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Quantifying ROI from Insurance Mobility Initiatives


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By conducting a precision gap analysis and applying frameworks that emphasize user needs and behaviors, carriers can deploy mobile applications that delivery healthy monetary returns and competitive advantage.

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Quantifying ROI from Insurance Mobility Initiatives

  1. 1. • Cognizant 20-20 InsightsQuantifying ROI fromInsurance Mobility InitiativesBy conducting a precision gap analysis and applying frameworksthat emphasize user needs and behaviors, carriers can deploymobile applications that deliver healthy monetary returns andcompetitive advantage. Executive Summary since 2004. However, the devices and capabilities Let’s face it; as an industry analyst recently that are available today have vastly improved, said to a conference audience, “Mobility is here given the technology and connectivity now for the rest of your career.” For sure, mobility available. On the heels of such advancements, has a strong business case in the insurance insurers’ current mobility enablement initiatives industry (life and general), where it can help cut across the entire insurance value chain, from to improve overall productivity, contributing sales to claims, benefiting different stakeholder to both increased revenues and reduced costs. groups and leveraging various platforms and Quantifying the ROI of mobile initiatives, while devices. But when compared with other industries, perhaps challenging in many cases, is certainly such as banking or retail, insurers have traditionally possible and can help companies avoid the followed more than led. This is due, at least in inertia of deploying mobile solutions. part, to a lack of understanding of how mobility This white paper looks at the mobility initiatives can best be used within the business and how it insurers should prioritize, as well as how to can generate a positive ROI. perform a gap analysis and then build a strategy When looking at what insurers have accomplished to bridge those gaps. Furthermore, it explores with mobility over the past five years, the various frameworks for evaluating the costs trends are clear: and benefits of such endeavors to facilitate decisions on deploying mobility solutions. • Mobile technologies are still ”cutting - edge/ emerging” vs. ”operational” for insurance Based on the authors’ experiences, insurers companies. can expect to achieve an ROI of between 3% and 10% purely from mobility initiatives. • Most initiatives have been very basic in nature, such as a simple mobile site or mobile app Insurance Mobility Initiatives (i.e., an insurance calculator). Insurance companies are surely no strangers to mobility initiatives. In fact, they have been • The focus has been on creating a mobile presence vs. leveraging mobility as a viable enabling their field sales force with mobile devices revenue -generating channel. cognizant 20-20 insights | november 2012
  2. 2. The Dilemma: Whether to Mobilize initiative. These questions can help answer whether such an investment is being appliedIn conversations with numerous insurance CXOs, toward a fad or a proposition that will be usefulseveral questions invariably arise: to the business, if not even a competitive• We hear a lot of buzz around mobility, but “ advantage of sorts. is this just another bubble?” Where Do You Stand?• Why ” should my company undertake a Making the decision to go mobile is an important mobile initiative?” step. The next step is understanding how to• What will the true benefits of mobility be?” “ bridge the gap between where you are today• How much investment would a mobile “ and where you need to be, as well as clearly initiative require?” understanding where the market is heading. Our mobility maturity framework (depicted in• How do we accurately quantify the return ” Figure 1) is useful to any organization at any on such an investment, considering that stage of its mobility journey to take stock of there aren’t many precedents?” its progress relative to the competitionFor sure, these questions are valid, since there or general a very real investment required by a mobilityMobility Maturity Framework MATURITY/CAPABILITY Laggards Starters Regulars Leaders (PARAMETERS) Roles enabled for mobility Customer functionality availability GAPS Agent functionality availability Products range Claims Ease of use of application GAPS functionality Mobile initiative/brand Mobile 2.0 ready CURRENT STATE TO - BE STATE (OR STAGE OF TOP COMPETITOR)Figure 1This framework can be modified for different based on either where the insurer wants to becapability parameters that can then be used or the level reached by another insurer thatto assess the existing state of an insurer’s is considered a leader in mobility maturity. The parameters should be • he gaps that need to be bridged to reach Tdefined based on the specific capabilities being the to-be state.considered for mobile enablement. Bridging the Gap: Business andThe framework provides a clear understanding Technology Roadmapof the following: To bridge the gap, it is imperative to design a• he T current state of an insurer’s mobility roadmap that ensures a seamless deployment of enablement and a depiction of where the the mobility solutions. The strategy and steps for company wishes to be. The “to -be” state can be bridging this gap are depicted in Figure 2. cognizant 20-20 insights 2
