Top 3 Reasons Core System Replacements FAIL

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2 Session 673 Tuesday, June 10 3:30 5:00 pm IASA 86 TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW

3 David Wagner, Senior Manager Wipfli David brings over 30 years of experience in the P&C insurance business to Wipfli clients. More importantly, he shares this experience with insurance companies to help develop their vision into a strategy, and that strategy into action. David has worked for insurance companies on their IT teams. He spent 18 years with core system vendors and now works as a consultant to the industry. This experience gives him a unique perspective when helping clients use technology to improve their businesses.

4 When it is time to replace, learn from those who came before you 4

5 Every project has risks Core system replacement projects are Expensive software licensing, implementation and opportunity costs Large consuming many people, directly and indirectly Long many projects taking years to complete Failure is expensive, time consuming, and opportunity lost

6 Six common project risks Expectation risk Are we all looking for the same things? Acceptance risk What could prevent us from leveraging this investment? Alignment risk What could prevent us from achieving the value we expect? Execution risk Are we getting things done effectively and efficiently? Solution risk Will this solution deliver on its potential? Resource risk Have we accounted for the total investment required for success?

7 Three carriers, all did core system replacements Two had a prior failure and one worked awfully hard not to Peter Thorp Dryden Mutual Insurance Co Guy Russ Church Mutual Insurance Ken Mitchel Clements Worldwide And a core system vendor s perspective Andy Scurto ISCS

8 Peter Thorp, Sr. VP & Marketing Manager - Dryden Mutual Insurance Co. During his 23 years at Dryden Mutual, Peter has served many roles including Marketing Manager, Actuarial Liaison, Annual Statement Schedule P preparer and IT Manager. During this time the company has grown Direct Written Premium from $9.1 Million to $53.2 Million. Peter holds a Bachelor of Science in Accounting from Adelphi University but no formal IT training. Since a successful 2003 implementation of the Image Right Workflow and Document Management system he has been involved in coordinating the development of Core System Replacements for DMIC with one failure and another success to his credit.

9 Dryden Mutual - A Tale of Two Projects Single state writer New York $53.2 million DWP year-end 2013 Commercial lines Small artisan contractors package, BOP and commercial package policies (no work comp or auto coverages). Personal lines - Homeowners, mobile home and dwelling fire Accelerated premium and policy growth from 2002 to 2006 Premium Increase + 155% Policy Count + 133%

10 Rapid Growth = Technology Changes Increased staffing levels to handle growth became evident changes to technology needed Solved document management and workflow system with successful Image Right implementation Seek out replacement for inefficient, outdated, manually intensive policy/claim/billing management system Do it all over again -- This time successfully! Massive undertaking with limited technology staff and expertise - We re underwriters not software developers!

11 2006 Core System Replacement A Valuable Learning Experience No formal vendor selection process followed. Key requirements not fully documented. Relied on vendor for project management leadership. Development process - the waterfall method after initial requirement gathering phase didn t see vendor for months. Too few key contributors from core company departments. Test plans not extensive enough to find defects. Executive sponsorship and commitment always remained solid.

12 Current Project Replacement If at First You Don t Succeed Senior management and key department staff on-board early with input and ideas. Engaged vendor selection consultant to assist in the requirements gathering phase and development of the RFP process. Systematic selection process led DMIC to short list of software vendor s each with proven track records. ISCS SurePower Innovation was clear choice. Contracted with outside project management team to help DMIC navigate the development process and assist with some business analyst functions.

13 Current Project Replacement If at First You Don t Succeed IT staff growing with business analyst and 2 developers since 2006 project. But, we re still a bunch of underwriters. Departments had ongoing input into the build out and were actively engaged in exhaustive testing of each module as they were delivered. Working within the agile development method provided users a hands-on almost real-time access to the progress of the project. Pleased to report initial go-live has been a huge success.

14 Thank you for your time and attention. If you have questions specifically regarding this portion of the presentation, please contact: Peter Thorp Sr. VP Dryden Mutual And now, our next speaker, Guy Russ of Church Mutual.

15 Guy Russ, Executive Manager IT Administration Church Mutual Insurance Co. Guy, a Lean Enthusiast, has 18 years of experience in the IT industry and has expertise in Strategy development and execution, Business process improvement, Technology alignment and implementation, Program and project management. Prior to taking his current position, Guy spent nearly 5 years managing a program of projects to transform CMIC's processing infrastructure which included developing new software applications for Policy Administration, Billing, and Reinsurance as well as integrating a Customer Relationship Management package and a data warehouse for Statistical and Regulatory Reporting. Before joining CMIC, Guy worked with Wipfli/SpiderLogic, SBC/Ameritech (now AT&T) and Andersen Consulting (now Accenture). Guy holds a Bachelor of Science in Finance and Master of Business Administration (MBA) degrees.

