October 03, 2013

Analogies are always helpful in understanding how and why things seem to work the way they do. Having recently attended some conferences on the modern software platforms now available to insurers, it struck me that an analogy from another industry might be in order.

Boeing's 787 Dreamliner is the world's most advanced passenger plane, featuring many trailblazing features (pun intended) for pilots, crews, and passengers. Similarly, there are some new platforms available for policy, billing, and claims that boast modern architectures and rich configurability and functionality.

However, as has been highlighted in the media, Boeing has suffered several setbacks along the way and the Dreamliner was temporarily put on the shelf until their engineers corrected the problems, not the least of which was on board fires caused by overheated battery packs. The aircraft has begun flying once again, but these early problems have been casting some doubt on its future viability, at least in the short term.

[More from Petersmark: Helping insurance CIOs manage expectations]

In the wake of the merger with McDonnell Douglas, Boeing focused on expense management rather than innovation. It outsourced much of the 787's design and manufacturing, and the project has cost much more and taken far longer than it was supposed to. If this sounds similar to the kinds of implementation paths that large IT systems take in carriers, it should. Just like insurers, McDonnell Douglas has discovered that it's often a perilous path from design to production.

In far too many instances, big IT programs and projects parallel the plight of the Dreamliner, with much the same results. In both instances, it's not that the designs of the systems/airliners aren't good — in fact, they likely are — it's that the hard part is execution and delivery, and that is often the place where many hit turbulence.

Frank Petersmark
Frank Petersmark, X by 2

Big software projects at insurers replacing core systems too often run into cost overruns and delays. Unlike the Dreamliner, some never even get off the runway. Or if they do get in the air, they perform poorly resulting in lots of turbulence for customers. Is this a systems design issue? Likely not. The IT "Dreamliner" turns into the Nightmare-liner, but the nightmare doesn't end when your wake alarm buzzes. It goes on for years.

So what lessons can be drawn between the experiences of Boeing and those insurers who find themselves struggling with large system implementations?

First, don't treat the implementation and delivery phases of a large initiative as if it were software development, because it's not.

Part art and part science, good large-program execution is a balance between the inevitable battery fires that will pop up along the way and the need to deliver the desperately needed functionality and process improvement to the organization. This requires a unique combination of talents – a thick skin, an unswerving focus on the ultimate objective, and the ability to effuse confidence when things don't look too good.

Last I checked that should be the description of many CIOs. It is generally not the description of a project manager, so be careful about the kinds of people and teams you entrust with bringing home this "you-bet-your-career" implementation.

Second, the best program leaders should always be focused on the sum of their efforts, rather than on the individual parts that make up the sum. Leave the track or pod tasks to those who do that well, as it's imperative that somebody keeps their eyes riveted on the big picture. The danger of not doing so is program delay, or even failure, buy a thousand cuts, or in this case of carriers death by a thousand status meetings.

This by no means is a commentary on agile or any other software development methodology that breaks large tasks into smaller tasks as a way to demonstrate progress and forward momentum. That is a fine approach for software development, but remember that this is not an exercise in software development anymore; it's an exercise in communicating, executing, and delivering. And of course above all, it's an exercise in leadership, something that was lacking when Boeing made its stumble.

This is where Boeing missed the runway, so to speak, and where many insurers miss as well.

Keeping the big picture in mind – what the successful delivery to production means to the organization – should be motivation enough for anybody, but this also the place where the most initiatives stumble for insurance carriers and for many other industries. Looking ahead, this will also be where all the action is for carriers. Yes, software developers will always be important, but talented (internal or external) integrators, implementers, and those who can deliver will become paramount and the priority for talent recruiters.

Now back to our analogy. Perhaps the most relevant point is that the whole idea behind the Boeing approach was to engineer and construct a new aircraft that would become the reputational and financial future of the company.

In concept that's a fine idea. However, it's often a long and perilous road from concept to implementation, whether it is an aircraft or an insurance system. From media reports, Boeing chose to try to build and deliver their future as cost-effectively as possible, including outsourcing much of the work to disparate teams who had little or no sense of the overall program. As a result, it's going to cost Boeing immeasurably more in costs and public relations than any monies that might have 'saved' via their execution and delivery approach.

The same is of course true for insurers that take the same large initiative implementation approach, and end up spending more than they had planned via rework and refit, and more importantly, who lose the trust and credibility of their passengers (policyholders)--something not easily recovered in any industry.

About the author: Frank Petersmark is the CIO Advocate at X by 2, a technology consulting company in Farmington Hills, Mich., specializing in software and data architecture and transformation projects for the insurance industry. As CIO Advocate, he travels the country meeting CIOs and other senior IT and business executives at insurers, learning about their goals and frustrations, sharing lessons learned, and offering strategic counsel. Formerly VP of IT and CIO at Amerisure Mutual Insurance Company, Frank has more 30 years' experience as an information technology professional and executive. Widely published and quoted, Frank has spoken at American Association of Insurance Services, Society for Information Management meetings, and various CIO and industry conferences. He can be reached at Fpetersmark@xby2.com.