  3. 3. Business and Technology Roadmap Create business Deploy in waves so Choose the tech- roadmap by users have ample nology approach understanding Analyze time to become Focus on the by combining business func- the benefits, familiar with user each user type tionality by user costs, ROI new capabilities, with its function- types by mobile thereby maximiz- ality needs technologies ing adoption Figure 2 Focus on the User Carriers, in both the life and general insurance easily developed. These use cases can then industries, are not paying enough attention to act as inputs for the technical team, which can the most obvious question of, ”Who is the target decide the best technology to adopt. user?” We believe this is the primary question Create the Business Roadmap to answer before addressing any other concern. The business roadmap combines the user types A user- centric approach to mobility aligns with their functionality requirements. It should possible areas of focus with different user also provide a view of how to time deployment populations. The user - centric approach offers for specific user groups, which can be addressed three benefits: in the form of implementation “waves.” 1. brings focus to the mobile strategy, as the It insurer can focus on the key users who will Figure 3 provides a sample view of functionality benefit from mobility. by user category and the different waves of mobile implementation enabling this functionality. It is 2. helps identify the key focus areas and pain It imperative for insurers to identify the right set points for each type of user. of functionality that they want for each user 3. y segmenting users and focus areas, use B group, since this will determine the technology cases for required functionality can be more approach, effort and costs.A User -Centric ApproachFOCUS ON UTILITY, FOCUS ON DISCOVERYPRODUCTIVITY AND AND INFORMATIONEXPERIENCE Driving self-service by furnishing:Functionality-intensive apps for: Agents Customers • Product information • Illustration and quotes • Account information • Sales support • Company and agent information • Client information • Calculators • Compensation campaigns Employees FOCUS ON EXPERIENCE AND PRODUCTIVITY • “ unday night/Monday S morning” experience • eamless integration S with back-end systems • Lower asset management costs • Market intelligenceFigure 3 cognizant 20-20 insights 3
  4. 4. Implementation Waves WAVE 1 WAVE 2 WAVE 3 • Product information and brochures • Information gathering AGENT • Need analysis and illustrations SERVICES • Quotation • Application submission • Lead and prospect management • Training: news and updates, info snippets • Interactive training (including videos) • Branding and campaign management AGENT • Commissions TOOLS • Notifications • Customer management: app status, new business reports • Customer management: reminders, policy inquiry, claims • Self service • Product information and brochures (interactive) • Agent/office locator CUSTOMER • Branding, games / educational SERVICE • Financial calculators • Quick quote • Notifications- reminders • Underwriting approval • Agent business level INTERNAL • Application status USERS • Notifications-reminders • Business dashboardFigure 4Choose the Technology Approach Microsoft is also making a strong statement with Windows 7 and 8 devices, which weChoosing the technology approach can be believe will be a force to consider in 2013.challenging for senior management, as all thehype in the industry around apps and Web sites Here, the segmentation of users would assistmakes it is easy to adopt a strategy that might in deciding the target platform. The rule ofnot be sustainable in the fast-changing mobile thumb is that, if it is a consumer-facing app,landscape. Several questions need to be addressed the strategy adopted should support allbefore arriving at the best possible approach: current and future platforms. However, if the devices are under the control of the• App or Web site: The choice between app or company (i.e., company-issued tablets), then Web site is clearly one of end-user experience specific platforms can be targeted. From our vs. cost of