digital transformational trends in insurance

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June 2016

What’s the Framework? | Where do you Start?Enabling Digital

Ray ShehataDirectorFinancial Services

+1 732 331 [email protected]

© 2016 Information Services Group, Inc. All Rights Reserved 2

Laying the Foundation for a Digital Transformation

Digital transformations starts with a solid vision for Cloud, Platforms, and Automation utilizing Agile Processes - The backbone and architecture for Digital insights and the interactive Customer experience

ISG’s Digital Framework

Processes

Cloud

CustomerAnalytics

Collaborative Product

Innovation

BusinessInsights

CustomerExperience

Product Analytics

IoTAutomation

Platforms

Access Channels

Social MediaCollaboration

Enterprise

@ @ Partners

Customers


Digital Requires a Flexible Infrastructure and Better Processes

Cloud ManagementTeam

Windows Server Team

Data CenterLAN Team

Linux ServerTeam

Disk Storage

Team

Flexible Infrastructure

Agile Application Development & Processes

► Infrastructure management automated -- environment is standardized and commoditized.

► Tower orientation replaced by converged cloud infrastructure management

► ITaaS or Service Brokers

► Integration and management is the differentiator

► Agile in a global delivery model becomes the norm

► Integrated DevOps team with rapid deployment a must

► Contracting for Agile switches from well-defined scope to variable scope

► Integrated development and business teams to drive digital transformation

Agile Priorities


The Digital Backbone Provides Agility and Cost Efficiencies

The Digital Backbone not only enables agility but can drive costs out of the business. Understanding the levers is key to formulating the strategy

LegendTypical Client Current State

ISG Recommendation

Levers

Automation

Agile PODs

Cloud Adoption

Platform Strategies

Increased Costs Decreased Costs

Staff Aug

Agile PODs

Private Public

Custom Apps SaaS/PaaS

Limited Highly Automated

Distributed PODs


Cloud costs are “highly” sensitive to usage

1 0.9 0.8 0.7 0.6 0.5

0.399999999999999

0.299999999999999

0.199999999999999

0.099999999999999

-9.99200722162641E-16

$0

$1

$2

$3

$4

$5

$6

$7

Range of Public Cloud Prices per Logical Server configured like

Client's X86 Linux

Instance Usage*

Annu

al in

$00

0's

Sample Client

Interest in Cloud Adoption is exploding in Insurance. But Cloud is not always Cheaper

Internal IT costs are typically less than the public cloud when cloud instance usage is high, but Public Cloud becomes more cost effective when usage is less than 55%


Applications Drive the Delivery Model

By assessing / modeling the utilization of the applications workloads you can devise the optimal deployment model between Cloud and traditional datacenters while also rationalizing your application portfolio


Applications Example

After evaluating workloads, most clients realize they require a hybrid model with some apps remaining in traditional datacenters / managed hosted environments

AZURESaaS

Salesforce and CRM

Finance Systems

Time & Expense

Reporting

Talent Mgt

SharePoint apps

Existing .Net Apps

OS365

Knowledge Mgt.

Custom Apps

Backup &

Restore

Infra Support

Mobile Apps

AWS

Legacy Apps

Customized COTS

PLM Tools

ERP

Data Center


Multi-Speed IT Addressing Digital Demands

► More brownfield than greenfield► Silo Development APIs, Web Services, Platforms► Multiple Speeds of IT Delivery coexisting – Agile &

Waterfall► Fixed Price Contracts vs Agile► Agile Enterprise Architecture► ….

► Move from local optimization to lifecycle thinking► Application Portfolio & Footprint► Manage Business Idea System Retire► Think “service“ instead of “application“► Buy vs Build vs XaaS► Flexible Price per business service► …..

Software Development

lifecycle(Plan-Build, Agile, Lean, DevOps,,…)

Operations(ITIL, SLAs…)

Application Portfolio Management

(Business Case, Requirements, Target

Architecture,…)

Value delivery

Value Realization

Value Identification

InnovationPortfolio

Business UnitPortfolio

Enterprise Portfolio

Agili

ty

Stab

ility

Multi-speed Application Development Focus on Application Lifecycle

Digital transformation will also require Applications to be developed at different speeds giving rise to Bi-Modal IT


