Part One: The insurance executive's fears
There are five 'fears' that keep even the most seasoned insurance CIOs on their toes. This column covers time and money.
Editor’s Note: This is the first installment of a four-part series written exclusively for PropertyCasualty360.com that explores how insurance executive “fears” prevent carriers from effectively embracing technology for transformation.
It is challenging to run an insurance business. Competition is fierce, the industry is complex, and constant pressure mounts on IT teams to outpace agile market entrants. In this demanding environment, the CIO has one objective: leave a lasting legacy for the business. This comes down to selecting the right technologies to achieve growth, based on business need, without blowing budgets and timescales.
Achieving this legacy is a complicated, delicate balancing act of factors, or “fears,” that affect decision-making. These fears are time, money, complexity, the ability to differentiate, and change management. Managing them appropriately can make or break a digital transformation project.
In this article, I delve into time and money. The relationship between them is irrevocable. If not managed effectively, time and money fears can paralyze CIOs and prevent them from taking decisive action. The tightrope between spending too much money and having too little time, and vice versa, creates challenges to walk. Here’s why…
The CIO’s challenge
We begin our journey with the root of many insurance CIOs’ anxieties: the systems upgrade. Managing a system like a policy administration platform is a Herculean task, involving a great deal of technological complexity. CIOs proceed with caution as the average executive tackles this project once in their tenure at a company.
So it is no surprise that, rather unfairly, CIOs get accused of spending too much time on what they do. Anything complex or mission-critical takes time to understand. In addition, the CIO is the de-facto owner of ideas and systems that business colleagues have implemented over decades. The original champions of those ideas have left the company, but the systems remain. The CIO inherits responsibility for managing them as well as keeping up-to-date with new technologies to stay ahead of the curve.
Amid this scrutiny, CIOs battle an outdated paradigm that says, “Business should drive, and IT should execute.” This mindset needs to be skillfully replaced with one of collaboration and education — blending business leaders’ creativity and IT executives’ technical knowledge.
So, CIOs find themselves contemplating how to proceed. They want to move quickly and decisively but are unsure how. Time and money fears begin to creep in.
The time fear
Ultimately, the CIO wants to tune into the business, find solutions to resolve issues and respond in an appropriate amount of time. If the request is urgent, there are two primary options. Number one is to deliver something quickly but risk not accounting for the full systems landscape, potentially adding complexity. Number two is to think through the request strategically but be accused of taking too much time.
The biggest pitfall for CIOs is going too fast, without taking into account business readiness. Going faster does not always mean doing better. There is a trade-off between too much and not enough time. The answer lies in meeting the business where it is at, understanding current challenges and competition, and clarifying the level of depth required from a solution. Without doing so, IT will lean towards creating a solution that is ‘industrial strength’ — designed to last decades but likely to be outdated quickly.
Aim to match time spent on technology with business maturity levels. Having an appropriate budget to support this also helps. Enter the money fear.
The money fear
Innovation costs money. Keeping up with competitors takes investment. This is why money and time are connected; projects that take longer to deploy cost more money. Expensive, complex technologies take time to maneuver. The time/money seesaw tips constantly.
While transformation costs money, IT is often seen as an expense. The automatic reaction to an expense is to lower it. Unfortunately, nothing could be further from the truth. Technology should be seen as an investment, viewed through the lens of value. If CIOs have clarity on how specific technologies impact business outcomes, money can be allocated appropriately. Less money and time on older systems, more on newer systems.
Creating a consciousness within the organization about how much it costs to do things, and the value those things create, helps the CIO lessen concerns about using budgets. It is also important to measure costs and communicate these appropriately to stakeholders.
Overcoming the fears
Brooks’s Law argues that adding more time to a complex software project will delay the delivery and outcome. With any major technology decision within an insurer, it is not as simple as ‘going faster’ or throwing money at it. It is more nuanced — think dimmer switch rather than on/off button.
To address time and money fears, pace and budget setting should be outlined, with business goals/needs in mind. These goals depend on the maturity of the organization and preparedness for change.
Having a good mix of people to support a systems overhaul will help the CIO effectively deploy resources. Quick thinkers can be applied to solutions that can stand up fast and be taken down if needed. Deep thinkers can be applied to more complex, time-intensive ‘industrial strength’ solutions.
In support of skills, there are a host of cloud-native technologies available to help CIOs become responsive, cost-conscious and nimble. These provide core policy administration functionality that can be deployed at breakneck speed with myriad configurations. A technology provider can also be a business partner, helping to identify business goals and bring IT and business teams closer.
Finally, CIOs should be conscious of the fact that the amount of money spent and the value that IT brings need to be understood by business leaders. Only then will you have harmony between IT and business units — and a legacy that will last.
Greg Murphy (Greg.Murphy@Instanda.com) is executive vice president of North America for INSTANDA. The opinions expressed here are the author’s own.
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