maintenance. While HTML5 Web experience, most insurance companies have sites are certainly improving, the architecture adopted the BYOD (bring your own device) of a Web site today makes it challenging approach, especially for agents, which reduces to replicate the experience of a native app. asset management costs but also means that However, HTML5 Web sites are clearly maximum coverage needs to be provided, the easiest to maintain, since the target and the platform should be market-driven platform is no longer important. From our vs. company-driven. experience, it is typical to use different approaches for different users, with the • arget user group: The last decision that T ultimate goal being user satisfaction and, needs to be made is the order in which user hence, higher adoption rates. groups are targeted.• arget platform: Many customers’ first choice T Once these decisions are made, the choice of platform is iOS (both iPhone and iPad). of technology approach becomes fairly However, Android is a strong contender, straightforward. Since mobility has been driven considering its increased adoption, its by consumers, who are accustomed to easy- ongoing evolution and the number of to-use interfaces, fast response and stable device makers supporting it and its growth platforms, it is very important that the technology in developing markets in China and India. approach delivers on these expectations while cognizant 20-20 insights 4
  5. 5. optimizing the costs of maintaining the technology base (including multiple user groups) whileinfrastructure. providing relevant priorities. In addition to theTo achieve this with currently available technology, traditional strategy of choosing one dominanteconomy of scale becomes important. The winner platform, three other approaches should bewill be the technology that can cover the broadest considered (see Figure 5).Approach to Mobile Technology Platform OPTION 1 OPTION 2 OPTION 3 Native mobile apps for dominant platform, Set up MEAP platform for the region, as a whole HTML5 and hybrid apps mobile Web for the rest of the platforms Target dominant platform with native app. Mobile middleware allows one code base to be Lower cost than native and MEAP. mantained, while deploying to multiple platforms. - ddresses needs of primary audience A Emerging technology with maximum with the best user experience. Provide adapters/connectors to integrate to device coverage among smartphones. back-end EIS. - everages HTML5/mobile Web L Hybrid platforms and pure HTML5 offer for all other platforms. Multiple options for development applications flexibility for development. (HTML5/native/hybrid/mobile Web/desktop). - llows broadest reach to support users A Open source avoids vendor lock-in optionPROS of nondominant platforms. Standard provisions for implementation compo- for integration with native libraries and nents, including security. HTML5 code base. Multilanguage and multidevice support (includ- Provides for caching of data using built-in ing feature phones). 5Qlite engine. SLAs offer future-proofing benefits. HTML5 tags and device access APIs now allow tapping into hardware functionality, and hybrid Flexibility for choice of applications and devices allows deployment as native on app stores. for deployment. Higher development and management High licensing and/or maintenance costs Developing technology, early-stage. costs over time. (competition putting downward pressure on Not suited for sensitive and secure these costs). Constant catching up with the market. application development.CONS Possible vendor lock-in (some MEAP vendors Worse user experience for HTML5/mobile Experience of a true native app lost; not as fast. allow easier switching). Web user, including limited offline capabili- Limited device coverage (doesn’t extend to feature ties. phones), which could negatively impact some target markets.Figure 5Understanding Mobility ROI“How will the mobile initiative benefit the Benefits from mobile initiatives: Quantifyingcompany?” “How do we quantify the return on benefits from mobile initiatives must start withsuch an investment, considering that there aren’t the business functionality that the insurer hasmany precedents?” Insurers often ask such defined in its mobile business roadmap. Thequestions when planning their mobile initiatives. basic idea is to quantify the benefits arising fromAnd the answers have not been forthcoming. implementing this functionality. For quantifyingOne mobility pioneer has stated it is not even benefits, a step-wise approach should be utilizedlooking at quantifying ROI at this stage. for best results (see Figure 6).There are two parts to the mobility ROI process:benefits and costs.Step-Wise Approach to ROI from Mobility Initiatives Step 1 Step 2 Step 3 Step 4 Step 5 List Functionality Identify Quantitative Identify