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Insurance Companies Get Smarter About Project Management

Insurance companies are getting better at protecting their IT investments through flexible application of project management best practices and by aligning incentives to results.

Insurers striving to become smarter project managers should adopt conventional best practices, but they should be flexible in their adaptation of those practices, recommends Rao Tadepalli, CIO of Republic Indemnity, an independent subsidiary of Cincinnati-based Great American Insurance. They also should be open to ideas from other industries, he advises.

Owing to the Encino, Calif.-based P&C carrier's proximity to Hollywood, Tadepalli has been able to take inspiration from television production procedures in the form of a "runner" role. "A runner is someone who does most of the odd jobs," he explains. "We realized that in large projects, teams tend to act as silos and neglect things that don't belong neatly within their responsibilities. In order to close the gaps, we applied the runner concept to keep projects on track."

According to Tadepalli, he first employed an independent consultant to act as a runner during Republic Indemnity's legacy claims system replacement initiative. In mid- 2009 the carrier finished implementing Guidewire's ClaimCenter within 18 months and 10 percent under budget. During that initiative, Tadepalli explains, the runner was available for tasks — such as database administration, coding and documentation — for no more than 50 percent of his time; Tadepalli stresses that the runner was as much diplomat as gofer.

"The rest of his time was spent to offer help and mediate," Tadepalli continues. "He was in a position to hear both sides of a story between teams that might blame a problem on each other. Sometimes these issues are just a matter of constrained resources, and a runner is able to pick up slack. Otherwise the issues get escalated to the project manager level or to me, and there are disputes that divert energy away from project work."

[For more project management tips, read Tadepalli's 10 Rules of Project Management]

During the past decade, insurers' project and program management has matured significantly, and many carriers now have adopted advanced project management offices (PMOs), required at least some of their project managers to be PMI (Project Management Institute) certified and built education programs to groom managers, according to Karen Furtado, a partner with Boston-based research and advisory firm Strategy Meets Action (SMA). While these measures have reduced the incidences of project failure, however, there still is plenty of room for improvement, she says. "We still hear about too many project failures in the insurance industry," Furtado comments.

The Right Talent for the Job

To improve that record, Furtado recommends that insurers hire experienced project managers, rather than delegating that work to business analysts or technical architects. Combining roles will end up costing insurers in the end, she warns. "Companies need to have a formalized structure and processes for all to follow," Furtado advises. "The appropriate level of process for each project is key."

Company growth drove Scottsdale, Ariz.-based Nautilus Insurance ($250 million in 2011 premium) to a higher level of formality in its IT management, including hiring its first CIO, Brad Lontz. The company has an appetite for modern technology, such as its Java-based Fiserv (now StoneRiver) PolicyStar core insurance system, Lontz tells I&T. However, as Nautilus has continued to invest in IT, he says, its leadership wanted to answer the question: "Are we getting maximum value for that investment?"

To drive both greater efficiency and transparency into IT resource use, Lontz licensed San Mateo, Calif.-based Clarizen's project management software on a software-as-a- service basis. "That allowed us to start small, with minimal investment, and walk away with little trouble if it didn't work," he says.

According to Lontz, Nautilus took a focused approach to what he describes as the rich functionality of Clarizen. "Early on we instituted an intake and prioritization process, which addresses how you get the projects from the business team, prioritize and execute them," he relates.

The software has given Nautilus a precise grasp on the status of projects and availability of resources, Lontz says. "You never say 'IT is busy'; you can determine which resources are needed and track when they will become available," he explains. "You mature away from working purely on a queue and saying, 'We can't get to that now -- let's put it off.' "

Tracking the IT Portfolio

When Jeff Frazee became SVP and CIO of Aviva USA (Des Moines; more than $47 billion in assets) at the beginning of 2010, he says, he faced the challenge of refocusing the technology investment of a large enterprise. Investment dollars were allocated to functional areas, making projects more tactical than strategic, he explains.

Frazee created a centralized fund for a business transformation portfolio of projects, as well as an Executive Prioritization Committee (EPC) staffed by the CIO, CFO, general counsel and the heads of insurance operations, sales and marketing. The EPC, which meets every three weeks, monitors strategic projects only, which are defined as those that meet a threshold of 2,500 work hours or $200,000 invested, he relates.

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 Financial Services of TechWeb he has written on all areas of information ... View Full Bio

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