Fast Forward?

Sharon S. Schwartzman

The notion of speed in the insurance industry today is a bit schizophrenic. When referring to bringing new products to market, it's viewed as a good thing–the reason being a first mover leverages the opportunity to gain competitive advantage (for more, see “Beat the Clock”). It's odd, though, that same thinking rarely enters into the IT equation. As often repeated, insurers are more apt to be technological followers rather than leaders. This is understandable–tighter budgets of recent years, scars from failed projects, or the industry's well-known risk aversion can throw fear into the bravest technological pioneers. Or it's possible there truly are no business needs or opportunities to warrant such risk taking.

But while it's painfully straightforward to quantify the cost of a failed project, it's less easy to quantify lost opportunities: In the short term, there's the potential for cost cutting, greater agility, or new business. Long term, the benefit could lie in attracting the brightest young employees to your organization because you have the technology such talent wants to work on. And recruiting the best people may be increasingly competitive. According to data collected by the Higher Education Research Institute, the percentage of students who intend to major in computer science or engineering remains small and has declined from 4.2 percent in 2002 to 2.3 percent in 2005.

Then there's also the need to prepare for a generation that will do its business differently. On several occasions, I've heard Barbara Koster, CIO and SVP of Prudential Financial, make this point– most recently at a Celent conference in Manhattan, where she said: “The generation that is coming is going to drive a new kind of behavior, and technology can't turn on a dime–you can't wait until that generation is here and then react. I had a conversation with the CIO of Notre Dame, and it was enlightening to me. What the students at the school expect [from technology] is like their electricity–it's just there. Translate that into their expectations for the workplace. Everything is there for them. The same is true when they go to buy products. When they start buying their own life insurance or their own property/casualty, their expectation of what's available to them is very different.”

As a community, Koster asserted, insurers have yet to pick up on how they're going to make all this happen. “Is your company wireless?” she asked. “Is your standard desktop really a laptop they can port around?”

While these things sound simple, they take time and money, not to mention convincing business such initiatives are important to profitability. But following this rationale to its logical conclusion, the next generation won't like to work the way we're prepared to have them work, and they won't want to buy products the way we're prepared to sell them, which spells trouble for the workplace and marketplace. The bottom line is an industry cautious about even near-sighted investing for the present somehow must develop courage and a far-sighted vision so as not to risk the future.