May 06, 2013

Demand: Fireman's Fund is breaking away from the traditional model whereby IT receives requirements generated through a discussion within the business, says CIO Alexander Bockelmann. "My mental model is that there's always a customer at the center of things, and that customer has needs," Bockelmann says. "We need to develop a business strategy to meet those needs."

Alexander Bockelmann, Fireman's Fund
Alexander Bockelmann, Fireman's Fund

IT's role at the Novato, Calif., insurer is to understand the customer and business strategy, and then translate business capabilities required to execute the strategy into IT solutions, Bockelmann adds. "To be able do that, we created a demand management function that we embedded within the business to be part of its extended leadership team," he says. "The purpose is to basically cut out the middleman and be close to where the action is."

The demand function enables IT to understand what the business needs better than it would through a discussion about ultimate requirements only, because it enables an ongoing translation that avoids the need for interpretation later, according to Bockelmann. IT is also able to use this partnership with the business to inform its strategic direction as early as possible in order to react quicker to future business demand.

Fireman's Fund's demand function has been elevated to the COO level, where both IT and business processes are managed. "That allows the demand function to cover the end-to-end needs of the business," Bockelmann says. "The business doesn't need to determine whether a given capability will be achieved through a process change or an IT enablement."

Bockelmann sees the demand function as avoiding the problem of business throwing its requirements over the wall, and IT responding hit or miss with the end product. "This allows us to get a much richer picture from which we can then derive the future solution," he says. "By working in tandem with the business, you also minimize the likelihood of surprises and fire drills that result from items getting stuck somewhere in the process so that you only hear about them once they're already due."

Design: Fireman's Fund has suffered in the past from having redundant elements of IT embedded in the business without centralized IT leadership, Bockelmann acknowledges. This led to product-specific solution designs rather than flexible enterprise systems. "Rather than hard-coding solutions for an isolated business need, we now leverage flexible solution architectures linking our solutions to the longer-term business strategy," he says.

In an effort to optimize the business-IT relationship, Fireman's Fund's leadership decided it would achieve the best design results with tight collaboration between the business architecture function and its IT architecture counterpart, Bockelmann says.

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The business is thus able to directly influence IT architecture, standards and design. Now all requests follow an efficient design model rather than going directly to execution, which tends to add complexity to both the business and IT over time, Bockelmann reports.

"We separated out our IT enterprise architecture design competency and gave them teeth, empowering them to shape solutions in ways that fit the target state of the enterprise," Bockelmann says. "By adding this design review, we've been able to significantly reduce complexity not only to new demands but existing demand."

In concrete terms, Fireman's Fund has reduced overlapping functionality and retired a significant number of solutions, which in turn has increased productivity and reduced overall run costs, by Bockelmann's account.

The carrier has also attached to the design function its IT R&D competency, which is charged with evaluating the utility of emerging technologies for solving existing and future business problems. "We don't want our design function too entrenched in the 'as-is' state of running the company," says Bockelmann.

Delivery: Fireman's Fund is no different from other companies that see significant opportunities in using external resources for delivery purposes. However, Bockelmann insists that there are key aspects of delivery that should be kept in-house, or brought back in if they're been outsourced.

Bockelmann sees value in maintaining internal project management capabilities to foster, maintain and reinforce effective relationships between the business and IT. "Connected internal people can also help struggling external project managers to get up to speed within this sourcing model," he notes.

Bockelmann also believes in prioritizing the application portfolio by business criticality and keeping hands-on delivery personnel for applications that define and differentiate the company. "This allows you faster response times and shorter time-to-market for business changes, even if you scale in large transformational projects with external capacity," he explains. "Internal knowledge of code and technology gives you much stronger ability to partner with vendors and strategic sourcing partners, rather than solely relying on their interpretation of the solution and effort estimates associated with it."

ABOUT THE AUTHOR
Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek ...