The TINtech annual survey reveals the technology strategy challenges facing business leaders both now and in the future.
This year, as well as a strong focus on the implications of emerging technologies such as AI, machine learning and robotics there is also a real appetite to ensure existing tools can create and deliver value now. The results also reveal the continued need to understand how you effectively manage technology led change, that is constantly evolving and has implications for current business and operating models …as well as the organisations culture. Finally, this report highlights the practical challenges that directors across the sector are grappling with and gives an insight into the progress being made on areas such digital transformation, meeting changing customer expectations and the constant pressure to reduce operating expenses.
As always, we have kept commentary to a minimum and put the insights from respondees centre stage.
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By far the hottest topics this year are automation and AI. 57% of respondees ranked Robotic Process Automation (RPA) as either first or second most important technology to impact their organisation. Of those currently running POC initiatives over 90% said they included RPA, intelligent automation or AI projects.
It is worth pointing out that although these two topics are related the journey from RPA through to intelligent cognitive systems powered by AI is at its very early stages. However, “while the promise of automation has been around for years, the pace and the extent of its adoption in the workplace has significantly picked up over the past 12 months.” (McKinsey 2017)
From the survey results its clear that there is a thirst for practical examples of how this technology has been deployed and whether the business promise is now a reality.
Respondents asked for “lessons learned from automation at scale” and insights into the “practical use of Robotics” and in a wonderful mix of the technical and the colloquial “real world examples of where a CUI with a decent NLP is in play. I am not talking bog standard chatbots it is a step beyond that”.
This sentiment seems to resonate a lot:
“AI and where it is really making a difference. Is it proving a ROI etc”
or with another fantastic colloquialism:
“What are the transformative trends to look out for in AI and machine learning - and what's all sizzle without the bacon?”
Achieving digital transformation is a key strategic objective for organisations, with 76% agreeing that it is a board level priority. The majority of those that responded (82%) said they were at the start of their digital transformation journey with only 11% saying they were deep into their strategy.
However, the definitions of what digital transformation means for different organisations varies quite starkly and makes it difficult to effectively assess how far along the road we are.
For some, digital transformation is about, “getting the core offering and service right, and taking out low cost transactions”.
Others questioned whether transformation is the right word at all, and I think these responses are worth listing just to show the range of what people think we are actually talking about here. I think we all often get that sinking feeling when an article or a presentation starts with a definition, but in this instance it might be necessary!
Many will find the assertion that digital transformation means “a lot of noise but little action”, but this sentiment was echoed in responses to a subsequent question of whether the board understands what digital means in its broadest sense.:
From these responses and the wider conversations we have facilitated at recent events it’s clear to me that a significant amount work still needs to be done to educate the board on the full implications of digital for their insurance businesses. Digital encompasses a range of technologies - chiefly mobile, social media and cloud - that are both changing the business landscape by reducing traditional barriers to entry for new entrants and rapidly changing customer expectations around service, speed and transparency. Digital change is not something that you do once and tick off – it is the new business constant that every director will need to grasp that if they are to survive, drive profitability and increase market share.
By far the biggest obstacle to digital transformation are legacy systems with 64% saying this was there biggest challenge. However, legacy is only part of the challenge. Organisational culture and leadership factors are also a key finding of the report with the inability to experiment quickly and a risk adverse culture being high on the agenda of attendees:
“A lack of understanding at board level, lack of business knowledge in the IT team and a general reluctance to change are the key challenges to achieving digital transformation. In my humble opinion the more brilliant and Brainiac the person, the less willing to change they can be”
Innovation is usually sited as very important in tackling the challenges that digital throws at us and 58% said they had an innovation budget – but what is this budget used for? To try and answer this we thought it would be interesting to find out what your peers thought of the huge buzz phrase “digital innovation” and what it meant for their organisations – here are a selection we thought were insightful.
We’ll let you draw your own conclusions on whether you agree of disagree with any of these comments, but the wide range of answers of what innovation means to different organisations potentially points to a general lack of focus or direction – which it could be argued feeds into a risk adverse culture.
As one survey respondent commented to a question on what is hindering innovation with their company:
“Culture and buy in. We have a very traditional approach to business change – waterfall thinking, need 100% of requirements before anything can start, etc. Scepticism from senior business leaders based on passed performance of projects.”
This is important because if digital initiatives or POCs fail to deliver any positive change in the business and eat up valuable resources, it is hard to see how the current leadership teams will continue with the investment.
Innovation can’t be a separate team, unit or function, and it can’t just take place on a Friday afternoon in the pub – it needs to run through the organisation from the board, to your foot soldiers and back up again. There needs to be a framework to assess ideas and launch projects which can then be reviewed, refined and relaunch if needed…and fast.
But this has all been said before – perhaps now it is time for the those within the leadership teams with budgets to step out of their comfort zone and into the dynamic digital world.
One respondent summed this up very nicely:
“There are plenty of competent IT and business tools out there, with many competing in the same or similar spaces. However, it doesn't matter how good a tool is if adoption of its use is not forthcoming. This is where a good Business Sponsor is key, because projects rarely fail due solely to the tool, Project Manager or project team.”
For respondees from the London market many were keen to hear an update on the TOM and to get an insight into where TOM phase 2 might be taking us. It’s interesting that fewer chose the equivalent of defacing the ballot card than in previous years.
Having said that many are keen to discuss modernisation at a company level as well as at a market level, as reflected in some of these responses:
It strikes me that in many ways what we are really talking about is change management but looking at it through the lens of digital. Or to put that differently, if you get the technology right, you’ve only got one piece of the puzzle right – you’ve got to get your people on board and up to speed, and you’ve got to align processes and culture around your digital transformation as well as the technology.
“Managing change within an organisation, especially those project based in Digital Transformation, come up against a plethora of challenges and barriers - cultural, operational, budgetary, etc. What advice do you have to manage this?”
“Managing change effectively within the underwriting community, it is more than just the technology”
And finally I hope we’ll be able to at least partially answer this question, which I think in many ways very succinctly sums up what we’d like TINtech to be about:
“What will a COO be focusing on in 5 years' time?”
McKinsey (2017) ‘Automation at Scale is driving transformative change across insurance’ Available at: https://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/automation-at-scale-is-driving-transformative-change-across-insurance (Accessed: 30 April 2018).
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