As the insurance market expands and the competition intensifies, technology remains one of the core deterministic factors in defining business processes and customers’ satisfaction levels. One of the issues insurance companies have to deal with is how to select the proper technology to use. One of the important such choices they have to make is between building their software from scratch or buying a ready solution. This decision often takes place at the option of flexible insurance software, where a competitor has to go through a build vs. buy analysis. This blog discusses the importance of the insurance software and offers information concerning the build or buy evaluation criteria.

1. Understanding Flexible Insurance Software

These are the types of insurance solutions that can be easily customized depending on the particular requirements of an insurance organization. Unlike previous software solutions that may not be easily adaptable, especially to the system’s clients, flexible insurance software can be modified to meet the peculiarities of the field and work for various insurance companies. As this kind of environment is highly volatile because of changes in regulations, markets and customers’ demands this adaptability is crucial in such a sector.

The key features of flexible insurance software include:

Customization: Enables the customization of options as well as options and functionalities based on the specific business requirement of the insurer.

Scalability: Enables the expansion of the operations of the company as it provides flexibility that allows handling of more transactions or other activities.

Integration: Provides a smooth integration with other systems and applications like CRM, data analysis, third parties systems etc.
Agility: Allows for easy change and modification depending on emerging market forces or any changing regulations.

2. Their decision making framework namely the Build vs. Buy Analysis

Choosing software select involves a thorough decision of build or buy when the organization is torn between creating a special software in house or going for a ready-made software in the market. Such considerations include ease on cost, time, flexibility, and even the needs of the enterprise involved.

Build: Advantages and Considerations

Customization: Writing software in-house entails a direct control over the kind of software that is being developed in a way that meets the company’s needs perfectly. This is especially helpful for organizations with specified functions or requirements which cannot be address by application available in the market.

Control: Internal development gives total control on all aspects of the software, the features to be included, any changes to make, or even on the security that it should have. This can be useful for the business as it helps to sustain competitive advantage and to meet legal requirements.

Integration: For instance, custom-built software can be developed in a way that it will fit the existing organizational systems and processes, hence avoiding continuity of disruptions.

However, building software in-house also comes with challenges:

Cost: New software, which means creating it from the ground up can be costly, based on development cost, testing costs and costs connected with the maintenance of the particular software.

Time: The development process is lengthy and projects may take quite a while to be completed, may make the implementation of critical features or capabilities slow.

Resources: The creation of new systems entails extensive internal investment that can include human capital such as developers, project managers among others.

Buy: Advantages and Considerations

Cost-Effectiveness: The benefit of using off-the-shelf software is if the cost of developing usual solutions is much cheaper than purchasing off-the-shelf solutions. Google licensing, support and updates’ costs are usually comprised in the over all cost.

Speed: Off the shelf solutions can be applied rapidly thus enabling firms to gain value of fresh technologies very early.

Proven Solutions: COTS have been shipped widely and come pre-tested and with good following where it offers a stable base and a large customer base.

However, buying software also has drawbacks:

Limited Customization: A lot of packaged solutions might not fully fit the needs of the company, which could mean that there will be modifications needed.

Integration Challenges: The integration of purchased software with other systems within an organization may at times be problematic in terms of how efficient it may be.

Dependence on Vendors: Thus, using external vendors for receiving updates and support can decrease the level of control over the software’s development and further evolution.

3. Making the Right Choice

To make an informed decision, companies should consider the following steps in their build vs. buy analysis:To make an informed decision, companies should consider the following steps in their build vs. buy analysis:

Assess Needs: Assess the company’s particular circumstances, its present and anticipated needs, in order to decide whether in-house development or acquisition of the ready made software would be more appropriate.
Cost Analysis: Calculate the yearly and lifespan cost and compare between the two options, the initial outlay, the recurring expenses, and the hidden costs.

Timeline: Compare the time that it takes to develop one with the time it will take to implement a purchased solution. Determine the potential consequences that could occur if delays were to occur to business operations.
Risk Management: Consider the pros and cons of each solution: what risks are related to vendor lock in, security, and changes in requirements?

Selecting an appropriate and effective software solution is one of the most important strategic decisions of insurance companies which have a strategic goal of improving their organizational processes and satisfying the needs of their clients. The type of insurance software that is available needs to be highly flexible to provide the sort of adaptability required to address any new insurance challenges that may occur while the build vs buy approach provides guidelines for actually obtaining the software needed.