The Trouble With Legacy Systems: An Insurance Executive's Challenges And Options

Based on aging development standards with limited functionality and usability, most insurers' legacy systems have been in place for decades with many in use since as early as the 1960s. Despite their limitations with green-screen interfaces and lacking the conveniences of modern applications—drop-down menus, instant help files, intuitive navigation, etc.—nearly 70 percent of corporate business systems today are legacy applications. In fact, many are still relied on to provide mission-critical business functionality. (1, "Legacy Modernization: Creating an Agile Enterprise")

Conversely, it takes a flexible, nimble organization with a good dose of forethought to compete in today's aggressive insurance landscape. Reliable technology that is scalable and integration-friendly for growth and change will dictate an insurance organization's success in this environment. Because legacy applications were built in a different time, often to serve a single purpose, and rarely meet the criteria necessary to help an organization for the long-term.

Still, some insurance firms—of varying size and location—are operating with legacy applications as their backbone. However, their successes are limited at best and at worst a downright liability. Problems with these legacy systems include:

• Many are band-aided together and guarantee business silos.
• Maintenance and staffing costs are high and growing.
• Compliance and regulatory concerns abound.
• Limited functionality limits innovation and growth.
• Purely data-driven architecture prohibits access to business content.