Over the past 4 years, 3 of the 4 major Risk Management Information System (RMIS) vendors have been acquired by private equity investors. That amount of consolidation, in what was previously a very stable market, really is astounding. What does vendor consolidation mean for RMIS users? And more importantly, what does it mean for you and your team?
The impact of RMIS market consolidation is almost certain to rank low on any risk manager’s list of concerns. There are more critical issues on which to focus—renewals in a commercial property insurance market that continues to harden, adequately evaluating and insuring against cyber risk, taking a more proactive approach to loss prevention, or developing an ERM program, to name just a few.
Those who depend on their RMIS for basics such as consolidating a handful of TPA feeds and reporting on claims data, RMIS mergers and acquisitions may barely register. For risk managers and their team members who use their RMIS on a day-in and day-out basis, the potential effects of consolidation—in particular, the ability or willingness of a RMIS vendor’s owners to invest in improvements in technology and support, rather than preparing for future sale—are worth considering.
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The onboarding process can be challenging for both TPAs and their clients. Migrating data from one claims management system to another is often a difficult, resource-draining part of that process. Wesley White’s article 10 Data Migration Best Practices For Any Organization summarizes the extent of the challenge:
Migrating data to a new information management system from multiple sources is a complex and often headache-inducing undertaking. Data migration is often necessary to keep up with technological advancements and industry standards, but it requires great effort. Data from various storage areas—both onsite and in the cloud—must be evaluated, analyzed, cleaned up and organized before it can be combined and reconciled.
The right technology can help to reduce the tremendous burden that data migration places on new clients. It can also transform the onboarding process and showcase the unique insights, savings, and benefits your organization delivers. As White notes, “It doesn’t have to be as hard as you may think to get past these challenges and successfully migrate your data.”
Assisting with the pre-migration phase
Research from the independent research firm Bloor paints an ominous picture of data migration projects. Of these projects, 37% exceed budgets, 67% take longer than expected, and 84% fail to meet expectations. In Why do so many data migration projects end in disaster?, Colin Rickard, a data management director with Experian, is asked to explain the high failure rate. “Often there has just not been enough analysis done at the start, so you end up with a lot of data problems at the end,” he responds.
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Taking the time to evaluate your RMIS technology can play a part in ensuring your long-term risk management objectives are met. Equally important is an honest assessment of whether the RMIS support you’re receiving is meeting your expectations.
Your responses to the following questions may indicate that the relationship between you and your RMIS service team is in trouble.
#1 Has there been significant employee turnover?
For years, the users of prominent RMIS platforms have been forced to deal with service issues that stem, in part, from the departure of experienced RMIS support personnel. Rather than reaching a point of stabilization, M&A activity over the past year has been followed by rounds of layoffs, as well as account reassignment for the service team members who remain.
This turnover can leave you at a net deficit, as constant changes mean more work for you and your risk management team. As the article A Stranger is Calling: The impact of RMIS service team turnover points out, “a revolving door of service team personnel who need to be brought up to speed on the unique aspects of a RMIS and the risk management program it was put into place to support compounds the problem” of RMIS technology that may already be struggling to keep pace.
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Risk managers looking to move on from spreadsheets or leave the limitations of a legacy system behind know what they want from a new RMIS. But they should also know there are certain things they’re entitled to. Given the size of the investment, as well as the fact that the system will support efforts to prevent losses, control costs, and inform decisions that impact an entire organization, there are—at a minimum—five critical elements that every risk manager should expect from their RMIS platform and service team.
#1 – A transparent, proven RMIS implementation process
RMIS implementations are complex endeavors. Promises of “quick” and “easy” should be taken with a grain of salt. As with IT projects of any size, the potential for unforeseen delays and changes in scope are not uncommon. You deserve to know where you stand throughout the implementation process. In addition to a detailed plan for delivery, the team you work with should also be experienced enough to anticipate and address potential problems, and have a track record of successfully responding to unforeseeable issues.
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Standing atop Mount Everest is an extraordinarily rare feat. Since the first reported ascent in 1953, only 5,000 people have reached the mountain’s 29,029-foot peak. Over the same span of time, nearly 300 have died attempting to do so. And while making it to the top of Everest is tough, having the fortitude to turn back when the summit is within reach can be even more difficult.
