In digital transformation initiatives, which core systems really matter in insurance, in any business?

The InsurTech Silicon Valley Summit on Core Systems and InsurTech Fusion March 29-30, 2017, hosted by the Silicon Valley Insurance Accelerator (SVIA) got us thinking about core systems.

To get really, really basic here: in our Customer Relationship Intelligence (CRI) Framework we define a business as a set of activities between a buyer and seller performed for gain. In a product/company centric world, no one worried too much about the customer’s gain. Now in a customer centric world where the customer is increasingly in charge, there is a risk of making the same mistake, by not making sure that the seller gains.

Enlightened executives, we believe, see their business as a set of activities performed for mutual gain. A partnership where both the buyer and seller prosper. A relationship.

By definition, a relationship is mutual. In high value B2B, our focus, profitable customers especially get that. They want a relationship. A relationship matters. It matters to their infrastructure. It matters to their supply chain. It matters to mission critical processes.

So now to answer the question, “Which core systems really matter?” The answer is ALL core systems matter, because ALL of them impact the development of the relationship between the buyer and seller. Core systems allow the entire business to run effectively…to create the relationship that creates mutual value.

Granted, some core systems matter more than others or at least would have a higher, earlier priority for making sure that there is mutual value being created in a digital transformation initiative.

 

How do you know where to begin?

Start by identifying the most critical interaction process that any core system enables.

  • Get everyone on your cross-functional management team on the same page.
    • Assess how prepared you are to focus on your customer’s success. We have a reality check that highlights process issues that need to be fixed. Validate it with Voice of the Customer interviews via a third party like us to see what customers really value.
    • This is important. Year after year one study or another reveals the perception gap between what the seller and the buyer think about value. One of B2B leaders and CIOs from 2015 by the authors of Competing for Customers showed a gap of 34X the value delivered from the seller’s perspective compared to the buyer’s perspective. The gap was considerably less on help with adoption challenges (which will be important in any digital transformation exercise). Here the gap was only a 4X difference in perception. But really? A 4X perception gap!
  • Decide what really are the most critical interaction processes to fix in the core systems.
    • Map the customer experience in those processes. We have a method called a value creation map. It goes deeper than a customer journey map and quantifies the effort of the buyer and the seller. What does it cost either party to do each step in the process? How effective is it? And so on.
  • For more look at our blog post “Are you driving positive and profitable customer relationships?” There you’ll learn more about how to keep your executives from flying blind about their customer relationships.

 

Now to an example from the source of this blog’s inspiration…insurance. 

Probably the most critical interaction process is the claims process from the customer’s point of view. But it is also the most critical one from the insurer’s point of view as well because this is the seller’s big opportunity to practically guarantee a customer for life by how they treat the customer.

In other words, think about the mutual benefit in any process and make sure as core systems are transformed that every process is examined for the value created for both the buyer and the seller. Don’t just pave the cow paths.

In their February 2017 article, From disrupted to disruptor: Reinventing your business by transforming the core, McKinsey & Company asserted, “Simply taking an existing product line and putting it on an e-commerce site or digitizing a customer experience is not a digital reinvention. Reinvention is a rethinking of the business itself.” McKinsey cautions: “One temptation is to focus on simply digitizing existing process rather than really rethinking them.”

 

Perfect timing–for the summit hosted by the Silicon Valley Insurance Accelerator (SVIA).

At the InsurTech Silicon Valley Summit on Core Systems and InsurTech Fusion March 29-30 a new breed of insurers will start a dialogue. These InsurTech CEOs from Lemonade, Inc., Slice, Figo, and Metromile have built their own core systems on digital platforms, but designed for a customer centric world from the ground up.

The opening keynote “Core Systems and InsurTech in the Era of Engagement” by Guidewire’s Eugene Lee, VP Data & Analytics sets the stage. Lemonade’s CEO & Co-Founder Daniel Schreiber will talk about Lemonade’s strategy of continually innovating exceptional customer value and improving business results.

SVIA co-founders Mike Connor and Natalie L. Wood address customer centricity head on with panels they are moderating. Natalie is moderating a panel on “The New Insurance Customer & Digital Ecosystem Engagement” while Mike is moderating a panel on “Digital Insurance Platforms for a Customer Driven World.”

Their summit promises to add significantly to the reinvention underway in InsurTech. Full disclosure: Mike is a Religence Advisor.

 

Customer Experience Wisdom: Paving the cow paths by just digitizing existing processes isn’t going to cut it in a customer centric world. What needs to change are processes that don’t work now for the mutual benefit of the buyer and seller.

 Questions: How big a gap is there between your perceptions of how you deliver value and what your customers would say? Want to know? Then, Be In Touch.