Contributing Big Picture Benefits Parameterization and Benefits Benefits Qualitative Benefits Of Benefits Key step: every quantita- List all the functionality From this list of benefits, For each quantitative ben- Consolidate the quantita- tive benefit that is being planned as identify quantitative ben- efit, identify the qualitative tive benefits must have a formula to part of the roadmap. efits (i.e., reduce data entry benefits to see the big picture compute how the benefit effort, increase number of that contribute to it or the main benefits that is achieved. List benefits that can customer visits). and arrange into will exist for any insurer, be gained from implement- Each parameter in that a tree structure. (i.e., increase revenue, ing the above functionality At this stage, do quantitative formula reduce cost). on mobile (i.e., benefit not look at the big picture Connect the functionality should ideally be backed levers). -- focus on the immediate to the benefits to draw a This is what the insurer by actual studies con- benefits. line of “benefit” for each is working toward. ducted by the insurer or be type of “benefit” function- based on some empirical ality planned. precedent, to ensure credibility.Figure 6 cognizant 20-20 insights 5
  6. 6. Benefits Framework Benefits Benefit Levers Functionality Quantitative Benefits Levers Qualitative Benefits Levers Increased customer facing time 1. Lead management Increase customer Agent Services visits (improved Gain Intelligence from lost deals 2. Product info and brochures scheduling Information at finger tips to agent 3. Information gathering and planning) Increase agent ............. 4. Application and submission productivity 5. ……………… Increase Increase prospect ............. 6. ……………… Revenue conversion by Reduced turnaround time agents Faster quoting capability 1. ……………… Agent Services Reduce ............. 2. ……………… 3. ……………… Faster response to agent queries 4. ……………… Reduce ............. 5. ……………… ............. Reduce operations 1. ……………… Customer Services cost Higher customer satisfaction 2. ……………… Reduce cost of... ............. 3. ……………… Reduce Costs ............. 4. ……………… 5. ……………… Keeping the customer engaged 6. ……………… Reduce cost of... Reduce cost Increase customer loyalty of claims Easy access of info to customer 1. FNOL for customer and status Adjustor 2. Adjustor notification Reduction Faster claims processing and response 3. Data of risk and loss details in claims Easy access of info to customer 4. rocessing on field data P expenses by... Enhance efficiency of claims processing and sending to back officeFigure 7The benefits framework in Figure 7 provides a the impact of the investment.sample view of quantitative analysis that can Costs for mobile initiatives: We have developed abe performed for an insurer based on the step- framework to analyze the costs of implementingwise approach. It can be expanded for additional a mobility solution. Such a framework consists ofbenefits that align with the insurer’s value chain. three primary components: Licensing, developmentFor any insurer looking to create a business case and hardware (see Figure 8).for mobility, this framework can help maximizeCost-Analysis Framework Cap - Ex Licenses Op - Ex One - time (Cap - Ex) Cost Development Maintenance (Op - Ex) On - premise Hardware HostedFigure 8 cognizant 20-20 insights 6
  7. 7. From our observations, the bulk of the costs mobile implementation due to adaptabilitywould be incurred in the first year (license costs, levels of the channel/customers/employeesdevelopment of key functionality), while ongoing to mobility. Relevant assumptions will needmaintenance costs (based on onboarding of to be made for staggering the expectedadditional users and functionality) could be benefits, keeping in mind the variables ofadjusted depending on the company’s preference. business growth, market growth and expectedLicensing and development costs could be benefits for the year (i.e., all agents might notsignificantly high depending on the chosen start using mobile functions in the first year).approach; adopting MEAP (mobile enterprise • Some benefits might end after the initialapplication platform), for example, requires a period (i.e., even though agents might enter”per user, per year” cost, which could make all details for the quotes, quality assurancemobility a hard choice. Hence this component must still be performed, plus some amount ofmust be carefully considered before making a data entry since not all agents will go mobile).choice. In order to control this, we encourage In this case, expected benefits associated withcompanies to consider propositions that effort reduction for data entry might remainconvert the high up-front Cap - Ex to a per- stable after an initial period.user-per-month Op - Ex cost. Costs usually kick in over a