While making a leap to that next level of efficiency in their operations is what many companies dream of, such leaps arent made easily, and they dont come cheap. Strategic projects are major differentiators, says Jack Tyniec, managing director of TCi Consulting and Research. But such projects typically have a multiyear horizon. They deal with issues that take a company or its operations into new areasa new level of service, new kinds of paradigms, new types of back-office service options, outsourcingwhereas tactical projects are pretty narrowly focused, Tyniec says.

Insurers love what the big-bang projects can do for them, but the money needed to make such investments is not available in todays economy. There simply arent the dollars available in todays budgets to justify substantial expenditures, Tyniec points out. Very few CIOs have a pool of discretionary investment capital available for a new opportunity that already hasnt been defined. By contrast, tactical projects are not so much a matter of preference, but rather a matter of necessity, he says.

One tactical approach favored by some insurers involves niche outsourcing arrangements, according to Tyniec. By taking closed blocks of business out of the processing areas and call centers, insurers can allow their customer service reps to concentrate on supporting open blocks of existing products with a target customer base, he explains.