It has been a perennial topic. Much has been said and copious ink spilt on the suite vs best-of-breed core system debate. Adding to it, I recently participated in a webinar hosted by Insurance Networking News entitled “Have Suites Won the Policy Admin War?” It reviewed the pros and cons of implementing full suite core systems vs integrating various best-of-breed solutions. But this time I found it hard to repress the thought: “Why are we still talking about this? The war is indeed over. “
Sure, there are scenarios where best-of-breed integration is a logical choice. And one of the two insurers on the panel articulated those well: a specialty lines insurer with many lines of business that began its legacy replacement in 2006.
However, much has changed in the core system world in the last ten years. Most of today’s modern suite vendors only showed strength in individual components a decade ago. And component support for anything other than standard personal and commercial lines was spotty. For insurers starting today, the cost/benefit equation has shifted.
Single Vendor Best of Breed Is a Start Line
Gartner coined the phrase “single-vendor best-of-breed” a few years ago to describe the integrated suite offerings that were maturing fast. Today, as a result of both acquisition and the build-out of solutions by vendors, there are a number of viable options—to the extent that I would characterize an insurer on the core replacement path that is not looking at maximizing suite components from a single vendor as marching to the rear.
Why? In one word: integration. Both insurer panelists concurred on this point. Integrating core components so they play together well and support a real-time digital business is difficult and risky. As examples, there is heavy-lifting around data mapping, and individual vendor solution upgrades can have unforeseen impacts across the system. Pre-integration of components and the use of common data models mitigate the risk of implementation and maintenance and drive a lower cost of ownership.
On the upside, integration with non-core components, such as auto-signature, has become much easier, and there are many such components. But at the same time, insurers are disadvantaged when integration of a third-party component becomes a multi-point operation to disparate core systems rather than a single integration to a unified suite.
Customer Engagement Moves the Finish Line
While integration and the subsequent TCO are the major benefits, other forces are shaping the conversation now, in the age of the customer. To support real-time interaction with customers, partners, and producers, core systems need to form an open, flexible, and adaptive platform. The interaction channels have grown with the addition of mobile and social media, and distribution is reaching farther into retail, online, and niche segments. The result is an explosion of interaction points and data inputs, including IoT, geospatial, and customer data.
Can your core systems capture and leverage all these inputs for improved customer service and personalized offerings and experiences, in real time? Here again, the value of a unified core systems platform that exposes transactions and data in a consistent manner as APIs and micro-services is apparent.
Open and Unified Systems Are the New Winners
We should no longer be asking, “Should we be best of breed or suite?” The more pertinent and up-to-date question is “Are our systems unified and open?” In addition, are they able to provide real-time connectivity and customer engagement across the ecosystems, and not just for post-sale servicing but also for customer acquisition? Now we’re talking!