By Rob Stavrou, Director of Consultancy, Northdoor
Today’s insurance industry is an extremely dynamic market, which means that the IT systems that you’ll need to address your goals right now may not be the best choice when it comes to your future growth and development. As a result, even though modern IT systems may be able to provide a robust platform for improving customer relationships and developing new revenue streams right now, you’ll still need to be able to adapt your IT strategies and capabilities quickly and easily in order to stay competitive in the future.
When deciding on your IT strategy, it is therefore vital to consider where you’d like your firm to be in several years’ time, so that you can identify what resources you’ll need to achieve these objectives and then plan accordingly. The IT industry clearly needs to play its part in achieving this goal as well, by offering a more collaborative way of working that will allow you to manage your business effectively in the short, medium and long term.
Here at Northdoor, we’re actively addressing this issue by sharing our proprietary IP on new projects with clients. This collaborative approach is already gaining a great deal of popularity within our client base, as it can provide firms with unprecedented flexibility and control over their IT systems.
What is ‘Shared IP’?
This new operating model, known as ‘Shared IP’, allows insurance companies and IT solution providers to co-own the intellectual property (IP) that underpins their new IT systems. As a result, insurers and IT solution providers are able to share the risk, resources and ownership of an IT solution that is developed in a true working partnership.
This idea of ‘shared ownership’ is a really exciting aspect of the shared IP model. For obvious reasons, this approach can offer a much more flexible and open alternative to the traditional licensing model, since it allows you to collaborate with the solution provider on both the design and overall direction of the IT system.
By working alongside your solution provider to develop a totally tailored, fully customisable solution in this way, you’ll benefit from an open, modular system that’s created using standard languages and platforms, and which can therefore be integrated easily with any existing systems and tools. For all of these reasons, the shared IP model can provide three key benefits: control, flexibility, and a focus on service quality.
IT systems that you can control
One of the main benefits of the shared IP model is that it will give you complete control over your IT systems – even if you don’t want to commit to a service contract with the solution provider afterwards. The shared IP model gives you the option to split the IT solutions and service contracts into two camps, so that you have the flexibility to choose exactly who you work with, for what, and when.
Likewise, with the shared IP model, any development and customisation that you’d like to undertake in the future will be totally in your hands as well. This level of autonomy will make it much easier to gain a competitive advantage, as you’ll be able to modify your IT system to meet specific requirements and/or to perform certain functions easily, and therefore stay one step ahead of the competition as market demands change.
The Shared IP model also gives you more control over your costs. Unlike traditional licensing agreements that cost you more money every time you expand the user base (and yet provide little room for modification), shared IP will give you much greater control over your own system and sourcing arrangements as they change and develop.
IT that can flex with your changing needs
While the right IT systems can certainly help you reduce your overheads by boosting efficiency right now, the shared IP model can help to increase revenues by providing the agility and flexibility that you need to support a strategy of active growth. Because this model will give you the ability to customise your IT solution in-house, you’ll be able to innovate much more easily, as you’ll be freed from the constraints of rigid ‘one size fits all’ off-the-shelf products that have been pre-built on a one-to-many model.
Instead, when developing a shared IP system, you’ll be able to work with your technology provider to make sure that the design of your IT systems is tightly linked with both your current and future business objectives, and that it has the built-in flexibility and scalability that you’ll need to stay competitive in the future.
This close working relationship will not only help both organisations to understand one another’s strengths and priorities, but will also enhance communications at different levels. As a result, by building a mutually understanding and supportive relationship within this collaborative model, you’ll be able to highlight any concerns, issues or priorities very quickly, and then ‘flex’ your IT systems to address them.
A focus on service quality
In addition to these other benefits, the shared IP model ensures that your technology provider remains completely focussed on the solution’s design, development and service at all times.
After all, with the Shared IP model, your provider doesn’t have the option of simply sitting back and waiting for incremental licensing revenues to roll in. Instead, it is imperative that the company continues to demonstrate the value of the IT solution and system, and to offer high quality service. As a result, you’ll benefit from the provider’s experience, IT expertise, and business insight, and can also be sure that your business objectives are taken into account at every stage of the project.
Even with all these benefits, most firms have rarely, if ever, encountered this shared IP model. However, this type of open, benefit-sharing relationship is quickly gaining momentum with today’s forward-looking insurance firms, and for obvious reasons. Not only will this collaborative model free you up to focus on growth, but it will also eliminate the traditional limitations associated with having to adapt, resource and fund large-scale IT projects in order to address your firm’s changing needs over time.
Author: Rob Stavrou, Director of Consultancy, Northdoor, the IT consultancy and solutions provider to the global insurance market www.northdoor.co.uk
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