Insurers want to be considered as stable, trustworthy entities that can support their customers’ long-term financial goals. One way that they have traditionally tried to meet these expectations is to hold tight to proven systems, processes and procedures. 

However, this means that when change is eventually implemented, it often requires large and complex projects to replace or upgrade legacy systems and associated processes. 

Often these large projects are still tied to traditional waterfall or hybrid deliveries and to calendar-based corporate funding cycles. The project scopes, deliverables, costs and return on investment (ROI) all need to be managed over long timelines.

The length and cost of these transformational projects make it especially important to embed robust project management procedures, including quantitative measures of success and strong change management controls. Measuring project outcomes objectively is essential so that ROI calculations can provide a concrete and data-driven assessment, rather than relying on subjective evaluations. 

However, once approved, large projects to transform legacy processes and platforms often continue to evolve in terms of their scope, schedule, costs, and other key attributes. Companies that are diligent about having a robust ROI review and approval process at the start of the project, are often less rigorous about putting a review process in place for any material changes. 

The aggregation of multiple changes can easily erode an ROI that met key hurdle rates at project launch. It is therefore essential that changes to each project are reviewed to make sure that any revised project outcomes still add appropriate value to the organization, and that the ROI of the adjusted project can be tracked. The reviewers should not only include the project sponsors, but also a more independent third party such as the enterprise project management office (PMO).

By way of example, one insurance company’s corporate PMO Portfolio Management process started with a very rigorous and fact-based business case analysis to evaluate, rationalize and approve a project for funding – with provable metrics and ROIs. 

To avoid ROI degradation through poor change control, the company applied the same PMO Portfolio Management process to review, validate and approve any ongoing material changes to its portfolio-level projects. The definition of a ‘material change’ was set at a level designed to balance having too much governance – slowing down day-to-day change management – against the risk of allowing impactful changes to slip through ungoverned.  

Change controls documented the impact of each change using the same metric and ROI framework as the initial project approval. This process helps to ensure that the final outcomes of a project remain in line with the original goals and that changes made during the life of the project do not degrade the end result. 

Getting the right balance between too much versus too little governance is always difficult. However, in relation to project-level change management, there is often too little governance. 

We recommend that organizations review how they handle project-level change management and determine whether they have the balance right. This review process can itself uncover value-delivery leaks in projects and portfolios. Repairing these and putting the right project governance in place can be key to both keeping an organization afloat and preparing it for the future.