The document discusses the critical decision-making process for insurance companies regarding whether to build custom software solutions or purchase off-the-shelf products. It emphasizes the pros and cons of each approach, highlighting factors such as cost, maintenance, speed-to-market, and the ability to adapt and scale. Ultimately, it suggests that opting to buy often leads to better outcomes, with proven software solutions offering faster implementation and more robust functionalities.

1. Finance :: Insurance Software Solutions - Build or Buy
Companies that want to be successful need to develop, grow, and manage their business effectively-yet
to successfully accomplish this, today's insurers need to recognize industry trends and optimize
them.
DEVELOPMENT TIME
Build: Business need to factor in the multitude of required meetings necessary to plan, discuss,
design, execute proof-of-concept, and maintain continual development. A policy administration
solution can be particularly tough to estimate the total investment; you have to include the cost of
the resources involved in environment & software development, including :
o Requirements gathering
o Infrastructure construction
o Analyzing
o Designing
o Implementation
o Testing
o Training users
o Ongoing maintenance/enhancements/updates of the software
Buy: Purchasing an insurance solution suit or policy administration software is often more cost
efficient, as it eliminated many of the costs involved in architecture design and development,
however there are still licensing fees subscription costs, particularly with Software-as-a-Service
(SaaS) model. Even though a custom-built application may seem to offer
control and flexibility, build-your-own-software can lock your company into a less than
optimal solution.
Buy: Solution vendors have the benefit of having invested their time, money and resources into
perfecting solid software that they can tailor to fit your needs. Other compelling items to consider
when trying to decide whether to build or buy include:
o Vendor solutions for policy administration applications have the capability to leverage reusable
components.
o Purchased software can often be easier/quicker integration with third-party technologies.
o Reliability has been tested and proven.

2. o Purchased software should be scalable, future-proof, and able to handle fluctuations in user
demand, providing the ability to grow with your business. Additionally, SaaS solutions also have the
added advantage of rolling out new releases, quickly and efficiently without the need to train
additional resources or invest time into programming and development. After all, the repercussions
of a software choice can be long lasting and affect all your business systems and processes.
Many businesses assume that building their own in-house software is an easier route; especially
considering that it would be customized for their organization. Since it is developed and maintained
by in-house staff, you have total control over the software, changes, updates and overall design.
Proven software solutions should have an agile development methodology, which would allow for a
continuously enhanced platform, and ensure that custom feature requests can be folded into the
base application. While this is an often overlooked benefit, it can be a key factor, as having the
ability to stay modern is a critical element for business. Budgets can change based on economical
factors, and so can moods, minds, and development criteria. However they often overlook the fact
that a tailored solution could result in increased costs, including the addition or enlargement of IT
teams and of front-end time by employees. Subscription or pay-as-you-go models can minimize risk,
as a business can roll in applications based on need. Any software investment should yield positive
results, whether they address complex system challenges by streamlining operations, reduce costs,
leverage new market opportunities, or as with some vendors, a unique combination of all. However,
when software is developed in-house, there are added costs involved for development, testing and
design, especially in order to keep software from becoming dated or obsolete. However, in today's
uncertain marketplace and rapidly advancing technology environment, innovation can be a risk. A
common perception when developing in-house software is that users will not expect as much from it
as a purchased software package, that they will be more forgiving of its shortcomings. Each of these
stages can take months or even years before you're ready for launch, which can be further
complicated by system defects, flaws, and revisions. Additionally specific software development
tools, training and staff time must also be included in estimates.
Buy: Speed-to-Market is a term that has been abundantly utilized, as insurers recognize the
importance of rapid response, fast turnaround and the downside of development time. Like many
business marketplaces, the P & C industry is an extremely competitive one. Additionally, when
opting to buy a solution, you want to ensure that expansion costs are considered -as adaptability of
the product is a key advantage especially for expanding distribution channels and/or leveraging new
market opportunities. Gone are the days when one dimensional insurance portals are packaged and
sold, with rigid tactical application for submission and limited data capture.
SOFTWARE MAINTENANCE
Build: Anyone who has an iPhone or who has ever logged into Windows is probably familiar with the
message indicating software updates are available and to install. Not to mention ongoing
maintenance of the policy administration system, unsupported by an external company, as well as
the costs for system developers necessary to help construct and implement such infrastructure.
Vendors often include a setup or installation fee, which in some cases may also include a
maintenance package or service plan. if your programmers have fast fingers, your data can be
captured and coded quickly, however no matter how speedy your developers are, there is no rushing
quality.
Buy: When you purchase policy administration software, updates and maintenance are the
responsibility of the vendor, as opposed to in-house staff. Requirements gathering, writing and
testing the application code, user training and acceptance, hardware/software coordination and
testing systems, comprises only a portion of the time necessary to developing a customized system.

