Using a targeted “micro transformation” strategy, insurance companies can upgrade complex business operations from within and score quick wins.
he insurance industry is notoriously averse to change. Burdened with legacy systems and constrained by limited funds and resources, many insurance firms are often reluctant to even contemplate implementing new methods or technologies. That leaves their CFOs unable to fully take advantage of innovations that are streamlining other industries and empowering them to thrive.
For many of these companies, transforming the finance platform is a prime objective for improving operations. Yet the mere thought of taking on that task can be intimidating since the process is perceived to be a long, colossal undertaking with diminishing returns. The complexity seems overwhelming: Conduct current situation analysis, plan future operating models and perform a detailed gap analyses all before embarking on system selection and a multiyear implementation.
The finance function is an ideal starting place for implementing micro transformations within an insurance firm.
One way to get around this issue is by executing “micro transformations.” These are rapidly deployed small projects that require lower financial investment and are designed to yield immediate successes and returns.
The beauty of the micro transformation is that it focuses on a targeted function while adding value across the entire enterprise. As the successful outcome of each micro transformation builds upon the next, the firm gains momentum for change and overall performance improvement.
Scenarios and Solutions
Tools that improve efficiency and capabilities are at the core of the micro transformation. The good news for CFOs is that the tools are widely available and tend to be budget friendly. Three common examples are:
Dynamic Workflows – Enable creating and tracking of tasks with the added ability to review and approve documents
Excel Enhancements/Replacements – Facilitate data management and analysis with the same look and feel as Microsoft Excel, but with the addition of a powerful database in the background
Dashboards – Facilitate progress monitoring and decision making
How might these tools be implemented? Consider the following scenarios and solutions:
Scenario: The tax department of a global insurance company manages thousands of tax filings and returns using a spreadsheet taped to a wall. This archaic method of tracking leaves the firm prone to multiple errors — and risks. It also makes the department more vulnerable to penalties and fees for filing returns late.
Solution: Employ dynamic workflow tools within the department. Adding the ability to create, review and approve documents (such as tax returns) helps ensure full compliance. Implementation not only improves monitoring of progress and due dates, but potentially saves money by reducing the vulnerability of penalties and fees.
Scenario: Input sheets sent to many different cost centers during the financial planning and analysis (FP&A) process become lost when returned to FP&A for consolidation.
Solution: Employ a third-party tool that enhances the functionality of Excel or even replaces the software completely. You may already use Excel, but like many other firms, you may also be stuck in a comfort zone and rely on only the most familiar features. Enhancement or replacement tools have other highly useful features, such as a robust database for consolidation and other calculations, an internal workflow tool that helps with monitoring and coordination of the FP&A process end to end, and a full suite of functions that improve the planning cycle time and increase efficiency and accuracy of analysis.
Bonus solution: The dashboard tool can help with either scenario as well as others by turning metrics and KPIs into an easy-to-digest chart that helps managers in their decision making.
All Eyes on the Finance Function
The finance function is an ideal starting place for implementing micro transformations because it touches every aspect of the company value chain. Among its services are accounting, auditing, budgets and forecasts, cost management and investor relations.
You might target the tax department and FP&A in particular, since these areas are likely to produce early quick wins that have the potential for broader impact.
Your chosen project would apply tools within the selected functions, develop KPIs, conduct measurements and calculate the value of the improvements achieved. This value calculation should include error reduction, actual efficiency gains, tangible and intangible benefits, ROI and lessons learned.
Capturing Maximum Benefits
Once a micro transformation is implemented, other company departments can observe the improvements and begin their own respective projects. From there, management will begin to integrate a series of micro transformations aligned with the strategies and objectives of the organization, forming broader enterprise-wide transformations.
While micro transformations can be seen as DIY projects, partnering with an independent insurance expert with domain experience and expertise in data management can augment and accelerate the process. Working in collaboration with in-house personnel, experts can transfer knowledge, provide advice and assistance in understanding technology options, and help plan and implement broader improvement capabilities.
Micro transformations can in fact be a self-funding proposition, reducing costs while improving performance — and, in some cases, reshaping process flow to shift costs from low-performing functions to higher-performing functions. The momentum created by the improvements can be magnified and accelerated with the right industry expertise. In the end, micro transformations support overall business strategies and objectives to make a company more profitable and competitive.