As an insurer, are you feeling weighed down by technical debt? The heavy burden of supporting outdated legacy systems and spaghetti code that should have been modernized long ago? You’re not alone: technical debt is one of the insurance industry’s longest-standing IT challenges.
On Wednesday, April 24th, I hosted the most recent Datos Insights Women’s Network meeting on the topic of project prioritization and technical debt. Our panel included Darchelle Caces (Senior Director, Project Management at Trustmark) and Nancy Casbarro (Head of Insurance Advisory at Datos Insights). Highlights from our discussion are discussed below.
Technical Debt Increases the Cost of Doing Business
For insurers, one of the biggest drags on efficiency and productivity is the burden of technical debt. Supporting outdated legacy systems and layers of old code acts as a tremendous weight, requiring more time, people, and money to get even basic tasks done. Attendees gave examples of projects being severely delayed once the full scope of entangled legacy tech was uncovered.
A major issue is that the original developers of these archaic systems have long since retired, leaving little institutional knowledge behind. Making changes requires unsnarling a complex web where “nobody understands how everything interacts with each other.” It’s incredibly difficult to find new talent interested in working with those outdated technologies instead of the modern systems and best practices they have learned. Every insurer on the call cited talent as a top concern stemming from technical debt overhang.
The impacts go well beyond the IT department. Underwriters and other business staff find themselves stuck on painful green screens, cumbersome interfaces, and inefficient processes, which leads to frustration and turnover. Running problematic systems with unknown vulnerabilities also introduces severe compliance risks.
“Shutting Down Projects Is as Important as Starting New Ones”
One of the key pieces of advice from the meeting was the importance of shutting down projects that no longer align with top priorities. As one insurer put it: “Shutting down projects is as important as starting new ones.” Why continue pouring resources into initiatives that have fallen out of step with strategic goals?
Insurers emphasized the need for strong governance with consistent reporting on initiatives to create transparency across the organization. This enterprise-level oversight avoids insular priorities developing in silos. It allows leadership to continually reassess priorities and proactively shut down projects that no longer make the cut.
One participant put it bluntly: “When you have 10 priorities, you have none.” Prioritization requires raking initiatives and making hard decisions. When everything is deemed a top priority, nothing actually is the top priority. The courage to shut down misaligned projects is critical.
Technical Debt Makes Project Prioritization More Challenging
While prioritization is a must, meeting attendees surfaced several challenges made more difficult by technical debt:
- Skills Mismatch: IT resources with certain specialized skills may not match the needs of the highest priority projects. “These resources can’t all do the same kind of work.”
- Knowledge Gaps: On top of skills gaps, critical knowledge gaps exist around legacy systems. “It’s not just understanding the tech, but also understanding the business rules coded into these older systems.”
- Backfilling Constraints: It’s relatively easier for IT to temporary backfill open roles with contractors or outsourced resources. But backfilling critical business roles and subject matter expertise required for projects is very difficult.
- Scope Uncertainty: The unscrupulous nature of technical debt makes it extremely hard to accurately predict the amount of work involved in projects until well underway. “We thought we were solving one piece, but there were actually seven things we had to do.”
The consensus was that prioritization decisions need to be made by a cross-functional team representing IT, business operations, product leaders and other key stakeholders. This cross-pollination ensures alignment on priorities as well as transparency into the reasoning behind the decisions based on larger strategic goals.
Prioritization isn’t easy, but it’s a necessity for insurers looking to finally get a handle on technical debt and focus resources on the initiatives that will drive the business forward.
Our next Datos Insights Women’s Network virtual meeting will take place on May 29th at 11am ET on the topic of “How Will AI Transform Insurance?” facilitated by Datos Insights Head of Insurance Martina Conlon. Register to join us here.
