Taming the IT Beast in Insurance

Each of us must at least have a couple of horror stories to recount about an IT project gone wrong due to:

> Adapting an off-the-shelf system instead of adopting it.

> Cost overruns.

> Delays in delivery.

> Forgetting to assign non-IT folks to projects.

> And so on.

It is not uncommon to hear of insurers that spend hundreds of millions of dollars on IT annually and still struggle to showcase a single B2C, B2B, or B2B2C connectivity solution or global business intelligence system. I have no idea why this is the case but the nightmare seems to be a never-ending one.

Paradigm Shift #1: Strive for Perfection

IT project planning, design, implementation, and measurement must be attacked with a vengeance, enthusiasm, relentless drive, and obsession with timely and on-budget delivery.

Leaders who are in charge of IT project delivery should have zero tolerance for slippage. The system end-product and screens must also be aesthetically pleasing (read beautiful to look at) and its customer friendless superb. When in doubt, think Apple!

Paradigm Shift #2: The $400 million Question

You’d be hard pressed to find executives and shareholders who can truly justify IT spending in terms of increased efficiency, customer satisfaction, and ROE.

Think of IT investments in terms of premium opportunity cost: To fund a $20 million IT project you need to produce $400 million of premiums at a combined ratio of 95 percent. That’s the equivalent of 200,000 auto/motor policies at an average premium of $2,000.

You get my point?

Having said that, we MUST continue to invest in IT, but SMARTLY. Why?

> Customer Centricity: Ease of business with your customers and distribution partners, especially in the personal consumer and SME commercial customer spaces, is key to success in the 21st century.

> Sales: Facilitate sophisticated real-time data mining to analyze customer segments and match their personal and business risk needs with appropriate products and services at the right time. Big data is yesterday's idea. Think fast data.

> Winning: Have a competitive edge when rolling out new products. The IT solution must be part of your unique sales proposition (USP) and competitive proposition to the marketplace.

> Control, Knowledge, & Governance: Better manage your business through accurate and timely business intelligence.

> Communications & Connectivity: Internally and externally in an ever-mobile, demanding, and globalized business world.

> Efficiency and Cost-reduction: Pressure on profitability margins continues to increase, especially in the context of an ever-volatile investment returns environment. IT can be a major costs reduction and efficiency enhancement driver.

Paradigm Shift #3: Don’t let the Dog Wag the Tail

IT solutions should serve customers and your entire business, not the other way around. Instead of just complaining about the IT problem you should take charge.

Put non-IT folks in charge of IT departments and make sure they are supported by subject matter experts. The same thought process applies to HR departments. I mean, why not? If an executive is good enough to lead thousands of people and run a billion-dollar business, why can’t she lead an IT or HR department?

Note: Don’t forget to challenge conventional thinking and drive gender diversity in your business, including the IT space! Shocking, I know! The best CIO I worked with is a woman called Amanda Curley.

The real issue is not with IT departments only but also with senior management. Most IT folks and projects do not get enough management time, support, and collaboration. Like claims people (recall my claims blog?) IT folks are often ignored (until the screen freezes of course) and are referred to as the back office. The logic escapes me, especially in today’s digital economy where your business will simply DIE if you get IT innovation, spend, and utilization wrong.

Deep Dive: You the Boss, need to be involved in IT projects. Here’s precisely what I mean:

> First, don’t be a micro-manager – just in case that’s what you understood!

> Monitor your projects’ spend progress reports and watch every penny.

> Staff the work streams with as many non-IT as IT folks, if not more.

> Show up at every major governance meeting, ask lots of questions, be skeptical, and keep tweaking.

> Challenge your team to deliver more, better, and cheaper solutions.

> Go through and test at least some system functionality yourself during User Accepting Testing (UAT) sessions. Remember to lead by example.

> Review the aesthetics with the help of experts, and make sure the screens are flawless, attractive, and easy on the eyes.

> Show a beta version to customers and distributors and get their input.

> For online, B2C, B2B, and B2B2C systems, ensure that the quote, buy, FAQs, and other buttons are in the right place. The right place is measured by how easy it is for a customer or a distributor to go where you want them to.

> Ensure that the language is not convoluted and the editing is properly done and appropriate for the audience (and isn’t some insurance jargon lifted out of an insurance manual or broker-specific marketing piece if it is intended for the non-insurance-savvy general public.)

TIP #1: Make your Governance Robust & Efficient

When it comes to IT projects, you need to strike a balance between good corporate governance and a speedy and efficient way to getting things done. Remember my recent blog on efficient meetings: Keep' em short!

Do not overburden the process and organization with too many layers. At best you should have two layers: A project working group (PWG) that moves things along operationally on, say, a bi-weekly basis and a decision-making group (DMG) that meets monthly or quarterly to tackle more strategic and important matters. For an in-depth discussion on how to structure and run IT governance for maximum effect and minimum cost and time waste consult the IT chapter in The Insurance Management Playbook.

TIP #2: Get a Project Management Officer (PMO) assigned to the project from day one. PMOs are the most expensive resource you cannot afford not to hire.

Conclusion:

By now you may be thinking I am crazy to expect you to achieve all of the above. However, if you follow my advice, you will end up running major IT projects successfully. My teams and I have been there. It works!

So, as I advised you in my claims blog, love your IT folks as much as you love the claims staff. Show them appreciation, include them in win celebrations, and do make an effort to actually understand what they do and what type of support they require. Ultimately, NEVER refer to them as the back office.

Final TIP: Most companies invest in software, hardware, and implementation but often neglect to allocate enough funds to hire change-management experts. Like PMOs, they are the most expensive resource you cannot afford not to hire!

Their purpose in life is to look at the X-ray that was taken of your operation, compare it with the to-be process, and determine the behavioral and cultural gaps that will impede the efficient use of the new system.

They use their expertise as a bridge to get your people from the inefficient present- to the efficient desired end-state and apply methods and tools to facilitate the transition. They build mental bridges, using well-honed techniques and tools, to get new or upgraded system-users comfortable with the idea of change, highlighting its benefits to your employees and intermediaries.

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