During the last half decade or so, insurance IT has gone through rapid evolution, and the role of the CIO has evolved with it. The industry has made great strides in both vendor development and insurer implementation of core systems built on new technologies, insurers have responded energetically to a revolution in consumer demand caused by consumerization of technology, and the insurance industry — a pioneer of high-volume data processing — is on the threshold of a new era of data and analytics that is likely to transform the industry. As these technology-driven changes occur, CIOs should be considered a key strategic resource for their companies, according to Matthew Josefowicz, founder and principal of New York-based research and advisory firm Novarica.
"In an information business, the chief information officer should play a critical role in helping the other strategic executives understand the company's capabilities and the possibilities of a rapidly evolving information technology environment," Josefowicz insists.
CIOs have gained stature in their organizations and taken on that critical role in many companies, Josefowicz maintains, but their work is fraught with opportunities for failure, given the dynamic state of technology and the significant investments required to utilize it.
"When CIOs fail to deliver on their core operational mission of delivering IT-enabled business capabilities when and how their business partners expect them, they lose their partners' trust and can't function in their strategic role," Josefowicz elaborates. "This is bad for the CIO and for the company. CIOs must 'run the business' of IT effectively in order to create a platform for their strategic value."
The experience of the last several years reveals that various management and technology factors can pose hazards for insurance CIOs. Novarica's Josefowicz offers the following recommendations for them to maximize their chances for success, and thereby retain the confidence of senior leadership and maintain strategic influence:
1. Focus on the Business: Always keep your focus on business-enabled IT capability rather than on the underlying technology of how those capabilities are delivered. Use the best tool for the job.
2. Execution is Fundamental: Strong project management is essential for building the faith in IT of the business organization. Don't neglect proactive communication on project status and anticipated problems.
3. Embrace Agile Development: Insurance CIOs should embrace the Agile development methodology not because it's cool, but because it leads to closer business/IT collaboration.
4. Reverse Engineer Analytics Initiatives from Business Goals: In any data/analytics project, start with an anticipated business outcome and work backwards. What will change if there is better data?
5. Distinguish Partners from Suppliers: Be sure you know which vendors are suppliers and which are partners, and treat them accordingly.
6. Understand the True Costs of Outsourcing: Understand whether you are outsourcing for cost or for capabilities. If it's for cost, make sure you understand the whole picture, and that you have implemented adequate measures to ensure acceptable quality.
7. Tap Virtualization and Private Cloud Synergies: Think about how to leverage your virtualization investments in a private cloud environment.
8. Invest in Your People: Make sure that they have an understanding of the impact they have on the business and reward their contributions.