BPO hosting: Has the dark side finally been destroyed?

luke yodaWhen Luke Skywalker was being trained by Yoda did he ever think about Hosting vs BPO – well maybe he should have. Maybe there where bigger fish to fry than cutting his own Dad’s hand off, which felt a little cheesy.

So what are we talking about? Well, for years Carriers have sought a way not to spend multi-million dollars on infrastructure and to host or process outsource their core. Now if you have no CSR staff and do not wish to hire them, then process outsource was the only avenue, if you had CSRs but your enterprise infrastructure was poor you looked to a BPO to provide hosting. Breaking it down though, no BPO firm wants to host your policies, it is not in their business plan. Sure, they will but why do you think they will? Because their sales guy will constantly be trying to drip bleed you dry and move over to BPO “let us handle the excess claim volume next month”, “wow billing is such a simple area, we could take that off your hands and your valued staff could be moving into bigger things” – it is all the “camel’s nose under the tent” – you do not notice the nose and soon enough, the whole camel is in.

So where is this going, seeing as there are limited offerings… the world has changed and at last large Policy Admin vendors are looking to the Cloud. With harnessing new models in a way to offer their products the costing and security can seem great benefit, to the big and the small alike. Only last week I sat with a PAS vendor who took me through how they could, cost effectively, host several small carriers on one hosted instance, spreading the cost and achieving a way for everyone to access the latest and greatest software out there. Of course, people have laid claim to this before but no one has ever seemed to make it a realistic business model, until now.

The good news is, it is out there – finally we can see costing and hardware sizing where they should be — which is the best of what you want, when you need it. No longer do you need to size for your month-aversary and no longer does the end of year CPU crunch need to worry you…you can have the best of the Admin Systems and you can strap on power when you need it. I, for one, finally feel that really Insurance Admin in the Cloud is here and it is here to stay.

Admin vendors can worry about their product enhancements; Cloud providers focus solely on the security and fail over (they are the best at it after all); carriers can focus on customer service and product. Amen, we are all where we should be. And what about us integrators? Well that is simple, with any move like this comes a need to not only have your Cloud strategy in place but also the ideal time to review your Enterprise Architecture as a whole. PAS is just one thing, what about Office 365 in the Cloud? The list goes on and on – it is time to see if the Cloud has an avenue for your organization and time to stop letting others control your destiny. Cloud vs BPO hosting /services – a no brainer decision.

Beware What Lies Beyond the Valley of Despair

If you’ve implemented an ERP system in the last few decades, you have surely seen one of the many representations of the traditional ERP change management curve, with copious advice for avoiding, or reducing the depth of the Valley of Despair. The graph is somewhat misleading, in that it typically ends with a plateau or pinnacle of success, implying that your troubles are over as soon as you go live.

If only that were true.

A more comprehensive graph would look like this:

DESERT OF DIS

Notice the descent into what I will refer to as the Desert of Disillusionment, that awful place where every “productivity improvement” line item in your rosy ROI analysis (the one that you used to justify the project)  is revealed as a mirage.

Why does this happen, and does it have to be this way?  More importantly, what are the warning signs and how should you deal with them?  We will deal with specific topics in future posts, but for now, we invite you to take our short survey on diagnosing enterprise system impact on business productivity.

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