Claims Outsourcing Strategy – Managing a Smooth and Seamless Transition

Part 2

In Part 1, we focused on creating the core structural foundation of a Claims Outsourcing Strategy:

  • gathering the business and technical requirements
  • creating a detailed Request For Proposal (“RFP”)
  • selecting the correct claims outsourcing vendor
  • contract negotiations

In Part 2, we will concentrate on the development, testing and conversion that take place between both companies, identifying some of the pitfalls that can be avoided during this stage.  In Part 3, we will wrap up with a focus on maintaining a strong, healthy partnership.

Development Phase

 Prior to the development phase you should ask yourself as well as your staff the following question:

“What is the best strategic approach that both companies should utilize to obtain optimal success during the development phase?”

Without a key strategy agreed upon by you and your vendor, many unforeseen obstacles will soon be on your door step, obstacles that you’ll need to juggle and resolve. 

One pitfall many organizations fail to identify prior to the start of the development phase is the common “siloed development approach”. Your company works against a set of functional and process requirements specific to your own system to support the outsourcing project.  Your vendor works against another set of functional and process requirements specific to their system.  There is no known intersection of the functional or process requirements between the two companies. By no means is this ever considered the correct strategic approach to take.



By strategically working together prior to the development phase, both organizations will find the intersection or “Joint Functional and Process Requirements”, so all three pieces of the puzzle can come together and be managed accordingly.  If you skip these requirements, the puzzle is not complete and managing this process will become a nightmare.

Testing Phase

As with the development phase, a joint strategic approach for testing should be developed and agreed upon prior to testing beginning.  Many organizations fall into one of the biggest known pitfalls – unclear definition of the different phases of testing.  Ask your IT and Business staff as well as your vendor this question:

“What is considered unit testing, system testing, User Acceptance Testing (“UAT”) and Integration testing?”

I promise you this, you will not receive a unified answer from your staff or vendor as to what each phase represents.  Clearly identify in a Testing Strategy Plan what each phase’s primary purpose is, who is responsible for executing the phase within and between both companies, and what is the measurement of success for each phase.

Without a doubt you can utilize the integration concept from the development phase in the testing phase.  Developing test plans to support this process should include resources from both organizations.  Agreement on what is to be tested and who should test will lead to the optimal testing results.  This joint planning should take place early on so that both companies know what is expected of them during this joint testing effort, and have their resources allocated when it come time to start.

Conversion Planning/Execution

Conversion is one area we consistently see that both companies have not spent the quality of time or effort needed to succeed in their conversion efforts.  Conversion of data and files to and from both companies is equally as important as the development and testing efforts.  Yet most companies will spend less time understanding the data and files needed in order to make the transition and outsourcing arrangement successful.

Time and effort must be allocated to analyze and enhance the data to support the outsourcing initiative.  This includes putting a team in place to focus on:

  1. Identifying and measuring the data in your systems(s) today — determine the quality of the data or the lack thereof.
  2. Identifying a set of data quality rules and targets that must be met prior to the conversion of the data.
  3. Designing and implementing data quality improvements processes where needed, that make the data ready for the conversion.

If the correct analysis and time is not spent upfront to understand the data, files, and conversion planning, the project will come to a screeching halt. Prevent this by investing in a detailed Data and Data Quality Assessment.  Figure 1 below depicts at a high level the data process life cycle that companies must take in order to understand, scrub and enhance their data in preparation for a successful conversion to the vendor system(s).


Figure 1

One thought on “Claims Outsourcing Strategy – Managing a Smooth and Seamless Transition

  1. Pingback: Claims Outsourcing Strategy – Managing a Smooth and Seamless Transition « Edgewater Technology Weblog

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