The London Market: Rising to the digital challenge
A new report from Cognizant makes interesting reading in light of the latest update on Lloyd's Blueprint Two roadmap.
If anyone needed reminding of the barriers that are strewn across the London Market’s digital transformation pathway, it came at the beginning of the month with Lloyd’s latest quarterly update on its Blueprint Two roadmap.
The scoresheet of milestones delivered made depressing reading: just one was hit – on continuous contracts – but two others were postponed and one dropped altogether. Clearly, there is a need to take a step back and ask some serious questions about the nature of these barriers and the actions that are required to remove them.
A recent research report from global technology consultancy Cognizant provides fresh insight into the challenges faced by London Market firms that have embarked on this transformative journey, and points the way towards the actions needed if they are to succeed in reaching their destination. It makes clear that the solutions required will have to be bold if they are to achieve their ambition to deliver a lasting step-change in the industry.
One of the most telling findings of the research in their report, titled Overcoming the barriers to digital transformation in the London Market, is that 92% of the senior decision makers surveyed believe the biggest barrier to change is an inability to define the benefits of it, and develop a clear vision of what they look like.
This failure to articulate the benefits handicaps the entire process from the outset. Often, it goes hand-in-hand with a lack of vision around the strategic benefits of change, which are often as much about re-engineering embedded processes as imposing a technology solution on accepted norms of how business is done in the London Market. There are strong examples emerging in Blueprint Two of how this reassessment of process can drive change and deliver benefits. The Faster Claims Payment for delegated authority businesses, for example, which enables claims payments to be made in minutes once authorised, replaces a cumbersome multi-stage process. It is also an example of the sort of quick win that is essential to secure buy-in to transformative projects.
Too often, the end point of transformative projects seems distant, exacerbating the problem of defining the benefits. By identifying and delivering easy wins, firms can answer the “what’s in it for me” scepticism often found among staff who feel more is being asked of them for little obvious benefit. The challenge is to make people feel more valuable to a business by harnessing data and the power of artificial intelligence to take advantage of their deeper knowledge. Put simply, “it is asking the London Market to step away from a way of working that demands it eyeballs every risk, to focus on deeper analysis of those risks that potentially add significant value to the business,” says Matt Jarman, the Cognizant client partner who led the research.
Jarman says the “closed loop” of IT vendors is another major barrier identified by the research. Asked about the most important factors in selecting a third-party provider, 71% of respondents placed London Market experience at the top, with 49% citing “demonstrable experience of having delivered a comparative solution” as the next most important factor, ahead of flexibility and innovation.
The unique complexity of the London Market cannot be ignored but the need to bring in fresh thinking alongside market knowledge is essential. Voices around the table that ask why a particular process is structured the way it is, or even whether it is needed at all, are just as important as those that bring a ready understanding of the London Market. The way forward highlighted by this report is by building partnerships that blend both perspectives and, at the same time, win the hearts and minds of the employees that have to deliver the solutions.
Picking the right vendor is obviously crucial and the report highlights a disturbing level of dissatisfaction across the market with IT vendors. Frequently, the relationship falters because of poor expectation management, which suggests that many vendor/client relationships never develop a genuine partnership with shared vision and goals.
An Unstructured Approach
With the rapid advances being made in data management and analytics, Jarman says there has never been a more opportune moment to undertake a thorough review of processes. “The ability to ingest unstructured data opens up a new world of opportunity if firms understand how to apply this to their processes, especially when it comes to assessing risk and opportunity”.
The ability to ingest unstructured data opens up a new world of opportunity if firms understand how to apply this to their processes
Take these research findings together, and they point to the key decisions that need to be taken at the outset if genuine strategic transformation is going to be delivered effectively.
To conquer the digital challenge, absolute clarity of objectives with clear measures of success – including those vital early wins – is essential. Alongside this, ensuring a blend of market expertise and innovative – even challenging – thinking that moulds into a genuine partnership is key. Of course, technical capability and capacity cannot be overlooked. It is not just about turning to those who talk a good game: it is about ensuring they can deliver so that expectations never outstrip reality.
Finally, the need for a neat cultural fit must not be overlooked. This brings into focus internal management, especially the need to secure employee buy-in by defining the benefits change will bring for them, enhancing the value of their expertise. It is a clear message from the research that those at the operational coalface are essential to building that productive, innovative and dynamic partnership that will enable, rather than inhibit, successful transformation.