3. There are however, considerable challenges too, as vendors may tout a rapid deployment, however if
there are complications in a build, or they fail to adhere to company's business requirements,
inevitable delays can turn costly. As most Legacy system users learned (the hard way) if your system
is not future-proof, than technology will continue to evolve, regardless of whether your business can.
But in reality, users demand as much, if not more, from software developed in-house. Businesses are
often misled on the upfront expenses of an in-house build, as it is nearly impossible to estimate all of
the modifications that are sometimes overlooked during the initial design.
In an effort to assist insurers with the decision about whether building or buying an insurance
software solution is best for your company, we've complied a small comparative to consider
regarding the differences between "buy" and "build."
UPFRONT COSTS
Build: It can be difficult when factoring in upfront costs, to build a custom insurance software
solution, because initial investment in hardware as well as software may be required. Vendors can
now focus on increasing acceleration, value, and innovation, so when a business chooses their
system, the software arrives with already proven performance quality.
OTHER FACTORS
Build: The reality with most businesses, particularly insurers, is anything can happen. There are a
myriad of other factors that businesses must consider when building their own solution, like: Do our
business and IT Strategies align ? Is our solution adaptable, responsive, and future-proof? Is our
design scalable ? Can it cater to the businesses growth and expansion into new markets ? What if
the developer(s)who build our in-house system are heading out the door? What resources should we
be willing to sacrifice if we maximize our budget but encounter unexpected issues ? How do we
accommodate for an unsuccessful implementation ? When and how can we measure growth, return
on investment (ROI) and true speed-to-market ?
Buy: SaaS solutions, particularly those with a
scalable suite of insurance processing
applications that handle core functionality,
have measurable benefits, including faster time
to value, minimized operational costs, and
simplified integration. It can takes years of
development and maintenance--not to mention
a quite a lot time and money before the system
meets the requirements that guided its
development and design, works as expected,
and can be implemented with those same
characteristics. There are no guarantees that could bridge the gap between an in house system's
capabilities and the actual implemented system, which those who have encountered this dilemma
know, can often become exceedingly significant.
In conclusion, ultimately, there will be additional underlying aspects, many unique to your business's
current and expected demands which should also be explored, but in summary, as indicated by
recent analyst and industry reports, organizations who opt to build often fall short of their
expectations when choosing to build their own software, versus buying a system.

4. . Being adept at implementations, especially those that are scaled to fit any size insurer, as well as
having exceptional experience in software development, maintenance and systems integration, is
also a key factor when opting to buy. Regular release updates not only improve functionality, but
also to eliminate flaws. Not only that, users often think that because the developers are in-house and
accessible, they can request customizations and changes whenever they want, which is obviously not
an efficient way to manage expectations. Other typical costs to factor in include on-site requirements
gathering and training, as well as any travel expenses which are often involved. Now solutions are
being honed to fit the growing demands and ever changing imperatives of business.
SOFTWARE MATURITY
Build: Like a fine wine, good software often needs time to age, or rather mature. Proven vendors
often have honed their experience in an effort to provide the most effective and efficient
development and testing methodologies, thereby allowing businesses to focus on adapting to a new
system. And while insurers are familiar with risks- most have built their business around identifying,
analyzing, managing, and insulating against them, deciding on which trends to follow and what
opportunities to leverage, is a critical decision.
With the advances in technology and the constant fluctuations in identifying risk factors, now more
than ever, it is important to have a system that can deliver instant access, along with the ability to
respond and manage your exposure. Of course, this situation could be prevented/controlled with a
careful management process. A system with true multi-tenant architecture will enable every client to
benefit from system enhancements. In order for a system to remain innovative, it must remain
current and effective. Software developed in-house is especially taxing, on both the builders and the
testers, as there are always 'bugs' to squash and faults to find. Yet when it comes to modernizing
your operation, to maximize efficiencies of business processes, businesses often face the choice of
whether to build or buy the software. Like any careful insurers, it is imperative to weigh the factors
and consequences carefully. When you buy an insurance software solution, true speed-to-market is
easier to achieve with a competent product that can be ready to launch, and it only requires an
investment in time for user training