By Leo Corcoran, CEO
80% of business executives say their business has begun digital transformations in recent years. However, just 14% say efforts have made and sustained performance improvement. Right now, Digital Transformation, or DX as it’s becoming more widely known as, is creating hype across the business landscape.
Countless businesses are attempting to dip their toes in, without committing too many resources, for fear of not being able to determine ROI. While companies continue to roll out DX projects, there are three key areas where insurers should focus their efforts.
Focus on Tangible Outcomes
Respondents who report the highest levels of success with DX projects say their business focused on a handful of digital themes, which were tied back to performance outcomes. According to McKinsey, the main objectives for digital transformation projects were to improve customer outcomes, improve product/service quality, and reduce operational costs.
However, how can this be mapped back to tangible outcomes?
Novarica has outlined three levers of value, which all insurers should look to focus on: Sell more, manage risk better, and reduce operational costs. Using these two examples, you could say that to sell more, an insurance company must have better products and/or services than their competitors. When focusing on improving product and service quality, there are many metrics you might choose to measure. For example, to measure an increase in product quality, you might choose to monitor customer acquisition and set a target to increase your customer base by 10% over a 12 month period.
Breaking these goals into more tangible goals allows the DX team to focus more clearly on the goals and objectives of the overall project. When questions arise during the project, they can be directed based on that clear objective, which will help to achieve company goals.
At ClaimVantage, we work with many companies that need to provide an ROI to senior management sooner rather than later. We work with customers to define their MVP (Minimum Viable Product). This allows them to get up and running quickly, before we go into phase 2, which may include integrations with external systems or customization for their specific business case. Which brings us on to the next tip.
Setting the Scope
Beginning a digital transformation project can be daunting. Start by defining your business objectives, focusing on the business areas where you can get the most bang for your buck.
For example, if improving the customer experience is your driving metric, first determine where your customer service is failing. Using a tool, such as the Five Whys, can help you to get to the root of the problem. Perhaps your customer service team can’t access the information they need to provide customers with the status of their claim in real-time. Next, determine why they can’t get the information. Is it because the data lives across multiple systems? Or perhaps finding the correct, most up-to-date paper file is not within their reach? This root-cause analysis will help you to focus on the scope of the project.
Studies conducted by McKinsey, have shown that enterprise-wide transformations are 1.5 times more likely to be successful. This is an important factor to share and remember as you and your team set the scope.
Make Digital Transformation Part of Your Culture
One of the biggest hurdles to successful digital transformation is a lack of leadership support and organizational buy-in. For a DX project to be successful, senior leaders need to be on board. Digital transformation is not going away, and the longer you leave it, the more difficult the transition will be. More work will need to be done, and it gets harder to stay ahead of market disruptors, leaving your business vulnerable.
Making a case for budget dollars has always been a hard sell. Researching the project and clearly outlining the objectives, goals, and projected metrics can help to clear the fog; laying out the path to success.
Another avenue to consider is to look at similar businesses or industries that are using digital tools to make inroads. Willis Towers Watson recently reported that 67% of life insurers who initially implemented predictive analytic tools to create competitive advantage by fortifying customer relations, found that the data has also helped to reduce underwriting expenses. 60% of respondents also found that additional customer insights have contributed to increased sales and profitability.
Remember to Play the Long Game
Sometimes it’s easy to show the economic benefits of an investment; However, it can be challenging to quantify the ROI of digital transformation projects quickly. To successfully implement and roll out a DX project, you need to invest in resources. Luckily, the majority of business executives understand that ROI on digital transformation is more long-term and strategic in nature.
With 80% of executives stating that a digital transformation project is imperative to the survival of their company, now is the time for you to start having these conversations with your team. What are the areas you need to improve? Start there and remember that digital transformation should be treated as an agile project, with continual moving targets, to ensure your project is as successful as possible.
McKinsey has done much research in this area across multiple business disciplines, that is worth reading for more information.