The costs of climbing Everest are significant. In addition to spending roughly $100,000 for a single attempt, the time climbers put into planning and training for the venture is typically measured in years. Given these investments of time, energy, and money, many climbers not surprisingly push on in the face of extreme weather, oxygen depletion, and increasingly bleak odds. Unfortunately, the drive to make the investment “pay off” costs some their lives.
In a season 1 episode of the podcast Choiceology with Dan Heath, Michael Roberto of the Harvard Business School refers to this phenomenon as a sunk cost trap. In a sunk cost trap, Roberto explains that the human mind obscures rational thought because of emotional attachments already ‘sunk’ into achieving a goal. We all experience sunk cost traps in our daily lives: holding on too long to a bad investment, staying in a bad relationship, or refusing to walk out of a bad movie on your first night out in months.
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How many members of your current RMIS vendor’s service team have come and gone over the course of your relationship? What about the number of service team leads who have guided support efforts on behalf of you and the other users of your RMIS software?
When you dial into a meeting and get introduced to yet another service team replacement, your RMIS provider is under-delivering.
Many business-to-business software providers place far too much emphasis on “software” and not enough on “service.” In terms of features and functionalities, the results of such an approach may be impressive. But the imbalance comes with a cost. Subpar support is always detrimental to client success.
The importance of consistent, knowledgeable RMIS technology support is difficult to overstate. Given the increasingly complex risks every business faces and the ever-expanding role risk managers play within their organizations, a platform implemented five or more years ago may struggle to keep pace with an organization’s changing needs. A revolving door of service team personnel who need to be brought up to speed on the unique aspects of a RMIS and the risk management program it was put into place to support compounds the problem.
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Is the sky falling? Or is it clearing? Will the new owners be a breath of fresh air? Or will they turn the business upside down? As a risk manager, you’ll likely hear all sorts of messages from peers, providers, and competitors. Following the acquisition of your risk management information system (RMIS) provider, the only message that matters is this: You have options.
It’s easy to feel as if your hands are tied as you seek answers to questions about what a new, combined company means for you and the users of your current RMIS. Asking questions and voicing any concerns regarding the answers you receive is the surest way to proceed prior to extending your contract.
Perhaps the biggest question—and in some cases, the one that is the most difficult to get an answer to—is whether or not you’ll be forced to migrate to the RMIS of the acquiring vendor.
While migration sometimes means you’ll be gaining access to functionality not available in your current system, the reality is that the move may not be as simple, or as straightforward, as promised.
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Selecting the right risk management information system (RMIS) is about more than choosing a set of features and capabilities. You’re also choosing a partner to help you meet your risk management objectives — both now and in the years to come. The aspirational nature of the sales process should only resonate if the team on the other side of the table can demonstrate a long-term record of success.
“That is why it is critical to vet out the potential partner as much as possible during the discovery period as the overarching goal is to produce a mutually beneficial relationship,” writes Michel Koopman in 10 Steps to Forming Long-Lasting Strategic Partnerships. … read more
The pressure to do more with less is constant. But delaying an honest evaluation of your risk management information system (RMIS), while an understandable temptation, can lead to compressed timelines, rushed decisions, cost overruns, and additional grey hair.
Industry consolidation is forcing changes both good and bad. Regardless of whether you elect to stay with your current system or make a move, the worst-case scenario is to find yourself boxed in because you ran out of time.
There are a few critical factors a risk manager should take into account to ensure they are in the driver’s seat. Your time is limited, but your options don’t have to be.
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Unforeseen delays. Cost overruns. Delivery of an end product that only slightly matched initial expectations.
Whether it was a home remodeling job or the deployment of new technology for a business, we all have stories to tell about the project we wish we’d never started in the first place. When purchasing or replacing a Risk Management Information System (RMIS), choosing Origami Risk means you won’t repeat the experience.
Origami Risk was founded a decade ago by industry veterans who recognized that improvements in the development, delivery, and support of RMIS technology were long overdue. A central component of the changes they introduced, and that we’ve continued to refine, is an approach to implementation and ongoing support that is different by design.
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