According to Markets and Markets, implementing ERP software into workflows is growing more and more popular among insurance organisations. However, to reap the benefits of ERP, insurance companies often have to change the way they operate and replace usual processes with more efficient and automated ones to work with the new solution. What is more, ERP implementation can often cause a number of problems, since the integration affects the company's business processes.
ERP experts from Itransition have listed five main insurance ERP implementation challenges to help you seamlessly integrate the right solution into your organisation.
ERP implementation in insurance companies can incur problems rooted in both the human factor and technical infrastructure.
Often insurance organisations underestimate the time and budget needed to successfully implement ERP due to the lack of qualified professionals who could provide a correct project evaluation. Another common problem is scope creep, or when a company wants to add more features to the ERP as the project is already underway and eventually has to increase the budget and push back the deadline.
Delays can throw off the overall project schedule, meaning that necessary IT resources and employees will not be available when they are needed later. It can also affect the quality of ERP implementation, with the team completing some tasks hastily to keep up with the deadline.
To avoid these problems, insurance companies need to develop a straightforward and realistic plan and make minimum changes to it once the project has started. A good project plan should also take into account possible obstacles and minor cost overruns.
Meanwhile, the project’s schedule should be adopted to the complexity of different ERP implementation steps, especially setup and integration, and the likelihood of problems.
One of the critical steps of an insurance ERP implementation is data migration, which involves transferring customer and agent data from several legacy systems to the ERP database. However, gathering and preparing the necessary company's data for migration can be challenging.
The main problem is that data can be spread across accounting systems, spreadsheets, and paper documents as well as many different insurance departments. However, the failure to detect and gather the necessary data for migration can lead to problems with the new ERP system like inaccurate or duplicate data.
A well-planned data migration can help keep your entire ERP implementation project on time and within budget. Here are some tips on how to prepare your data for migration:
Data quality is especially relevant for insurance companies that migrate their old records to a new ERP system for the first time. The main problem is that old data has been used and stored for years and may not be completely accurate because of the following reasons:
Post-migration, to preserve data quality, companies can clearly distribute data responsibilities, for example, the accounting team should handle all financial data and the customer service department should handle customer information only.
Implementing insurance ERP involves transforming many business processes, which requires a change in employees’ mindset and established daily work processes. So naturally, ERP implementation can cause some change management problems.
A major change like this, however, can make employees anxious about losing their job and resist using the ERP, and this lack of willingness to accept transformation can be a major obstacle to successful ERP adoption.
To prevent these tensions, prepare your company for the changes and challenges when you begin implementing an ERP system. Insurance companies should also educate employees about the features and benefits of the new ERP and how it will make their day-to-day tasks easier.
In addition to this, insurance organisations should take the time to properly train their staff before implementing ERP. Finally, getting management and stakeholders across departments to endorse and support the implementation is also critical for the project’s success.
Insurance organisations often underestimate the amount of work required to transition to a new business system. Cost overruns can arise in different areas, such as consultation with specialists, ERP development and implementation, data migration, training, and further system maintenance. In the end, the need to drastically change the budget can lead to delays or even the project’s shut down.
To avoid overspending the budget, insurance companies should hire an experienced development partner to accurately estimate the scope of required changes, including customisations and integrations, and how much it will cost. They should also provide a technical justification and analysis of how the new insurance ERP system meets your needs.
Implementing an insurance ERP requires a great deal of planning, effort, and oversight to minimise issues. Most of the ERP implementation risks come down to a failure to realistically estimate costs, migrate data, and prepare employees for the change.
It’s best to address the above issues during the planning phase to be able to solve them before implementation begins. In the end, a successfully integrated insurance ERP system will only increase employee productivity and customer satisfaction.