How Overly Customized Software Adversely Affects Growth
For health and life insurance agencies, there are 4 main ways to manage your book of business:
- Industry-specific agency management system (AMS)
- Generic CRM
- Homegrown solution
- Spreadsheets/paper files
With so many offerings in the space, it can be difficult to decide which one is best for you. Today, we’ll cover the 4 major downfalls you run into when using heavily customized software:
- Lack of Flexibility
- Lack of Security
- Creates Dependency
- Costly to Maintain
The main focus will center on generic CRMs that offer extensive customization options and homegrown solutions you have to build from the ground up.
How Overly Customized Software Can Lack Flexibility
Flexibility is a big issue. In the world of technology, flexibility refers to: “The ability for the solution to adapt to possible or future changes in its requirements.”
But flexibility doesn’t just mean adapting to change.
A flexible system also operates in the manner you currently need—it is tailored to your business model. Even if your system allows you to customize the interface, it may lead to one (or both) of these problems:
- The costs for customization become unmanageable.
- The customizations are never quite right.
Usually, this comes about because the structure of the original system wasn’t built to sustain the customizations you’ve implemented. These customizations lead to what is coined as “Frankenstein Software”, which refers to software that has been heavily customized to be nearly unrecognizable from where it started.
Some of the common customizations for life and health insurance agencies are creating an individual-based (or contact-based) tracking system vs. a policy-based one and building out a commissions processing platform.
The 2 major risks you run with Frankenstein Software are:
- Software failure
- Software workarounds
The failure comes when the original software can no longer support or manage the customizations you’ve implemented and is unable to operate properly.
Another failure can come in the form of updates within the system itself. If a generic system provides a general update, those changes could alter your customizations and you run the risk of having all of them wiped out. That leaves you at the starting point, again.
The workarounds come when your staff has to adapt to the software and make it work instead of it working for them. This is due to the fact it’s not actually built for your specific business needs. This means that your process is impacted and is less efficient and less effective.
How Overly Customized Software Can Lack Security
A back-up plan is essential to the security of your book of business, and that can be a major lack in some systems.
Dynamic Technologies identified these as the major causes of data loss:
- Hardware failures (45%)
- Loss of power (35%)
- Software failure (34%)
- Data corruption (24%)
- External security breaches (23%)
- Accidental user error (20%)
As you can see, it’s not always ill-intentioned forces that could cause you to lose data. Human error, hardware/software failures, and simple power outages are just as prevalent. Without a plan in place to account for any type of catastrophe, you stand to lose a substantial part of your business.
One study found that 96% of all business workstations are not backed up. Failing to backup your system means that your data is more vulnerable to theft, disaster, and loss, meaning you’re putting your clients and their sensitive data at risk.
However, it is important to pay attention to the ill-intentioned side, too. Homegrown solutions and unsupported CRMs are not always built with the same encryption or security of modern-day technology. While many things can age well (for example, fine wine), the same is not true for security measures.
An updated, cloud-based system can come with a security team behind the product that are there to help you stay safe. Plus, it can include bank-grade encryption and other security measures that keep your data secure in-transit and at-rest while backing all of your information up on secure, remote servers.
Security is a crucial thing to discuss if you’re choosing to change management systems, and these are the questions you should be focusing on.
To learn more about security in software, check out these additional resources:
How Overly Customized Software Creates Dependency
When it comes to dependency, there are two factors you must consider:
- Dependency on designated IT professionals
- Lack of dependency on the software (downtime)
If you aren’t a software and computer programming professional who is able to maintain and regularly update your system, you’ll need someone you can rely on. Remember, system failure is one of the top reasons for data loss in business, so having someone to maintain your system is crucial.
On average, an IT professional can cost your company $100,000+ a year; or you can opt for an hourly IT person who could cost hundreds of dollars per hour. Since they would be the only one with the knowledge of the inner workings of your system, your team would become highly dependent on them for upkeep, repairs, and modifications.
This can apply to both homegrown solutions and generic CRMs that require extensive back-end customization.
To create certain customizations, like building out a commissions processing platform within your homegrown solution or generic CRM, you’ll need the expertise of an IT professional. This creates the dependency. You’ll need them to build those new parts, maintain your current system, and fix any bugs that come up. And the more you add, the more bugs you’ll likely create.
But, dependency is two-fold.
The other half is the lack of dependency you may find with outdated software. Lack of dependency can be present in both homegrown solutions you’ve crafted and heavily customized generic CRMs.
This is often caused because the computer is bogged down from too many additions added onto the outdated framework of the original system. Another reason could be that the newer pieces added onto the original framework are incompatible with the original operating system. The system may no longer able to efficiently read the information and, thus, slows down the processor.
All of this can result in downtime.
Downtime is the time your agents and staff are waiting. Waiting for the program to boot up, save, update, etc. It’s the time they’re waiting to work because the system is processing a request.
To calculate downtime, use this equation:
Cost= P (number of people affected) x A (average percentage they are affected) x C (average employee cost; sales or wages +benefits)
How Overly Customized Software Can be Costly to Maintain
Arguably the largest problem: the costs of maintaining a system can be staggering.
On the generic CRM side, continuously customizing a system not truly built for your needs can become costly and frustrating. Plus, if the system goes down, then you’re paying for your employees who can’t work AND the IT professional(s) who is trying to fix it. This can also apply to homegrown solutions as you may have to create new customizations to support your maturing company’s needs.
Then, with security, more costs could arise. This is especially prevalent with homegrown solutions you manage in-house.
You’re housing the sensitive data of thousands of clients, prospects, and x-clients; you must keep it safe. But, if you’re using an in-house system with outdated security measures, this could be a potential HIPAA risk. Orion noted that HIPAA fines can reach upwards of $1.5 million per year per incident for failure to comply with regulations.
Plus, it’ll cost you to just run the stuff.
It actually costs more (sometimes a lot more) to run an old system than a new one. The added costs are attributed to things like virus attacks, incompatibilities with newer software technology, and multiple hardware issues. Orion found that:
Also, keep in mind, additional research found that PCs 4 years or older average 21 hours of downtime a year (which is a loss in productivity) and cost nearly twice as much to repair than a newer one.
If you’re using a homegrown solution that’s on-premise in your office, then you’ll also need to factor in the server room and the energy reliance it requires.
Although buying into a new system can seem like a lot of money, when you leverage it against the stacking costs of employing or outsourcing IT, employee downtime, loss of productivity, repairs, and customization costs you already have, it can come out to be a lot less.
Upgrading Your Process
Using a system for so many years can create a comfort zone for users; however, if your system is not actively helping you achieve your goals, then it may be time for an upgrade. The difference between using an industry-specific agency management system vs. a generic, Frankenstein software can be night and day with how fluid it runs.
If you are experiencing one or more of these problems, then you may want to consider upgrading your technology. To help you make the right decision for your insurance agency, here are some resources to walk you through the whole buying process: