The new millennium has brought new tools to the old game of legacy systems management. There also has been an increased emphasis on strategic alignment between business and technology as the metaphorical wall between users and technology collapsed long ago for the more strategically oriented companies.

More than three-quarters of a decade ago, the beginning of the new millennium—with its associated worldwide fears of Y2K—came and went. The tremendous bubble in systems consulting associated first with replacing and then recognizing the reality of merely patching all those legacy applications has returned to the more mundane, less globally significant concept of enabling competitive advantage. Still, here we sit approaching the year 2010 with much of the industry continuing to process the predominance of in-force policies on systems built nearly 40 years ago.

In the years since Y2K was crossed without serious trauma to the industry, the focus on replacing legacy systems has remained to some extent in the spotlight. The game has stayed the same; only the reasons have changed. Having successfully traversed the millennial boundaries, the driving reasons for the replacement of legacy systems have returned to the standard, business-constrained pattern of inflexibility, a diminishing labor pool of expertise, reduced speed to market on new products, increased cost of compliance, service environment complexity, and unreasonable total cost of ownership (TCO).

Yet like the still vigorous mainframes that have survived predictions of death by PCs, minis, and the Internet, legacy applications remain a critical element within the foundational infrastructure of many successful companies. Even those that have moved on to incorporate new generations of software can be found with highly profitable blocks that are laboriously plodding along on a COBOL- or Assembler-based mainframe system that falls into the CFO, Life/70, LifeComm, PALLM, or original Vantage or Cypros A/P class of systems. Traditionally by nature a conservative industry, insurance companies have reason to approach broad-scale replacement of these technological dinosaurs with trepidation.

Taking the Stage

Greater results have been achieved using a combination of staging, which is the use of new technology for a new product or business line, and wrapping, which is putting new features around the perimeter of legacy applications. Both approaches avoid the high-risk elements of long projects, exorbitant expenses, technologies that become outdated quickly, and technology-driven solutions by focusing on business-specific, near-term deliverables that enhance the ability to create, distribute, deliver, and serve insurance products.