Your Attention, Please: Insurance CIOs Must Focus on Core Capabilities and Minimize Distractions
In today's tech-centric world, an insurance CIO is confronted with a multitude of proven solutions for improving the business via technology. Add to that the myriad "shiny objects" that appear in the foreground to tempt distraction. Amid all this, it's no surprise that CIOs struggle to sort through priorities, solution alternatives and even job responsibilities.
While every company has unique needs, there are a few areas of focus that just about every CIO should be thinking about:
Leveraging Data
Improving data management and analytics is an absolute must for most carriers, particularly in the P&C and health payer segments. When analyzed and correlated meaningfully, data becomes information to help functional leaders and CIOs collaborate on priorities for technology initiatives. Opportunities abound in the areas of market share growth, retention, risk selection, pricing, product development, service delivery and reducing operational expenses. IT's role is to unlock and organize data and make it available to the business in a flexible manner. Business leaders in turn must put that data to work, and must navigate land mines such as legislation that might preclude, for example, community rating and other techniques designed to manage P&C risk and pricing.
Implementation and Management Practices
Fewer companies are building their own systems. More are buying and integrating packaged systems. But whether you are building or buying, your implementation practices should be evolving. For example, agile principles are changing the way systems are specified, selected and implemented. In the agile approach, business and IT counterparts come together in a highly collaborative setting with incremental objectives and short time frames for completing them. A common frame of reference is developed quickly, and there is a priority on working together in person. Good ideas get pursued more quickly.
Likewise, missteps are identified before major damage can occur. Course corrections are much easier and less costly. You don't have to adopt every practice of the agile approach, but understanding the principles will help you evolve toward reduced implementation times and improved business outcomes.
Shiny Objects
I know of one entrepreneurial CEO who is famous for falling victim to evangelists on long plane rides and then rushing back to his CIO to extol the virtues of the latest gizmo or silver-bullet methodology. And then the CIO has to tamp down the excitement, taking valuable energy away from the real business at hand.
Today, for example, cloud computing is very shiny. The principles are indeed important (though not new), but the hype is deafening. Bottom line: If you are operating any commodity systems or infrastructure, there is probably a provider out there that can host it for you less expensively. The truly valuable promise of cloud is that far more robust systems are now available remotely and reliably, and seamless integration with existing systems is relatively simple. Numerous industry-specific (policy admin, billing, etc.) vendors offer hosted solutions that are easy to ramp up and integrate.
Another very shiny object today is social networking. How many resources are being squandered trying to figure out what to do with it? Before committing resources, be clear about expected outcomes and benefits. How would using social networking improve your customer/agent/employee experience, and how would it benefit your market presence? If the answers are all qualitative, there's a problem.
Fundamentals
The economic downturn ironically has led to simpler decision-making. Some projects are simply off the table. New projects are scarce. Compliance and security projects are marching on. Budgets are flat or shrinking. But the fundamentals of successful IT projects are the same. A recent roundtable of CIOs identified those fundamentals as leadership, clear objectives, having the right team, open communication and relentless oversight. A CIO is responsible for installing and maintaining those fundamentals.
Our industry is steadily becoming more dynamic in applying technology. Our CIOs and solution providers are leading that charge. We are thus faced with an ever-growing number of options and alternatives to enable the business. Those technologies and management practices that serve core operational needs and satisfy customers are the ones that truly warrant a CIO's attention.
Rod Travers is senior vice president of The Robert E. Nolan Company, a management consulting firm specializing in the insurance industry.
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