16 CMIC and the DISCOVER program CMIC - the largest insurer of religious institutions in the U.S. $600 million in premium, more than 183,000 policies P&C lines - package/multi-peril, commercial auto, workers compensation and umbrella DISCOVER the largest strategic initiative ever launched in the company s 116 year history 5 partner organizations spread across 4 continents with over 200 resources contributing 4 major applications to build using IAA as the blue-print, 4 legacy systems to integrate, over 75 total integration points

17 Failure or Success???? Live in 3 states with commercial auto after 6 years Original scope was policy administration for all lines in two years Scope expanded to include CRM, billing, reinsurance and a data warehouse for all lines except workers compensation 30 more states of auto ready for rollout but no rollout plan Built up a product modeling competency in-house Sold the system at the end of last year The deal includes completion of our MP product line (our most complicated product) as well as ongoing royalties

18 Losing Sponsorship Long-running projects require long-running sponsorship 6 years, 3 Executive sponsors, New executives cycling into the Steering Committee Executives hear direct reports (aka, users) louder than project managers Sponsorship is agreement and support of objectives and methods. If methods aren t agreed, users who disagree will turn off executive sponsorship.

19 REPEAT! REPEAT! REPEAT! Business reasons for the change must be clear the WHY Vision for delivery must be clear the HOW Visual indicators of progress and constant repetition of goals and vision are essential. Delivery must be consistent to maintain confidence Plans must be realistic and based on actual data

20 The Stack Matters Choice of technology will influence: Total cost of ownership (TCO) Speed of delivery Future advancements A heavy stack requires more people and higher-level skills Choosing the cloud has its own implications for support and upgrades

21 Thank you for your time and attention. If you have questions specifically regarding this portion of the presentation, please contact: Guy Russ, MBA Executive Manager IT Administration Church Mutual Insurance Co. And now, our next speaker, Ken Mitchel of Clements.

22 Ken Mitchel, Director of IT - Clements Worldwide Ken Mitchel joined Clements Worldwide in 2007, and is currently leading an insurance core system replacement for the company. Clements Worldwide is a global MGA specializing in expatriate insurance for both P&C and L&H lines, and has policy holders in over 170 countries. Prior to joining the Clements team, Ken served as the Vice President of IT for a regional Mid-Atlantic auto carrier, where he successfully implemented a complete legacy systems replacement.

23 And now some more reasons Picking the wrong partner None of the other items will matter if you get this wrong Performance-based software selection will mitigate this risk What does the right partner look like? History of implementation success Proven project management methodology and toolsets Invests heavily in their product Overall fit this is a marriage

24 And now some more reasons Going it alone You re an insurance company not a software company Smaller companies usually don t have the resources and expertise needed to succeed without help 10% is a small price to pay to increase your odds of success substantially Don t wait to get help at the point you realize you need it, you ll already be behind schedule and budget

25 And now some more reasons Need to be clear on scope What s in What s out Remind frequently Unclear Executive Expectations The end of the implementation is the beginning of the project Andy Scurto Helps mitigate scope creep

26 And now some more reasons Going too big Business and people change fast go live fast to minimize these risks Look for a manageable piece to push live and don t wait for perfection

27 And now some more reasons Waiting too long to test Agile development protects against this risk Get test cases set up at the start of the project Provides for manageable test & rework wait too long and risk the rework death spiral

28 Thank you for your time and attention. If you have questions specifically regarding this portion of the presentation, please contact: Ken Mitchel Director of IT Clements Worldwide And now, our next speaker, Andy Scurto.

29 Andy Scurto, President ISCS, Inc. As president, Mr. Scurto is responsible for ISCS's corporate vision and strategic direction. The founder of ISCS, his deep understanding of both insurance and IT has led to SurePower Innovation's incorporation of uniquely rich insurance flexibility and capabilities, over its three-generation development. Scurto is a rarity among company presidents in reserving significant time to work in the trenches with customers. He notes, "If I weren't solving client business challenges, I wouldn't be in this business." His strategic decisions for SurePower Innovation are informed by this continued customer contact and knowledge of both the large, strategic issues and the minutiae of the insurance business learned through more than 25 years' working specifically with insurance industry systems. Scurto is passionate about technology and continually exploring how the newest technology developments can provide practical benefits for the insurance industry. He speaks frequently at industry conferences and publishes in industry publications. Mr. Scurto received his bachelor's degree in computer engineering from San Jose State University.

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32 Session Topic Too Negative What Should Be Done to Ensure Success! Ensure executive sponsorship and work to keep it! Get some quick wins Ensure first go live is not too far out Use a process which gives visibility into progress - Agile Know your special business requirements Use a formal selection process concentrate on what is important Select the right partner it will be a long marriage Get help (larger than usual project) Ensure adequate business resources are available this is a business project not an I.T. project! Ensure adequate and early testing Control Scope Going live is just the beginning!

33 Thank you for your time and attention. If you have questions specifically regarding this portion of the presentation, please contact: Andy Scurto President ISCS And now for the Q&A portion of today s program.

34 Q&A with Today s Speakers David Wagner, Senior Manager Wipfli Peter Thorp, Sr. VP & Marketing Manager - Dryden Mutual Guy Russ, MBA, Executive Manager, IT Administration Church Mutual Insurance Co. Ken Mitchel, Director of IT - Clements Worldwide Andy Scurto, President - ISCS

35 Please Complete the Session Evaluation Form on the Conference App and Include Your Conference Registration ID# to be Included in a Drawing for a Free Conference Registration for the 2014 Annual Conference! NOTE: Your Conference Registration ID# is Located at the Bottom Left Hand Corner of Your Badge. IASA 86 TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW