A Forrester Consulting November 2015

Thought Leadership Spotlight

Commissioned By
Accenture Interactive

Digital Transformation In
The Age Of The
Customer: A Spotlight On
Insurance
Table Of Contents
Executive Summary ........................................................................................... 1
The Customer Experience Is At The Heart Of Digital Transformation ........ 2
Insurers Have A Ways To Go On Their Path To Digital Transformation .... 3
Third-Party Solution Providers Plug The Gaps And Drive
Transformation ................................................................................................... 5
Key Recommendations ..................................................................................... 7
Appendix A: Methodology ................................................................................ 8
Appendix B: Supplemental Material ................................................................ 9
Appendix C: Endnotes ..................................................................................... 10

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Executive Summary
› Insurers are on the path to digital transformation but
The past five years have marked the beginning of the age of have a ways to go. Insurance carriers are making strides
the customer, in which technology and economic forces across the three dimensions of digital transformation —
have put customers in control of their interactions with organization, operational process, and technology — but
businesses. These businesses, hoping to understand and are still struggling with traditional silos and a lack of
serve customers in an increasingly disrupted global and integration and alignment. Many are stuck offering an
digital economy, are almost universally undergoing digital average digital experience with limited understanding of
transformation, which involves realigning and investing in what to do next, who should lead, and how to measure
new technology and business models with a specific focus success. Their focus is more on customer transactions
on the customer experience. and exploring new digital capabilities than on using digital
to build customer-centric relationships and develop game-
In May 2015, Accenture Interactive commissioned Forrester
changing innovation.
Consulting to evaluate digital transformation among
enterprises. To explore this trend, Forrester tested › Reliance on third-party providers confirms the lack of
hypotheses that firms are confused about what constitutes internal capabilities and highlights the need for
digital transformation (and who should drive it), and that insurers to shift toward open business models. To
many firms don’t have the required skills to transform into preserve internal resources, reduce time-to-market, and
digitally mature organizations. overcome gaps in capabilities, many carriers turn to third-
party solution providers for help with their digital
Only 9% of insurance organizations feel that transformation. But this is taking them only so far. Many
they have mastered digital to a point of need to acknowledge that, on their own, they cannot
differentiation from their competitors. provide the more relevant experiences customers are
increasingly demanding. Only by forming or joining
ecosystems that offer a broader range of more appealing
In conducting in-depth surveys with 396 business decision- products and “living services” will they be able to play a
makers (including 108 senior insurance leaders, on whose more active and engaging role in their customers’ lives.
responses this industry-specific report is based), Forrester
found that although companies are actively working to
transform their organization, processes, and technology in “Digital experience is a top priority
pursuit of a more effective digital business and a more
satisfying customer experience, they still have a lot of room for the company in terms of resource
for continued development of their capabilities. allocation. . . . It affects prospect and
KEY FINDINGS
customer experiences, and we want to
Forrester’s study yielded three key findings: improve both.”
› The customer experience is at the heart of digital — Director at a US-based insurance enterprise
transformation. With customers in the driver’s seat of
their interactions with brands, insurers must create
positive and relevant customer experiences across
channels and touchpoints. Although most firms are
confident that the experiences they provide surpass those
of their competitors and at least meet the expectations of
their customers, this is not supported by the findings of
other recent business and consumer surveys. As a result,
digital development and customer experience
improvement are two key priorities for insurers.
 2

› Online and cross-channel customer experiences are

The Customer Experience Is At The getting the most attention in the next year. It isn’t only
Heart Of Digital Transformation the case that the customer experience is the heart of
digital; digital is also the heart of the customer experience.
In the age of the customer, consumers are in control of their Customers interact with their insurers through a wide
interactions with businesses. Inundated by endless sources range of channels — often more than one channel in the
of information, customers expect ready access to content same customer journey. Digital channels are growing the
that is personally relevant in the context of what they are fastest and are therefore getting the most attention. When
doing, at any time, anywhere, and in the format and on the we asked respondents how they plan to improve the
device of their choosing. Attracting, winning, and retaining experience of their customers, the top responses were
customers in this environment requires a concerted effort improving the customer experience online (63%) and
from across the business: The organizational structure, across multiple channels (63%). Next was enhancing call
company culture, business technology, and partner center interactions (47%), followed by mobile (41%) and
ecosystem must all be integrated across the value chain social media (40%) (see Figure 1).
and aligned in service of customers, in the spirit of delivering
to them exactly what they want. Independent and redundant
customer views, processes, databases, administration, and FIGURE 1
IT functions must be eliminated. For this reason, digital and Digital Channels Are Key For The Customer
customer experience strategies are inexorably linked. Experience
Almost every change that organizations make to aid in their
digital transformation is also in pursuit of a better customer “What actions is your organization taking to improve
experience, whether directly or indirectly. Our study found the experience of its customers in the coming year?”
that:
Improving cross-channel
63%
› Key drivers of digital transformation are customer customer experiences
satisfaction and profitable growth. When we asked
Improving the online
insurers to rank their top drivers for digital transformation, 63%
customer experience
the drivers that came out on top were improved customer
Improving the experience of
satisfaction (63%), increased profitability (53%), improved interacting with a call 47%
ease of doing business (44%), and quicker time-to-market center agent
(37%). Insurers are in no doubt that the customer Adding or improving mobile
experience and digital transformation are key to their 41%
customer experiences
future financial performance.
Using communities and other
› Improving the customer experience and growing types of social computing 40%
revenues are top strategic priorities. The previous
Improving the store/branch
finding is well-aligned with insurers’ business objectives. 34%
customer experience
When we asked them about their broad strategic priorities
for the next year, “improving the experience of customers” Improving the phone self-service
33%
was the choice with the most No. 1 rankings (24%), customer experience
followed by growing revenues (19%). Reducing costs
Creating a dedicated user/
ranked third, with 17% of No. 1 rankings. Strategic 24%
customer experience group
thinking, leadership, and business/operational expertise
topped the list when we asked respondents what skillsets Base: 87 director-level or higher digital experience decision-makers at
they would consider most important for a senior executive insurance enterprises with 1,000+ employees
responsible for all aspects of digital business. Source: A commissioned study conducted by Forrester Consulting on
Technology, although the backbone of digital initiatives, is behalf of Accenture Interactive, June 2015
lower on the list, indicating that digital transformation is a
customer-driven business transformation initiative rather
than a strictly technical challenge.
 3

Insurers are in various stages of addressing these facets

Insurers Have A Ways To Go On of their digital strategy but are still significantly impeded by
Their Path To Digital Transformation their silos from becoming integrated, efficient, and
2
customer-centric. In the coming year, 62% plan to
Given the constantly evolving nature of technology, digital establish new digital governance and transformation
transformation cannot be a large, one-time investment and management; 53% plan to assess the impact of digital as
initiative. Rather, to digitally transform means to put it relates to the customer experience; 51% plan to
organizational, operational, and technological foundations in transform their IT systems to make them more agile; and
place that foster constant evolution and cross-functional 49% plan to create digital-oriented collaboration or joint
collaboration. Our study found that most businesses are ventures with business partners (see Figure 2).
actively working to develop their digital capabilities but are
far from achieving digital mastery. We found that:
› Confusion over who should own digital leaves
insurers unable to execute their digital strategies.
› Carriers are focused on assessing the digital There is no clear consensus on who should own and
experience and putting digital governance in place. drive the digital vision and strategy. Currently, ownership
Forrester states that digital transformation can be a is divided among the CEO (48%), the CIO (27%), the
“complex and risky undertaking” that “requires senior chief digital officer (8%), and other senior leaders (17%)
sponsorship, clear direction, appropriate resourcing, — and when asked who should own digital, the
cross-functional engagement throughout [the] responses are just as muddled (see Figure 3). Forrester
1 believes that transformation is top-down and that there
organization, robust governance, and much more.”

FIGURE 2 FIGURE 3
The Customer Experience Is A Top Digital Initiative Digital Vision And Strategy Are Most Frequently
Led By A CEO Or CIO
“What actions is your organization taking to address
the impact of digital disruption on your business “Who in your organization sets/should set the
in the coming year?” digital vision and strategy?”
Establish new digital governance 48%
and transformation management 62% CEO
26%
Assess the impact of digital as it
relates to the customer experience 53%
27%
CIO
Transform our IT systems to make 27%
them more agile for the 51%
digital world Chief digital officer
8%
Create digital-oriented collaboration/ or SVP of digital or
49% eCommerce 20%
joint ventures with new or existing
business partners
6%
Clearly define digital ownership,
49%
Chief strategy officer
funding and operations 14%
Sets
Create a skunk works or a group Ideally,
separate from the main company to 27% 3% should set
CMO
experiment with digital initiatives 3%
Create “smarter” and more digitally
aware connected products 24%
Base: 108 director-level or higher digital experience decision-makers at
or services insurance enterprises with 1,000+ employees. Top five responses shown.
Hire a C-level executive who 22% Source: A commissioned study conducted by Forrester Consulting on
is focused on digital behalf of Accenture Interactive, June 2015

Base: 45 director-level or higher digital experience decision-makers at

insurance enterprises with 1,000+ employees
Source: A commissioned study conducted by Forrester Consulting on
behalf of Accenture Interactive, June 2015
 4

needs to be a credible customer-focused executive to › Insurers feel that they are meeting expectations for
lead the charge in establishing a strategy to embed digital the digital experience but not exceeding them. For
3
capabilities across the enterprise. For digital most carriers, the sprint to implement rapidly evolving
transformation to be successful, leaders from across the digital technologies is a matter of keeping up with the
business must work collaboratively toward realizing a Joneses. Seventy-five percent of insurers surveyed feel
shared vision. IT’s primary focus is no longer on putting that their digital customer experiences meet their
out internal fires, and marketing is no longer focused on customers’ expectations, but only 9% feel that they’re
siloed outbound marketing approaches. Instead, these exceeding expectations — indicating that very few are
and other functions are looking to knit together their data, confident that they have mastered digital to a point of
systems, and processes in order to get an increasingly differentiation from their competitors. Another 16%
relevant and targeted view of customers to better acknowledge they are not meeting expectations, but most
influence and serve them. of these respondents believe their digital customer
› Insurers do not have a complete understanding of experience is “good enough.” These findings suggest the
digital. Not surprisingly, respondents listed their sentiment that digital strategies are good enough for now,
“organization” as the dimension of their business least as there are a number of strategies that businesses are
ready to execute digital strategy when compared with actively implementing and consider critical to their digital
technology and operational processes (see Figure 4). businesses — including implementing key technologies,
Across all three of these dimensions, insurers are on the fostering a culture of innovation, and reorganizing to
path to execution, with the majority at least “somewhat better deliver digital (see Figure 5). The key question is
agreeing” that their company is ready to execute their whether insurers have the cross-enterprise capabilities to
digital strategies. However, insurers have room to enhance the customer experience sufficiently and quickly
continue to transform, as a minority of respondents enough to meet customer expectations and remain
“completely agree” that they have the technology (38%), competitive. Many will need to consider bundling their
operational processes (25%), and organization (30%) in offerings with a network of service providers who can
place to execute their digital strategies effectively. complement their offerings (with such ancillary services
as appraisal services, restoration services, private fire
FIGURE 4 fighters, etc.) and who are better positioned to help
Organizational Readiness Lags Behind Technology achieve the customer-centricity, credibility, and next-
And Operational Process generation business model that are priorities for future
success.
“Across the following dimensions, to what extent
do you agree that your company is ready to › Measurement is lacking. Companies often worry about
execute its digital strategy?” implementation of new processes and technologies well
before putting in useful metrics with which to evaluate
Completely agree Somewhat agree 4
them. B2B marketers are particularly guilty of this. This is
at least partially due to the fact that increasing numbers of
Technology 38% 40% cross-channel touchpoints make the process of getting
5
useful metrics even more difficult. Our study reinforced
Operational process 25% 52% the observed trend that metrics are a low priority to
insurers, as “implementing the right digital metrics and
Organization 30% 43% measurement” came up as the least critical consideration
to enabling a digital business among both personal and
Base: 108 director-level or higher digital experience decision-makers at commercial-line carriers (see Figure 5). It could be argued
insurance enterprises with 1,000+ employees that their excessive confidence in the customer
Source: A commissioned study conducted by Forrester Consulting on experiences they provide is due to the lack of adequate
behalf of Accenture Interactive, June 2015 measurement.
As one CFO for a UK-based firm put it: “You can obtain all
sorts of information, but how much of it relates to how
 5

6
much customers come to you or stick with you when they Score (NPS), and customer lifetime value (CLV).
have an alternative choice? Digital is just one of the
touchpoints that customers have in a typical journey. Third-Party Solution Providers Plug
Metrics are a nightmare.” In order to drive continued
investment in digital transformation, digital decision-
The Gaps And Drive Transformation
makers must measure and prove the value of their
strategies. In the modern digital landscape, this means In recognition of the scarcity of skills in many insurance
deviating from channel-siloed metrics to measure more- companies, the intrinsic difficulty of transforming to enable
complex cross-channel metrics over a series of next-generation business models, and the goal of improving
interactions such as customer satisfaction, Net Promoter the customer experience (and with profitable growth on the
line), most carriers leverage the resources and expertise of
third-party solution providers and partners for at least some
FIGURE 5 components of their digital strategy. As digital
Measurement Is A Relatively Low Priority transformation pervades all areas of the business, however,
decision-makers increasingly look for their vendors to serve
as ongoing strategic partners rather than simple
“Which of the following considerations are most implementers of point solutions. Our study found that:
critical to enabling your digital business?”
› Eighty-eight percent of insurers use a third-party
Fostering a culture of digital solution provider for at least one component of their
innovation in your organization 58% digital transformation. The respondents that we
surveyed use third-party solution providers for at least
Implementing key digital
technologies 56% three distinct components of their digital transformation,
on average (see Figure 6).The processes that are most
Defining the appropriate frequently outsourced to vendors are web/user
funding/ financial model 56%
experience design (38%); implementation of front-end
Reorganizing to better (36%) and back-end (31%) applications; digital strategy
deliver digital 46% (35%); managed services (30%); performance analytics
and reporting (29%); and digital marketing support (27%).
Leveraging digital to optimize
your operations 38% The mix of outsourced services varies by company type
as well. Commercial-line carriers are more likely to use
Transforming your digital partners for analytics and measurement, whereas those
customer experience 38%
focusing on personal lines rely on partners more for
Implementing the right digital strategy, requirements definition, and project
metrics and measurements 21% management.

Base: 108 director-level or higher digital experience decision-makers at › Firms engage third parties for their expertise and
insurance enterprises with 1,000+ employees resources. We asked respondents why they contract
Source: A commissioned study conducted by Forrester Consulting on third-party solution providers for help with their digital
behalf of Accenture Interactive, June 2015
transformation and found that vendors offer a range of
benefits in support of companies that choose to engage
them (see Figure 7). Insurers leverage partners for their
expertise and resources (both 40%), to reduce the burden
on the insurer’s internal resources (41%), reduce costs
(38%), and reduce risk (37%). It stands to reason that the
top driver of organizations engaging third-party vendors is
the same for digital transformation overall: to provide a
better customer experience (44%).
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› Existing vendor relationships are not structured consider challenging their partners to engage in an end-
optimally. Very few (3%) of the insurers that we surveyed to-end partnership in which the vendor assumes some
were “dissatisfied” outright with their third-party digital responsibility for the success of the initiatives.
vendors, but only 28% reported being “very satisfied,”
leaving room for improvement. Interviewees commonly
cited communication and post-project support as areas “When you work in a partnership,
where vendors were lacking, though their experiences they take time to get to know the
varied among the vendors that they were using. These
types of issues may be symptomatic of the fixed-contract business; they aren’t trying to sell you
structure of many vendor relationships. Our study found
that 51% of companies have vendors as full-service
hours. Vendors must invest in that
partners, whereas the rest outsource work in a lesser knowledge.”
capacity. Strategic advisors are the next most common
(45%), followed by contractors responsible for point — Solutions leader at a UK-based firm
implementations (37%). For something as strategic and
iterative as digital transformation, organizations should

FIGURE 6 FIGURE 7
Companies Use Third-Party Solution Providers For Companies Trust Third-Party Solution Providers
A Range Of Functions To Help Drive Customer Experience

“Please indicate if your organization works with “Why does your organization engage third-party
third-party vendors for any of the following vendors to support its digital transformation?”
components of your digital transformation.” To provide a better customer
experience 44%
Web design, UX design,
content strategy 38% To reduce burden on internal
41%
Implementation of front- 36% resources
end applications They have more resources/
Digital strategy 35% capabilities 40%
Implementation of back-end 31% They have more expertise 40%
applications
Managed services 30% It is cheaper than doing it
38%
Performance analytics ourselves
29%
and reporting
To reduce liability and risk 37%
Digital marketing support 27%
It is faster than doing it
Digital organization and 22% 34%
operations ourselves
Content creation 16% We are integrating disparate
22%
tools or systems
Ongoing enhancements and 16%
platform upgrades They have better global
21%
capabilities
Requirements definition 14%
To help bridge an organiza-
We don’t use any vendors to aid 11%
12% tional divide
our digital transformation
International strategy and local
9%
market domain knowledge Base: 95 director-level or higher digital experience decision-makers at
Quality assurance and 9% insurance enterprises with 1,000+ employees
site testing Source: A commissioned study conducted by Forrester Consulting on
Project management 9% behalf of Accenture Interactive, June 2015

Base: 108 director-level or higher digital experience decision-makers at

insurance enterprises with 1,000+ employees
Source: A commissioned study conducted by Forrester Consulting on
behalf of Accenture Interactive, June 2015
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Key Recommendations
Digital transformation is a complex process that fills many insurance leaders with uncertainty. It is critical that leaders
fight through that uncertainty to take iterative steps to implement the culture, processes, and technology that will
enable their business to compete in the modern marketplace. As a decision-maker seeking to drive the digital
transformation of your business, you should:

› Advocate digital transformation and the customer experience at an executive level. Digital transformation is
not solely the implementation of digital tools and channels; it is the enterprisewide reorganization of the firm and
its people, processes, technology, data, offerings, and services for the digital era. It is the elimination of the silos
that foster high unit costs, slow time-to-market, low scalability, and weak sales and service — and that are the
enemies of seamless customer-centricity, enhanced customer experiences, and profitable growth. As a result, it
can only succeed as a companywide initiative, which requires strong collaboration and evangelism from company
leaders. No one person alone can drive all of the changes that are required for an organization to operate as a
customer-experience machine. Our study found that the company culture and organization lag behind process
and technology when it comes to digital readiness; this has to be fixed in order for insurers to mature effectively.
Therefore, don’t downplay the cultural change and educational aspects of transformation; instead, make them a
highlight of your plan.

› Execute change within the context of an end vision. A clear vision of the end state is absolutely critical to
make sure that everyone in your organization is moving in the same direction. Even if that vision is a moving
target, leaders need to always have goals in mind to ensure that they are not making changes in isolation.
Standardizing on a core set of technologies that the business can build around is a great way to accelerate
change and keep the organization connected.

› Be willing to take risks and learn from mistakes. As digital touchpoints continue to evolve and proliferate,
companies will need to take risks and develop Agile processes in order to keep up. In a digitally mature company,
not every change should require traditional approvals and a detailed business case; if new functionality is in the
spirit of digital transformation and the customer experience, give it a try, solicit feedback, and then iterate on it.
Insurers may even establish digital innovation teams that are given free rein to explore new ways of disrupting the
7
industry and delighting the customer. This Agile approach helps to ease capital expenditures, and third-party
solution providers may be willing to help phase investments as you implement new capabilities over time.

› Create or join ecosystems with partners whose capabilities complement your own. Even digitally mature
insurers will have new gaps in capabilities as the technology continues to evolve. Added to this is the fact that
most carriers, on their own, will struggle to shift from a passive to an active and valued role in their customers’
lives. They tend to think in terms of their current product portfolio, and have yet to embrace the opportunity to
develop more personal relationships with customers by offering living services — fluid bundles of offerings that
address a broader and higher-level range of needs and wants, that constantly employ digital technology to learn
about the customer’s preferences and intents, and that adapt in real time. Insurers can increase agility and test
new offerings by bundling their services with partners that enjoy greater credibility among their customers,
interact more frequently, and are more adept at providing engaging customer experiences. Reviewing the
organizational model with an ecosystem perspective could point to a more pragmatic approach that delivers the
required results with less transformational pain and risk.
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Appendix A: Methodology
In this study, Forrester conducted an online survey of 396 organizations (108 in the insurance industry) from across the US,
Canada, the UK, Germany, France, China, India, Japan, Australia, Brazil, and Mexico to evaluate their digital and customer
experience strategies. Further, Forrester conducted five phone interviews with respondents of the same profile to gather
additional in-depth insights. Survey participants included director-level or higher decision-makers with responsibility for
customer experience strategy and/or digital initiatives. Respondents were offered a small incentive as a thank you for time
spent on the survey. The study began in May 2015 and was completed in June 2015.
Project Director: Mark Brozek, Market Impact Consultant
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Appendix B: Supplemental Material

RELATED FORRESTER RESEARCH

“Brief: Audit Your Digital Transformation Efforts To Ensure Successful Delivery,” Forrester Research, Inc., March 26, 2015
“Use Customer-Centric Metrics To Benchmark Your Digital Success,” Forrester Research, Inc., February 5, 2015
“Digital Business Transformation: Lessons From The Pros,” Forrester Research, Inc., December 11, 2014
"Customer Desires Vs. Retailer Capabilities: Minding The Omni-Channel Commerce Gap," Forrester Consulting, January
2014
"Building The B2B Omni-Channel Commerce Platform Of The Future," Forrester Consulting, November 2014

RELATED ACCENTURE MATERIAL

“Digital Transformation: Re-imagine from the Outside-in,” Accenture Interactive, 2014
“Seizing the Opportunities of Digital Transformation,” Accenture Digital Innovation Survey, 2014
“The Insurance Customer of Tomorrow: Three Questions to Guide Success,” Accenture, 2015
“Beyond Insurance: Embracing Innovation to Monetize Disruption,” Accenture, 2015
 10

Appendix C: Endnotes
1
Source: “Brief: Audit Your Digital Transformation Efforts To Ensure Successful Delivery,” Forrester Research, Inc., March
26, 2015.
2
Source: “Brief: Budgets And Spending For The Insurance Industry,” Forrester Research, Inc., April 2015.
3
Source: “The Chief Digital Officer: Fad Or Future?" Forrester Research, Inc., October 31, 2013.
4
Source: “Compare Your B2B Content Marketing Maturity,” Forrester Research, Inc., July 16, 2014.
5
Source: “Use Customer-Centric Metrics To Benchmark Your Digital Success,” Forrester Research, Inc., February 5, 2015.
6
“Net Promoter Score” is an index that measures the willingness of customers to recommend a company's products or
services to others. Net Promoter and NPS are registered service marks, and Net Promoter Score is a service mark, of Bain
& Company, Inc., Satmetrix Systems, Inc., and Fred Reichheld. “Customer lifetime value” is a prediction of the net profit
attributed to the entire future relationship with a customer.
7
Source: “Disruptors Belong In Your Digital Ecosystem,” Forrester Research, Inc., September 2015.