In the retirement services industry, aging IT Systems that have been upgraded with a piecemeal approach over the years are a major challenge to the pension providers. Not only has this approach led to technology obsolescence but has also adversely affected the overall productivity due to increased maintenance and administration overheads.
What are the key drivers for large pension providers to continue status quo when they are clearly aware that their technology platforms are obsolete and need replacement? Of course, there are different reasons and chances are that each pension provider has a unique set of reasons. In our interactions with various providers, we have come across the following perspectives that act as dampeners to the ‘move for change’.
1. Resistance to Change: Being a collection of human beings, organizational behavior reflects the typical mindset of people – a tremendous reluctance to embrace change! Even though there is a larger level awareness as well as admission at an individual level that legacy systems need to be retired and modern technologies need to be brought in, collectively, this doesn’t figure in the organization’s priority list because no one wants to ‘bell the cat’, as it were.
2. Fear of the Unknown: As with human beings, organizations fear the unknown – and a host of questions in the decision makers’ minds shoot down any possibility of change. Some of these might be “the current system is running, why should we move to a newer one?”, “will the new platform handle all the business processes that are UNIQUE to us?”, “is the new platform robust, scalable and will its performance hold up?”, “will our customers be open to a change of platform?” Chances are that like in a person’s life, the old adage “nothing ventured, nothing gained” will fit in very well in this context too, but the ‘deer in the headlight’ syndrome makes organizations freeze and let things be ‘status quo’ because of the fear.
3. Risk Factors: Of course, the fear is not entirely unjustified. There are several risk factors that may be subjectively contributing to the ‘risk perception’. Some of these are :
- Migration of plans from the existing platform to the new one. This is a multi-dimensional risk involving quality of data in the current system, lack of qualified resources to do the migration of the data and the processes, technology skills availability etc.
- Product Set-Up and support
- Integration with multitude of ‘surround’ systems
- New vendor reliability and support (the ‘known devil’ syndrome)
4. Complacency and Insecurity: There is a sense of complacency in most organizations that ‘why fix what ain’t broken?’ Also, there is a sense of insecurity about newer platforms and technologies as well as the fact that the decision may go wrong and boomerang on the team that made the decision. One other factor that contributes to this is the lack of evidence of immediate ROI.
Given all the above challenges, the Status Quo wins over in most of the situations. But all it will take is one player to make a revolutionary decision and gain a competitive advantage through the deployment of newer and contemporary technology and the others will have to follow suit or get left behind. Is the industry ripe for such a ‘change’? We believe it is and it is just a matter of time before we see some revolutionaries changing the landscape of technology in this industry.