Benchmarking Policy Administration Upgrades: Advice from Those Who Have Gone Before

by Karlyn Carnahan,  Michael Fitzgerald, September 3, 2014
North America

Abstract

All IT professionals have a horror story about a system upgrade gone wrong. Since most policy administration systems (PAS) have a 12 to 18 month upgrade cycle for major releases, there are plenty of opportunities to misstep. To address this dynamic, a consistent claim of modern PAS vendors is that multi-tiered architectures and other technical designs ease the pain of upgrades.

Up to now, objective data concerning upgrade metrics was difficult to collect. How long does it really take to upgrade a PAS? Do modern systems live up to the levels of ease that vendors cite?  Historically, have insurers experienced any difference in outcomes when using vendor or third party system integrator staff versus internal staff to execute the upgrade?

In order to close this gap, Celent surveyed 44 North American insurance carriers to provide answers to these questions as well as to understand major challenges faced and overcome. 

Key Findings

  • Most carriers doing upgrades do a point upgrade, and generally these are successful. 
  • All upgrades to modern systems in the survey group were successful, supporting the expectation that these platforms reduce the pain related to ongoing updates.
  • The most frequently reported reason for taking an upgrade is “to gain new functionality” and the second most common driver is “current version no longer supported.”
  • Only 10.7% of insurer respondents used their own employees without assistance from vendors or third party companies. The most common uses of vendor services for upgrades are for coding, configuration, and testing. 
  • Most upgrade projects (64.3%) meet their delivery deadline.
  • Some carriers actually came in below budget on their upgrade, but the vast majority, 60.7%, came in on budget.

“Many carriers report that they have not upgraded their PAS either because they’re homegrown, or, more frequently, because these are new installations,” says Mike Fitzgerald, Senior Analyst with Celent’s research practice and coauthor of the report.  “This places a particular importance on the lessons that can be learned from other carriers’ experiences as the new installations prepare for their first upgrades.”

“For many carriers upgrades are a big deal,” says Karlyn Carnahan, Director with Celent’s Insurance Group and coauthor of the report. “They take months of effort, tie up a lot of staff, and can frustrate business partners. But done well, they go smoothly and can add functionality, upgrade configuration tools, and deliver significant benefits.”

This report focuses on carriers’ experiences in policy administration upgrades. It examines reasons for doing upgrades, staffing strategies, and scope, time, and budgets inherent in upgrades. It also provides advice from carriers on challenges to prepare for and ways to assure a smooth, successful process. 

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

1

 

Key Findings

1

 

Key Learnings

1

Introduction

2

Description of the Upgrade

3

 

Type of System Being Upgraded

3

 

Type of Upgrades Performed

4

 

Modern Vs. Legacy Upgrades

5

 

Reasons for Taking Upgrades

6

 

Scope of Upgrade

9

Staffing Upgrade Projects

10

 

Distribution of Staff Used in Upgrade

10

 

Vendor Services Provided

11

 

Staffing Budgets

12

Budget and Completion Times

13

 

Expected Completion Time Vs. Actual Completion Time

13

 

Costs Compared to Budget

14

Challenges and Advice

15

 

Most Challenging Aspects

15

 

Advice for Others

16

Conclusion

17

Leveraging Celent’s Expertise

18

 

Support for Financial Institutions

18

 

Support for Vendors

18

Related Celent Research

19

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