Get ready for DevOps

Applications undergoing higher speeds of change will demand integrated DevOps

ContinuousProduct

Validation

ContinuousMonitoring

ContinuousProductPlanning

ContinuousDeployment

High SpeedTest Driven Development

ContinuousTesting & Staging

ContinuousIntegration

Multi Speed Development: Agile / Kanban / Lean

Automation, Monitoring, Making it Safe to Fail

Systems Thinking & stricter Application Lifecycle Mgmt

Agile Operations with SDDC

Culture, People, Processes – especially when sourced

Building Blocks for DevOps Operational Success

Agile Architecture, Microservices & Platform


Strategyto Portfolio

Drive IT portfolio towards Business

Needs, Innovation & Continuous

Improvement

Requirementto Deploy

Build what the Business wants, when it wants it

Requestto Fulfill

Catalog, fulfill & manage service

usage

Detectto Correct

Anticipate & Resolve Production issues

Busin

ess D

eman

dMulti-Speed Process Orchestration in a Digital Enterprise

The role of Infrastructure shifts from “installer & maintainer“ to “broker & communicator“

Performance Management

Cont. Serv. Improvement

Benchmarking

Reporting Service Level Management

Consumption Management Quality Management

Governance Framework

Process Management

Governance & Management Systems

Org Change Management

Policies & Standards Mgt.

Knowledge Management Data Management

Information Management

Audit & Compliance Management

Risk & Compliance Management

Risk Management

Partner Integration

Contract Change & Amend

Contract Interpretation

Prov. Audit Prep. & Tracking

Invoice Management

Value Assurance

Contract Compliance & Del.

Provider On-/Off-boarding

Provider Communication

Spend Pool Management

Sourcing Lifecycle Management

EnterpriseStrategy

IncrementalImprovement

SDLC OR Scaled Agile

Managed RunEnterprise Portfolio

DigitalStrategy

IterativeInnovation

ScaledAgile

DevOpsInnovationPortfolio

DifferentiationStrategy

IncrementalInnovation

Scaled AgileOR SDLC

DevOpsBusiness UnitPortfolio


How ISG Typically Gets Started with Clients

► What are our current costs and consumption?

► What should we move to the cloud? What should we keep in our datacenters and optimize?

► What’s the ROI of the targeted Digital Future State? What will it cost including the upfront investments to implement?

► What’s the implementation roadmap including overall program timeline, service management design, and other change management programs required to transform to the new delivery model

ISG recommends starting by developing a Digital Strategy which focuses on creating the Digital Backbone and transforming the legacy infrastructure into a cloud-ready agile enabled environment. The strategy should address:


About ISG


The ISG Advantage

ISG focuses exclusively on helping clients achieve operational excellence providing clients unparalleled Data, Experience, and Insights.

► Achieved or identified more than US $65 billion in client savings achieved in more than 17,500 engagements

► ISG is a trusted advisor with more than 80% of our engagements are repeat clients

► Advised over 80% of the Forbes Global 100 with most being repeat clients

► Over the past 5 years we have advised on 17% of the Sourcing Market’s annual TCV awarded and over 60% of the TCV sourced with the aid of an advisor.

► Owner of one of the largest authoritative repository of sourcing contracts and cost benchmark data in the world

► Over 900 professionals from 21 Countries serving commercial enterprises and governments across the globe

► Proudly independent with deep collaborative relationships with all major service and technology providers

900 Advisors in 21 countries


ISG Differentiators

ISG is the leader in all aspects of services strategy, sourcing and business operations advisory.

*Contracts with ACV> $5M from the ISG Contracts Knowledgebase™ since 2008

► Corporate focus on ISG product development; data harvested from engagements for benchmarking

► Large teams of SMEs in all competencies from Service Integration to Applications/DevOps to Emerging Technology keeping up with technology

► Robust and continuously improving product development & training – focus on solutions

► Committed to engage with the service provider market; robust investment in Research, and collaborative sessions with the provider community in IT, Applications, Business Process and Engineering Services

► ISG is aligned with service provider most recent improvements allows our clients take advantage of capabilities they otherwise may not experience

ISG

Big 4 Acctg Firms

Law Firms

Other Advisory Firms

Mgt Consulting Firm

Research & Benchmkg Firms

Other Niche Firms

Unrevealed

65%7%

5%5%4%

2%2%

10%

Type of Advisor Used for Broader Market* Awards

N = $298 in Annual Contract Value

Scale

Continuous Improvement

Market Understanding


ISG’s Global Insurance Practice At-a-Glance

Our service lines and competencies provide a comprehensive array of consulting skills, which are augmented with deep Insurance industry knowledge

