John Davidson, CIO at insurance firm First Central Group, has spent the past nine years helping to evolve the role of technology within the business. “We are now particularly technology savvy,” he says. “We have our own line of business systems and we invest substantial sums to help business growth.”
First Central experienced 30% year-on-year growth and went into the Covid-19 crisis well prepared, says Davidson.
Before joining First Central Group, Davidson worked in the software industry in software development, then as a software architect. “I moved from a software house world to the other side of the fence,” he says.
There is a misconception that the tech industry moves far faster than corporate IT, and although Davidson admits the pace at First Central Group was a little slower initially, he says: “We have an appetite for change.”
For Davidson, this appetite feeds the hunger that is driving technology innovation to support business initiatives. “A traditional software house is a bit like an oil tanker,” he says. In such a company, product development moves slowly, week by week, month by month.
But at First Central Group, he says: “The role of technology in the organisation is very closely aligned to business outcome. This is very different to the objectives of a vendor. It is a very different model. My objectives relate directly to the business.”
According to Davidson, First Central makes significant changes to its technology estate every month. “The broader business is accustomed to iterative change,” he says. “It is a change heartbeat, a natural cadence that happens on the third week of every month.”
“The role of technology in the organisation is very closely aligned to business outcome”
John Davidson, First Central Group
Given his background as a software developer and architect, Davidson and the IT team at First Central recognise the need to ensure that new features work with old and new software. And while he is not keen for the company to undertake a “big bang” IT roll-out, it is still possible to deliver a fundamental change to an IT system.
A new general ledger or CRM (customer relationship management) could be deployed in a series of steps and remain dormant until it is needed. He gives an example: “We did a service pack roll-out last week, delivering some components that would not be live until next year.”
Robotic process automation (RPA) is among the recent technological innovations that First Central Group has deployed. “Robotic automation is a tool, not an outcome,” says Davidson. “It can lower operational costs, if you can find areas of low-value activity that can be automated.”
This allows the business to scale more quickly, without having to hire more full-time staff, he says.
Automation can drive growth
“If my business underwrites half a million policies with 1,000 full-time employees, we can calculate how many people we would need to scale up,” says Davidson. For instance, if a full-time employee can process 1,000 policies a day and an RPA can make someone 5% more efficient, the number of additional full-time employees required to scale the business by a certain amount is less because the robot can automate lower-value activities that the employee is normally required to do themselves.
“This can change assumptions on overall expense versus overall cost,” Davidson adds.
One example of where RPA is being used is in fraud detection. The company has used the Blue Prism platform to automate fraud checks on new policy applications within the first 24 hours, which has enabled it to increase the volume of new policies it can check by a factor of 10.
John Davidson, First Central Group
“Intelligent automation means so much more for us than an efficiency tool,” says Davidson. “We are building an entirely new technical competency into our business, so that it becomes part of our DNA. This not only changes operational execution but, importantly, changes the management mindset about the art of the possible and strategic decision-making.”
The automated renewal process is another area where Blue Prism has been deployed. With the support of Blue Prism’s partner, IT and automation consultancy T-Tech, the First Central team can check for accuracy the issue of more than 3,000 renewal invitations daily in just two hours. The new process verifies each renewal notice, removing the need for costly, time-intensive manual work downstream to correct anomalies and reduce the risk of a regulatory incident.
Along with driving operational efficiencies, Davidson believes RPA also boosts business confidence. “Risk mitigation is a lot more intangible, but can measure the cost of distraction and can measure our effectiveness from a robotics perspective,” he says.
Davidson’s team has established a robotics capability for the business capability. “It is not my job to close down operational risk,” he says. “That’s the responsibility of the process owner. My team has to deliver technology that closes down the risk.
“For instance, if the business can articulate a problem such as in the online channel, a customer may be paying the wrong amount. We can provide an RPA for this.”
Given that it is primarily a digital business, First Central Group does business through digital channels to underwrite thousands of policies a day. As this volume increases, so too does the risk, which is where the technology leadership can play a role. “We can help the business understand how to apply controls in a digital transaction,” says Davidson.
While his team was developing its RPA capabilities, Davidson ran a demonstration with a line-of-business manager, taking a policy number from the previous day and asking how it would be validated. This informs the decisions on which steps make good candidates for automating.
Davidson believes people in the business will ultimately manage and deploy their own robots to automate processes. “In order for RPA products to be effective, IT needs to relinquish control,” he says. “We recognise the business is more IT literate and requires more self-service from the IT estate. At First Central Group, we implemented a toolkit to do the things people in the business want to do, such as open up a policy and access a customer record.”
John Davidson, First Central Group
The IT team exposed application programming interfaces (APIs) to the back-end systems and added authentication, and Davidson has a trajectory to open up more APIs to the business. There are internal microservices APIs and a roadmap to aggregate these into macro services to give the business new capabilities.
The aim is to have these macro services call a series of APIs to achieve a particular business objective, without the end-user having to figure out how to achieve this. For example, says Davidson: “If we would like robotics to be used to communicate with our customers, instead of orchestrating five or six APIs, we will have a macro service to send an email to the customer.
“A well-constructed architecture needs the right divisional interfaces and responsibilities.”
Among those responsibilities is the question of technical debt. “Tech will go redundant,” says Davidson. “Every business has to make tactical decisions on architectural debt and ensure it gets remediated.”
Davidson believes CIOs need to recognise that if they do not maintain a system to ensure it remains current, it will become legacy. At First Central, this philosophy applies to the RPA, he says. “We are architecturally avoiding tight coupling to the RPA platform,” he adds.
Rather than being locked into Blue Prism, Davidson would like to be in a position where it would be easy to replace the underlying RPA engine with another one with broader capabilities, if such a product becomes available.