Insurers, like organizations in most sectors, are under pressure to transform their businesses using modern technologies like digital, mobile, cloud, etc., but face the constraints of decades-old legacy environments and limited funds to invest in modernization. The challenge is to reduce the costs of running their businesses and re-allocate the savings to digital transformation.
Transformational outsourcing is one approach for driving costs savings, but has its own challenges. Without a strong partnership and close collaboration, these challenges can negate the benefits of outsourcing, turning into another huge business cost that fails to deliver the expected return on investment.
CGI has worked as an insurance outsourcing partner for more than 35 years, and some of the practices we’ve implemented to ensure outsourcing success are highlighted in a long-term outsourcing engagement we recently completed with Delta Lloyd, the sixth largest insurer in the Netherlands.
CGI was brought in by Delta Lloyd’s direct writing division, OHRA, which was preparing to transition to a more modern ICT environment. While it focused on modernization, OHRA needed CGI to manage and enhance its mission-critical COBOL-based environment. CGI’s mandate included increasing automation, reducing legacy systems and improving ICT processes, so that internal resources could focus more on core business processes. In addition, OHRA wanted to provide its ICT employees with more career opportunities.
What began as an initial five-year outsourcing contract in 2005 turned into an extended contract that finally concluded in January 2016—with expected benefits delivered and high client satisfaction scores achieved.
CGI takes a “high touch” approach to transformational outsourcing—working closely with clients to build the kind of close partnership and collaboration required for long-term success. Here are some of the key best practices behind such an approach and our work with OHRA:
- Unique employee transition approach: One of the reasons OHRA chose CGI is because our unique employee transition approach, which led to a fast and seamless changeover of responsibilities. It is important to implement special HR initiatives to motivate transitioned employees, such as allowing them to work in the same region from the beginning and ensuring employees responsible for phased-out systems are given other career opportunities.
- Ability to ramp-up resources as required: In transitioning employees and building a new team, high-touch outsourcing success requires the ability to pull in additional resources as needed to meet evolving business requirements. In our work with OHRA, we added staff from other similar mainframe outsourcing contracts in operation, as well as from our global pool of resources, to ensure we consistently delivered the required expertise and bandwidth.
- Daily contact between CGI and OHRA managers: To foster close collaboration, processes that ensure daily contact between the service provider’s account manager and client’s ICT manager are paramount. With this type of daily contact, issues can be quickly identified and resolved, and the right solutions can be selected and implemented.
- Comprehensive and consistent reporting: Monthly reports on key performance indicators (KPIs), potential bottlenecks and an overall summary of progress, along with end-of-project evaluations to review successes and lessons learned, is a key best practice for high-touch outsourcing and ensured strong transparency, communication and issue resolution in our work with OHRA.
- Proactive maintenance: High-touch outsourcing also involves taking a highly proactive approach to maintenance. Instead of waiting for incidents to occur, the outsourcing team should work diligently to identify and address potential issues in advance. The team also should flexibly respond to any need to accommodate scope changes and work extended hours.
CGI’s work led to the smooth phase-out of outdated legacy systems, which enabled OHRA to drastically reduce the size of its ICT staff and transition efficiently to a more modern ICT environment. The process and system enhancements proposed by the CGI team also led to significant cost savings and other benefits such as reduced customer inquiries to OHRA call centers.
CGI continues to maintain a small team at OHRA on a time and materials basis and also is working with OHRA on the potential delivery of CGI software solutions to enhance its business.
If you’d like more in-depth information on our work with Delta Lloyd, feel free to contact me. I’m actually one of the OHRA employees who transitioned to CGI, so I have firsthand knowledge of what it took to succeed. I’d be happy to share more insight. Also, I invite you to read our Delta Lloyd case study to learn more.
About this author
Service Delivery and Transition Manager
Edwin Huygens is an expert and thought leader on outsourcing and offshoring, having published several articles on both topics over the past 25 years. He worked for two large insurance companies in the Netherlands before joining CGI, giving him experience and insight with respect to ...