Before we get into the top five common mistakes made in an insurance software procurement process, the first thing we should touch upon is the most criminal failing of any project team: treating the process as an inconvenience that needs to be gotten out of the way.
Procurement is a strategic process that, when done correctly, can lead to significant benefits for your organisation. When done incorrectly, it can negatively impact your insurance business for many years to come. Instead of a hinderance or an inconvenient process, procurement must be treated as genuine information gathering, perception challenging and an opportunity to truly understand your own needs.
That is not to say that we should procrastinate or make the process lengthier than it needs to be, but it’s very much about the open mindset you must enter into it with.
However, there are 5 additional mistakes that we too often see, that can prove catastrophic to the success of the project…
Top 5 most common mistakes in an insurance software procurement process:
Inadequate Requirements Analysis
One of the most fundamental mistakes is not thoroughly analysing and documenting your business’s specific needs. Too often, companies rush into the procurement process without a clear understanding of what they actually require from the software. This oversight can lead to selecting a solution that doesn’t align with your business objectives, resulting in functionality gaps that disrupt operations and necessitate costly customisations. Worse still is where businesses confuse documenting existing processes with genuine requirements. A fresh product roll-out is a chance not just to understand how you currently work, but how you should be working in the future.
To avoid this, take the time to engage with various departments within your organisation to gather comprehensive requirements. Understand the pain points and desired outcomes from the perspective of all stakeholders, from IT and operations to finance and end-users. This holistic approach ensures that the chosen software meets the needs of the entire organisation both now and in the future.
Ignoring Total Cost of Ownership (TCO)
Focusing solely on the upfront cost is something that we’ve seen far too often. While the initial price tag is important, it’s just one piece of a much more nuanced puzzle. The total cost of ownership (TCO) includes implementation expenses, hosting, training, ongoing maintenance, upgrades, and potential downtime costs.
To get a true picture of the investment, ask vendors for detailed TCO estimates. Consider long-term expenses and how they fit into your budget. This foresight will help prevent unpleasant surprises down the line and ensure a better return on investment. Moreover, by mapping out several years ahead, you can begin to model out what good and bad look like and where your best and worst case scenarios start and end.
Insufficient Vendor Due Diligence
Many organisations rush through this step, failing to conduct thorough due diligence on the vendor themselves. This is what leads to “Nobody got sacked for buying IBM” mentality and everyone ended up with the same solutions. Consider cultural fit with your organisation and not just whether you like the sales person you’ve been dealing with – sales people are literally there to make you like them! Without a comprehensive evaluation of the vendor’s track record, financial stability, customer support quality, and future roadmap, you might end up partnering with a vendor who cannot meet your long-term needs or deliver on promised functionalities.
To mitigate this risk, take the time to research potential vendors thoroughly. Look for reviews and testimonials from other insurance companies, ask for case studies, and obviously don’t hesitate to request a detailed demonstration of all parts of their software that you’ll be using. Make sure that demo is able to go “off rails” or better yet, gets hands on yourself through a sandbox environment or working POC. A reliable vendor should be transparent and forthcoming with information and more than wiling to give you this level of access.
Underestimating Implementation Complexity
Underestimating the complexity and time required for implementation is another common pitfall. Implementation involves more than just installing software; it includes data migration, system integration, and user training. In the case of insurance software, it also usually includes product building and lots of third-party integrations. These tasks can be time-consuming and complex, and failing to plan adequately can lead to significant project delays and disruptions to your business operations.
Develop a realistic implementation plan alongside a vendor that includes detailed timelines and resource allocations with key milestones that everybody can commit to. Engage withal of yours and the vendor’s key stakeholder to understand the full scope of the implementation process and prepare for potential challenges. Setting realistic expectations will help manage the transition smoothly.
Lack of Stakeholder Engagement
Finally, failing to involve key stakeholders from various departments can lead to selecting software that does not meet the needs of all users. Many underwriting and broking processes are incredibly nuanced and require steps that those not dealing with it day to day have no idea about. This oversight can result in resistance to adoption, as different teams may feel their requirements and preferences were not considered, or worse still, you end up with a system that slows them down.
Engage stakeholders early and throughout the procurement process. Involving representatives from different departments ensures that the software capabilities align with organisational goals and user expectations. This collaborative approach fosters buy-in and facilitates smoother adoption.
Procurement of insurance software is a complex and critical process that requires careful consideration and planning. By avoiding these common mistakes—conducting thorough requirements analysis, considering the total cost of ownership, performing diligent vendor evaluations, accurately assessing implementation complexity, and engaging your key stakeholders—you can make a well-informed decision that benefits your entire organisation.
Taking the time to navigate these potential pitfalls can lead to a successful software implementation, ultimately enhancing your operational efficiency and positioning your company for long-term success. Treat the procurement process as the strategic initiative it is, rather than an inconvenience, and you’ll set your organisation on the path to achieving its goals.
