The fundamental objective is agility. It's not just about the features and functions of a solution. Equally important are the technology and the architecture that create a foundation for flexibility. SMA's research on IT investments reveals a notable shift in emphasis from the back office to the front and middle office. Insurers are giving top priority to projects that will help partners increase their own productivity and improve new business and underwriting workflows.

Think Big, Act Small

The path to creating highly dynamic distribution channels will vary based on an insurer's business mix, distribution partners, and customer characteristics. But for many insurers, projects get delayed because the perceived complexity of addressing this tough topic is overwhelming. A three-step approach can help insurers move forward in an orderly fashion. Using these three steps, insurers can lay out a clear path for capitalizing on the evolving integration of communication and information.

Step 1: Think Big—Understand Required Capabilities

Even if work to support more advanced channels is already underway or in planning, don't be afraid to take a new view. Start at the beginning by educating all stakeholders on what is state-of-the-art. Then investigate what's coming next by looking at the state-of-the-possible. Explore leading trends in the distribution space to find out what key competitors are doing. Outline the set of business and technology capabilities that will satisfy business goals. Carefully look at:

• How are distribution channels shaping up? What determines leaders today? What will do so tomorrow?
• What are our points of vulnerability? How can we strengthen our position?
• What are the required capabilities for our company?

Step 2: Act Small—Prioritize Capabilities and Solutions

Analyze the information gathered in Step 1, and use it to develop and prioritize the list of required solution components. To perfect this analysis and prioritization, leverage research, experience, IP, and deep knowledge of the solution capabilities that are available in the marketplace. And because they are so inter-related, it is important to evaluate and clarify synergy and integration between the policy administration system, the underwriting desktop system, and distribution channels. Strive to define:

• What are the most pressing capabilities that the company needs to meet shorter term business needs and longer term business goals?
• What solution capabilities are available in the marketplace that will enable dynamic distribution channels?
• What internal constraints exist that will influence priorities?

Step 3: Drive Dynamic Distribution Channels with an IT Roadmap

In the final step, create an IT roadmap that lays out the major steps and technology investment required over the next three to five years, with high-level estimated costs. This will serve as the cornerstone of the IT investment plan and guide the direction of projects and plans. Consider the following:

• What is the overall investment requirement to deliver the needed capabilities?
• Which investments are foundational and which are incremental?
• What steps or projects are co-dependent? What steps or projects can be delayed if necessary?

Act Now

Insurance distribution is changing in ways that not all insurers are ready to acknowledge, much less manage. But this is an area where an 'ignore and wait' attitude won't cut it. Insurers that continue to take a wait and watch stance may find it impossible to play a game of catch-up. It is clearly the time to act. Drive dynamic distribution channels in your organization—now.

Deb Smallwood, the Founder of SMA, is recognized for her expertise in deciphering how IT spending trends influence competitive advantage in the insurance industry. She offers a fresh perspective on how business capabilities can meet strategic goals. Exclusively serving the insurance industry, Strategy Meets Action blends unbiased research findings with expertise and experience to deliver business and technology insights, research, and advice to insurers and IT solution providers. Deb can be reached at [email protected].

SMA and Tech Decisions are launching a new study to investigate insurance distribution dynamics. Watch for the survey late this summer. Results will be shared in a webinar planned for this fall.