What Insurer CEOs and CIOs Should Take From Southwest’s Meltdown


What Insurer CEOs and CIOs Should Take From Southwest's MeltdownThe issues with Southwest Airlines over the holidays should be a learning moment for all CEOs who decided to delay crucial system upgrades to improve profitability. Many CIOs have been in the situation where executives don’t understand the importance of investing in crucial “back-office” systems and processes. From the press reports, it sounds as if that is what happened to Southwest.

Southwest’s employee scheduling system was outdated and not able to scale effectively to meet the chaos created by the weather and the unwillingness of management to preemptively cancel flights. I can imagine the Southwest CIO at some point urging executives to upgrade the system.

Maybe executives didn’t understand how important that system was for all of their customer-facing systems. Maybe they didn’t appreciate that all systems need to be kept current, not just revenue-generating ones. They learned that lesson the hard way, and hopefully it will deter others from making the same mistake.

I’ve been very fortunate in my career to work for insurance carriers who understood the importance of having a healthy technology and business processing environment. Everyone wanted to avoid a “front-page moment.” Insurer CIOs can use the Southwest meltdown as a cautionary tale to secure funding for outdated systems and processes.

Insurers are faced with cataclysmic moments such as weather events, pandemics, financial market volatility, and a host of others which can easily put stress on technology systems. Being prepared to plan for the unexpected is what customers expect of insurers. There is time to get ahead of the disaster and avoid being front-page news.

Now is the time for CIOs to discuss modernization plans for aging systems and infrastructure with the executive team. Whether legacy PAS solutions need to be replaced with modern, cloud-based solutions or manual processes are eliminated with greater automation, the time to act is now. To learn more about how to plan for a core system replacement, read the Insurance practice’s latest reports on PAS implementations: PAS Lessons Learned: Implementation Best Practices for P/C Insurers and PAS Lessons Learned: Implementation Best Practices for Life, Annuities, and Benefits.