Service Lines

Competencies

PERSONAL &COMMERCIAL:AUTO / MOTOR

PROPERTY

GENERAL LIABILITYUMBRELLA

WORKERS COMP

WHOLE TERM

ANNUITYUNIVERSAL

VARIABLELTC

A&HGROUP

Research

Data & Analytics

Strategy & Operations

Transaction Services

Managed Services

APPLICATION DEVELOPMEN

TAPPLICATION MAINTENANC

EEND USER

COMPUTINGINFRASTRUCT

URENETWORKS

InformationTechnology

SOCIAL

MOBILE

BIG DATA

CLOUD

DigitalCONTACT CENTER

FINANCE & ACCOUNTIN

GHUMAN

RESOURCESFACILITIES

PROCUREMENT

BusinessServicesNEW

BUSINESS / POLICY ISSUE

POLICY SERVICING

CLAIMS MGTBILLING &

COLLECTIONS

ANALYTICS

ACTUARIAL / UNDERWRITI

NGAGENCY /

DISTRIBUTION

INVESTMENTS /

RETIREMENTRISK /

COMPLIANCEProducts

P&C Life


Financial Services and Insurance Engagement Experience

ISG has a long track record in helping the world's leading Insurance companies meet the demands of increased agility, efficiency, compliance and client service

Engagements by Region

30Asia Pacific

113N America

75U.K. & Ireland

71S Europe

122DACH

29Other EMEA

97% of our engagements are with Repeat Clients

2Latin America

Insurance Advisors to large scale transformation: Assisted 13 of the 20 largest US

insurers (by premium) Largest Claims and Underwriting BPO

transaction in US history Supported Global Insurance

operations lift outs Program managed Global Datacenter

consolidation, transitions and transformations

221

3,579 Total Engagements for 363 Unique Clients

Engagements by Service Area

Inform Services 15

Assess Services 1,979

Design Services 180

Execute Services 618

Transactions* 464

Transformations 54

Transitions 87

Operate Services 250

Project Management Services 221

Governance Services 28

Consulting Services 537

*TCV of ISG Led Sourcing Contracts ($B) $85 B

% ISG Led Contracts Valued at > $50M 63%


Business & Customers

Demand

EndUsers

Products

Employees

External Customers

R&D

ServiceDelivery

Supply

Cloud Services(SaaS, PaaS,

IaaS)

Social Media & Collaboration

Traditional Services(IT & Business Process)

BPaaS

Automation

ISG understands Insurance Business Operations / Services

Whether your services are internally provided, outsourced, from an offshore captive (or three), shared services or all of these together, we know how to help you be efficient and save money.

Operational Excellence is our business.

Our clients ask:► How do I ensure my IT and Business services

meet the demand of my internal and external customers?

► How do I ensure my back office is efficient and the services are optimized?

► Is my organization delivering services competitively?

► How can I ensure that my service providers deliver the best services and integrate effectively with the rest of my organization?


Acquisitions and Partnerships enhance ISG Service Offerings

What applications are appropriate for cloud?How much do applications cost across public cloud providers?

What is the cost of my current environment?(applications and workload)

Is my consumption aligned with the industry? What am I consuming on premise and in the cloud?

How can I optimize my license agreements as we move towards more digital and cloud strategies?

►What are the trends in my industry?►What are my current costs and consumption?

►What can I move to the cloud?►What will it cost me?►And…..How do I measure what I get and get

what I’m paying for?

We have also acquired companies and formed partnerships to help our clients answer the following

ISG acquired Saugatuck which provides subscription research and research-based

consulting and event services focused on Cloud (in all of its forms - IaaS, PaaS, SaaS), Mobility, Social Computing, and Advanced Analytics,

among other key trends enabling the Boundary-free Enterprise.

Partners

www.isg-one.com

Information Services Group is a leading technology insights, market intelligence and advisory services company, serving more than 500 clients around the world to help them achieve operational excellence. ISG supports private and public sector organizations to transform and optimize their operational environments through research, benchmarking, consulting and managed services, with a focus on information technology, business process transformation, program management services and enterprise resource planning. Clients look to ISG for unique insights and innovative solutions for leveraging technology, the deepest data source in the industry, and more than five decades of experience of global leadership in information and advisory services. Based in Stamford, Conn., the company has more than 900 employees and operates in 21 countries.

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