Legacy Systems are the “White Elephants” for Retirement Service IndustriesBy: admin - Jun 02, 2014
The Retirement Services Industry traditionally has been a slow adopter of information technology solutions. While the transition from VISIO Calc to next generation systems was gradual, the retirement industry has been stuck there for long time with those yester year proprietary and legacy systems which indeed are like white elephants from a continued maintenance expense perspective. However, recent spate of regulations and increasing pressure for bringing in efficiencies in operation and administration, has led to a bit of shake out of the retirement services industry. Current generation pension plan sponsors and participants are also demanding better tailored products and services for more seamless operations, faster response, increased transparency and flexibility.
To address the challenges posed by evolving markets, plan providers have tried to incorporate reforms to their existing legacy and proprietary systems, which are at best modest superficial customizations which cost a lot and increase the inefficiencies in the long term. A few providers have hired programmers to build software applications and a few others have bought software packages to support the business needs – in a phased manner. These modest workaround systems not only take significant effort to integrate, but also require frequent manual interventions. The efficacy of these disparate business applications that were built in-house and acquired over years depends on how well they are integrated with each other. Indeed, such workaround systems cannot act as firm platforms for new capabilities and growth. They fail to address the challenges of scalability, cost effectiveness and business objectives and end up compromising on performance front.
It is a hard fact to digest, that some plan provider organizations are spending 50-60% of their IT budget on maintenance of legacy and proprietary systems. At a time when regulatory bodies are exerting pressure on administrators to bring down costs, these ‘White Elephants’ exist in plan provider organizations in the form of money guzzling IT systems and outdated infrastructure. On the other hand plan providers are in no urgency to replace these legacy and proprietary systems, because the plan sponsors and participants end up feeding these “white elephants”. The maintenance costs of legacy systems are passed on to the plan sponsors and participants by the plan providers under smart camouflages. Replacing these systems with robust, scalable integrated platforms may well be the best way to reduce the complexity, cut the flab of legacy system maintenance and support business growth.
The pertinent question however is: ‘Who will drive the shift from Legacy Systems to modern integrated robust platforms with the plan provider organizations?’ Providers themselves or Plan Participants and Sponsors or the Regulatory Bodies? I believe that the onus is essentially on all the stakeholders. The regulatory bodies should impose more stringent policies on IT system standards in plan provider organizations and the plan-participants and sponsors should push their plan providers to replace the legacy / proprietary systems to bring down the technology costs. Technological advancements offered by new systems like service-oriented architecture, business rules engine, complex event processing, work flow management , and virtualization can help plan providers transform their business to unlock the potential of real time plan administration – opening up numerous opportunities for improving customer experience, back office efficiency, and analytic capabilities.Disclaimer
Categories : Legacy record keeping systems 401 Record Keeping Blog Uncategorized DC Record keeping Record Keeping Software Retirement Services Retirement Technology 401k Record Keeping Software Thought Leadership Retirement Plans Record Keeping
- Testing to Create a Zero-Defect Retirement Product: Challenges and Checks
- How Automation Aids Quality Control and What to Watch Out For
- Why Automate Software Testing?
- Make financial wellness programs more valuable to users, quantify benefits to employers: Report
- Why financial literary and financial wellness matter
- Role of APIs in the digital transformation journey
- Data Analytics can help deliver competitive plans, work out retirement income
- Mobile and online capability essential for DC plan providers, millennials seek info from social media: Study
- Why authentic leadership is important for transformation success; impact of MEPs, and the millennial connection
- Behavior analysis can help improve retirement outcomes, says expert