6 pitfalls to avoid when moving to an actuarial SaaS solution

Deciding whether to move to a Software-as-a-Service (SaaS) solution is a major decision facing businesses today. SaaS offers potentially enormous cost savings, reduced overheads and the opportunity to innovate.

The actuarial world is no exception. For example, IFRS 17 is challenging insurers and has forced many to investigate new systems to meet their evolving needs.

There are six key considerations when moving on-premises actuarial processes and systems to a SaaS solution.

1. One size does not fit all

When moving your strategic systems to an outsourced Software-as-a-Service (SaaS) solution, it is vital that the service provider fully understands your specific requirements as opposed to a generic set of requirements. The expectations of both parties must be clearly understood to avoid any ambiguities later in the project lifecycle.

2. Flexibility and scalability are key

A common objective of a database solution is to be the single source of truth for actuarial inputs and outputs, as well as a key integration point to finance. This has been particularly the case with IFRS 17 project implementations.

To achieve this, the design of the solution data model needs to meet your current requirements, but also be sufficiently flexible and scalable to accommodate assumed future requirements.

This is a key area where rework in the future can be costly, sometimes even resulting in a complete redevelopment of the data model.

Beware of generic data models being offered as quick routes to transformation projects. It’s much better to spend sufficient time validating the design through piloting and load-testing.

3. Interaction with the reporting process

Be sure to consider the implications of introducing a SaaS solution into your end-to-end reporting process:

  • Assess the impacts of transferring data to and from the SaaS solution, including security, automation and transfer times.
  • Consider the interaction of the SaaS solution link with your subsequent reporting process and on-premises Management Information (MI) processes. Deploying a Business Intelligence (BI) tool, e.g. Tableau or Power BI, into the SaaS environment means you are only able to build reports and dashboards on the data held within the SaaS environment. This excludes other data currently used in your MI processes, e.g. other input and output data in your reporting processes.

4. A good system needs good governance

Governance frameworks need to be expanded and/or created to deal with the introduction of SaaS:

  • The scaling of the production environment to increase capacity should be executed within a governance framework.
  • Current model development and release processes will need to be expanded or modified to incorporate all aspects of running on a SaaS environment.
  • Starters and leavers processes will need to incorporate the management of the SaaS user base.

5. Implementation is a marathon, not a sprint

The implementation project is likely to require several areas of development and testing, i.e. it will not be just an easy “lift-and-shift” of your current environment and processes:

  • Model development and testing will be required due to the change in the actual components involved as well as differences in version numbers of the SaaS solution compared to any on-premises solution.
  • Reporting spreadsheet development and testing will be required – this should not be underestimated as it is occasionally omitted from database solution implementation efforts, even though all Excel-based reports will need to be redeveloped as well.
  • If the solution includes the moving of input data preparation processes, these will need to be developed and tested.

6. The uniqueness of actuarial SaaS developments

The points outlined above can most likely be applied to many types of projects where on-premise solutions and processes are migrated to SaaS. There is, however, a key distinction that tends to make actuarial system and process developments unique.

Normally, a pure moving of on-premise solutions and processes to a SaaS solution involves some changes in processes and some adoption of new tools and components. In the case of moving actuarial solutions, the introduction of an actuarial database as part of the SaaS solution usually presents a dramatic change in the way in which actuarial users work and operate, in particularly with regards to control and flexibility within the world of Excel, files and folders.

While the data governance (and regulator-driven) ideal is to dramatically reduce the dependence on Excel, there is a fundamental shift in culture and approach required to achieve this with success.

MBE Consulting specialises in designing, migrating and implementing actuarial systems. To discuss your challenges and requirements for a SaaS actuarial solution contact us.

Christo Muller