Question

• You are the manager of a payroll system. Your company is going to replace the legacy payroll system with a more robust, Web-based version. Suggest two approaches that would minimize downtime and interruption to the payroll process. Provide specific examples to support your response. Propose a process for evaluating the success of the new system and a procedure for implementing software fixes and enhancements. Provide specific examples to support your response.

Answer 1

To succeed in the long term, each project
is associated with a compelling set of
business events or imperatives. Projects
as large as replacing a PAS require a strong
business case, socialization with key
stakeholders, and alignment to the overall
business strategy. Ultimately, business
and technology leaders will likely commit
significant financial and human capital to an
effort that could span several fiscal years
and may pledge multiples of the “business
as usual” budget in a single year. The stakes
are high if you fail—so why do it?
Our survey canvassed L&A providers to
learn more about the primary business
drivers for a PAS modernization (Figure
1). Forty-two of the nearly 60 survey
participants (71 percent) are in the process
of or have already completed performing
a PAS modernization. Clearly, this confirms
the focus on this business issue.
Those companies currently modernizing
were subsequently asked about the
influential business drivers impacting the
decision to begin the transformation. We
made the following observations based on
survey results for insurers selecting very or
extremely influential business driver..

There are two approaches that would minimize downtime and interruption to the payroll process direct conversion and parallel conversion. Direct conversion is terminating the old AIS and introducing the new. For example, terminating the old payroll system on Friday and introducing the new systemon Monday.

Most insurance executives will only get
one chance to complete a successful
modernization at their current
organizations. These projects are
professionally risky ventures due to the
perils of time and budget overruns.
Leadership is essential. A modernization
program is one of the highest risk projects
that an organization can undertake. A
typical modernization program impacts
many areas. First, consider the technology
components of the modernization,
including new applications, new data
integrations, data structures, and
potentially, policy conversions and
technical infrastructure changes associated
with improving web-based architectures.
The business is also significantly affected as
the functions and processing procedures
are altered. New organizational roles and
responsibilities may impact the people and
structure of the operation as they adjust to
the new ecosystem.
As mentioned, these programs may
take many years to complete. CST
failure rates can be among the highest of
all corporate initiatives. This program will
demand executive courage to approve,
manage, and lead.
To be effective, there are a few other best
practices to add to a project’s critical
success factors checklist:
• Build business case early: Develop a
realistic business case with complete costs
and benefits associated with the program.
Start the business case development early
in the vision and strategy development
process. Include key stakeholders in the
process and socialize the business case.
Be prepared for a marginal or even a
negative ROI initially. Continue to quantify
the risks/probabilities in financial terms in
an effort to provide a balanced analysis.
• Align executives: These programs are
transformational and the leadership
team needs the unwavering commitment
of all impacted parties. As most of these
programs are measured in years rather
than months, fatigue can set in, priorities
compete, or management restructuring
can sabotage an important initiative.
It is imperative to have the personal
commitment of leadership to bring these
projects to completion.
• Commit SMEs to project: Generally
a CST program will need to involve a
company’s most knowledgeable and
constrained resources. Subject matter
experts need to be able to focus
exclusively on the program. Back-fill day-
to-day activities with temporary resources
and new hire resources to allow the
A-Team to deliver this project. Don’t forget
rewards and recognition at milestone
deliveries (results) of the project team,
including partners and vendors.
• Assess realistic capabilities: Take
initial stock of the team. Be honest about
employee skills. Companies generally do
not get two attempts to do a CST right.
Engage with experienced professionals.
These projects won’t initially be staffed
without some incremental staff. Resist
the tendency to go it alone. Rather,
select partners and vendors carefully
in key value-added roles and take
advantage of their expertise and
experience.
• Establish strong program
governance: This recommendation
is predictable, but bears inclusion.
CST programs will usually take several
years. Developing robust standards
and a cadence for the program are
essential to drive decisions, enhance
communication, and create transparency
and trust among the project team and
stakeholders.
• Adopt, don’t adapt: There is often
an inclination to “repave the cow
path.” The short and long-term cost of
customization will introduce risk to CST
programs and the overall maintainability
of the solution. Whenever possible, stay
with the base system and adopt the
processes that come with it.
• Consider conversion alternatives:
For product categories that have had
limited sales and are not strategic to the
business, consider sourcing and sale as
an alternative to conversion. There are
many viable outsourcing alternatives for
managing the technical infrastructure,
applications, or the entire policy
servicing operation. Consider some of
the other approaches to conversion
as listed above. At worst, focus on the
bulk of the modernization and evaluate
options over time.