We’ve seen it many times before: Pension organizations like yours get to a fork in the road where you need to decide whether to rewrite the code of your current system, upgrade with a commercial off-the-shelf vendor, or modernize to a more cohesive technology.
There may be multiple issues that get you to this place:
- Processes that heavily rely on paper or “digital” paper (PDFs) requiring manual entry consume the time of internal resources away from performing value-added services to your membership
- Outdated legacy technology that is difficult to support with current resources and is difficult to attract talent to maintain, which in turn poses a risk to the organization
- Insufficient access to comprehensive dashboards with metrics and reports that makes it hard to be able to work effectively and to understand the tasks that cause delays in providing timely responses and calculations to
- Minimal front-end validations on employer contribution files allow for incomplete or inaccurate data; IT manual repair of files is costly and time consuming
- Lack of data security and potential cybersecurity risks
- The inability to program legislative and technology changes in a timely and cost-effective manner
Faced with this decision, some large pension funds saddled with these issues are choosing to modernize in-house.
Why are they doing this? Because they believe that retaining control over their systems, resources and priorities is the best way to continue delivering excellent customer service.
Going the in-house modernization route has several advantages:
- Controls the priority and pace of change, no longer needing to submit a ticket to an outside provider for a change order
- Gives your organization an opportunity to streamline your system and use business process improvement strategies
- Allows your organization to prioritize your implementation schedule and maintain it
- Ensures your membership needs are being met by technology you control
However, despite the size of staff, there are many challenges you need to consider.
Implementing a new system is a once in a career undertaking and many on staff will not have the experience or expertise to perform this transformation effectively, or there are not enough staff to dedicate their time to assisting in this transformation.
The new architecture will be even more complicated to manage technologically and even for large organizations, outside contractors will often have to be used for coding.
These initiatives require lots of internal leadership over a long period of time. Because the change is substantial, your leadership needs to get behind this, and will need to continue motivating others over the course of several years to ensure that staff and stakeholders can also get behind the changes.
They also require documented governance structures for decision-making, and that structure needs to be followed or there will be breakdowns in how important decisions are made and are accepted by others.
These projects also require lots of resources, and typically more resources than currently exist on staff. Purchasing COTS software means you are outsourcing many things to a vendor; if you decide to do this in-house, it means those resources need to be available internally, or need to be hired (many just for this project, and others in an ongoing capacity.)
There are ways to address these challenges and they involve proper planning and oversight of the project.
First, before fully going down the path of a modernization, your organization needs to conduct a full assessment to address Risks/Timelines and Budgets based on market knowledge, peer interviews and vendor demos. This needs to be performed to ensure you are confident in the path selected and it is the best fit based on your organization’s priorities, needs, and skillsets.
If your organization determines that the in-house modernization route is the correct one, you will need to ensure you have tracking of the project, testing plans in place before you begin, training for stakeholders on how your new system will work, and development of a cybersecurity structure in tandem.
Some other key areas that will help you accomplish your goals:
- Develop a full staffing plan for both the implementation project, which is a one-time thing, and for the future maintenance and operations with the new system
- Implement an Organizational Change Management program, these projects will not be successful without the buy-in of your staff
- Implement a Business Process Improvement Initiative to document the current state and desired future state (this makes sure the organization is not going like for like, but like for better)
- Continually review Future State Architecture/Technical/Operations Goals for key guidelines and objectives
- Supplement your staff with external resources to either focus on the modernization or to back-fill key roles to be seconded to the project
These are some of the key activities necessary to begin your modernization journey.
Linea Solutions has been providing strategic guidance that has improved our clients for almost 25 years. We would be happy to meet with you virtually to discuss what type of assessment would be ideal for your organization. If you have questions about the best way to improve your organizational efficiency, contact us to see how we can help.