period of time, asMost of the key functionality should be imple- more users come on board. Such a phasedmented and targeted at the user populations approach is recommended, since the pace ofmost likely to adopt it; this ensures that future the roll-out would depend on the maturity ofadoption rates are guaranteed and that the users in the target geography.ROI can be fully realized. In order to manage A simple break-even calculation or net presentcosts further, companies must consider value method could be used to compute thesourcing development and exploring hosted expected payback period and assess comfortsolutions. From our experience, organizations levels for investment. From the authors’that experimented with such approaches, experience, at least two scenarios, pessimisticespecially in the early days of mobile initiatives, and realistic, must be considered in order toreaped significant benefits. arrive at a meaningful analysis. CompaniesThe Cost-Benefit Analysis: have often relied on pessimistic estimatesKey Considerations to phase investments over several years and keep pace with the changing landscape.Analyzing mobility implementations is a challen-ging exercise but one that can be very Conclusionuseful for senior management to consider. Quantifying mobile ROI for insurers is an essentialUsing the benefits and cost frameworks provided requirement for justifying mobility investmentsabove, insurers can ascertain expected costs and benefits. Even though there is little precedentand benefits of implementation and then use any for quantified benefits and ROI, insurers can useof the conventional methods for conducting the what data exists and — more importantly — theircost-benefit analysis. Key considerations during own understanding of their business to realizethis exercise include: the simple benefits that can result from doing• The understanding that many of the benefits things differently; in this case, bringing mobility might not accrue in the first year of the to the enterprise. cognizant 20-20 insights 7
  8. 8. About the AuthorsPartha Panda is a Principal Consultant with Cognizant’s Insurance Business Unit. He has 13 years of experiencein insurance and risk management and has held line responsibilities in underwriting, claims, customer services,operations and other aspects of direct insurance operations. Partha has program management and consultingexperience, with a focus on providing IT enablement and transformation, working with insurance clients globally,across the value chain. Partha has been published in insurance journals and has been a guest speaker on insurancetopics at conferences. He can be reached at Venkatasubramanian leads Cognizant’s Mobility Solution Practice for Asia - P acific, advising and helpingcustomers with their mobile strategies. Following a six-year stay in the U.S., he gained experience in the Asia-Pacificregion through stints in China, Hong Kong and Singapore over the last five years. During this period, he helpednumerous clients with multichannel commerce and marketing strategies. Vinod has an engineering degree andan MBA from HKUST-School of Management, a premier business school focusing on Asia.He can be reached at CognizantCognizant (NASDAQ: CTSH) is a leading provider of information technology, consulting, and business process out-sourcing services, dedicated to helping the world’s leading companies build stronger businesses. Headquarteredin Teaneck, New Jersey (U.S.), Cognizant combines a passion for client satisfaction, technology innovation, deepindustry and business process expertise, and a global, collaborative workforce that embodies the future of work.With over 50 delivery centers worldwide and approximately 145,200 employees as of June 30, 2012, Cognizant is amember of the NASDAQ-100, the SP 500, the Forbes Global 2000, and the Fortune 500 and is ranked among thetop performing and fastest growing companies in the world.Visit us online at for more information. World Headquarters European Headquarters India Operations Headquarters 500 Frank W. Burr Blvd. 1 Kingdom Street #5/535, Old Mahabalipuram Road Teaneck, NJ 07666 USA Paddington Central Okkiyam Pettai, Thoraipakkam Phone: +1 201 801 0233 London W2 6BD Chennai, 600 096 India Fax: +1 201 801 0243 Phone: +44 (0) 207 297 7600 Phone: +91 (0) 44 4209 6000 Toll Free: +1 888 937 3277 Fax: +44 (0) 207 121 0102 Fax: +91 (0) 44 4209 6060 Email: Email: Email:©­­ Copyright 2012, Cognizant. All rights reserved. No part of this document may be reproduced, stored in a retrieval system, transmitted in any form or by anymeans, electronic, mechanical, photocopying, recording, or otherwise, without the express written permission from Cognizant. The information contained herein issubject to change without notice. All other trademarks mentioned herein are the property of their respective owners.