I recently wrote about the importance of having defined project roles and responsibilities for core system transformations—one of the most time-intensive, costly, and important initiatives an insurer can undertake. After selecting the system itself, carriers should ensure that key project roles and responsibilities are assigned. Strong project management and executive buy-in are crucial for a successful core system project.
But they’re not the only success factors insurers need to consider. In this second blog, I’ll discuss the value of establishing and measuring key performance metrics.
Being delivered on time and within budget has long been a measure of success for system implementations. However, as initiatives have transitioned from big bang projects with a defined start and end date to a more agile, iterative process focused on generating business value, this metric is less indicative of success. Value is delivered in results achieved, not just capabilities delivered.
It is vital to identify key performance indicators (KPIs) for both project health and business results before the project begins, and all stakeholders should be aligned on the value of these KPIs. Using Aite-Novarica Group’s Three Levers of Value—Sell More, Manage Risk Better, Cost Less to Operate—is a simple yet effective way to prioritize the features and functionality that will create the competitive advantage all carriers are looking for. All metrics should be meaningful and simple to track.
Having an executive steering committee (ESC) helps ensure that the project is on track and staying aligned with the strategic goals, provides a forum for key decisions that may impact one or more departments, helps address and resolve any challenges or issues, and keeps the executive team engaged and aware of project health.
Create a report card that evaluates deliverables against agreed-upon business objectives. The report card should reflect where the project stands on scope and schedule (release value vs. backlog carried over into the next release), budget (internal and external costs), resource allocation, and a risk indicator for each item (on target, at risk, or needs attention are three common statuses used). Issues that need ESC attention should also be noted, and decisions should be documented.
Establishing service-level agreements with vendors is critical to ensure that everyone understands and is committed to meeting critical and non-critical items. Assigning a severity level and priority to each item is also essential.
Some simple yet meaningful metrics for business results include improved turnaround times for processing new business, endorsements, and renewals. In our on-demand world, accelerated cycle times are top priorities for both carriers and agents. Other metrics related to improved productivity per employee are usually attributed to optimized business processes. Historically, this has meant automation of manual tasks, but in today’s environment, the elimination of certain non-value-added tasks combined with automation results in truly optimized business processes. Establishing measurable customer satisfaction metrics is also important.
KPIs tied to gains in speed, efficiency, and effectiveness of key business processes are easily understood by senior business executives and can be an easy way to communicate the success of a project and value of technology (IT).
If you have thoughts or want to discuss this topic further, please contact me at [email protected].