5 Areas Where Insurance CIOs Must Be Cautious

A former boss of mine, the COO, was once asked to speak at a CIO conference on "What I expect from my CIO." As a young CIO, I thought it worthwhile to go hear what the boss expected from me as he shared his expectations with a group of 250 of my peers. His message was quite simple but very profound. He said: "I pay my CIO 50% of his pay for what he does for me (the company) and 50% for what he does not do to me (the company)."

His words have stayed with me over the years. I believe his message is something all IT leaders should take to heart as a guide to managing the fine balance between what we deliver and what we do to remove risk and obstacles. At first glance, this seems rather strange. Are CIOs to cut back fifty percent? Obviously, no CIO could survive by reducing services and delivery. The best CIOs recognize they sit in a critical decision-making and execution position that can impact the business both positively and negatively. Let's look at some of the specific areas where CIOs can put the business at risk, exposing it to needless stress and turmoil:

Gerald Shields, The Nolan Company

1. Delivery Execution: Business depends on IT delivery for product introductions, service improvements, and expense reductions. In today's integrated world, every business event, process, and delivery has some element of technology associated with it. It is exhausting to business leaders to be held captive by delayed IT projects. These delays can drain the organization of its patience and goodwill very quickly. A joint 2012 study by McKinsey and Oxford University indicated that 17% of large IT projects fail to the extent that they put the company at risk. The report also shows that large projects often run more than 40% over budget while delivering less than 50% of the promised value.

2. Technology Life Cycle Management: Understanding technology's life cycle and managing technology introduction, migrations, and obsolescence is imperative. How and when new technology is introduced and mainstreamed into an organization can determine if the organization makes leaps forward or is crippled by technology not yet ready for prime time. Equally precarious is the predictive aspect of retiring applications and technology prior to obsolescence. When IT organizations manage this properly, the business experiences new and expanded capabilities. If it's managed poorly, the business suffers increased risk, down time, and frustrations that often lead to large financial fallout.

[Previously from Shields: Not So Agile Development: Why Insurers Should Optimize the Manufacturing Process ]

3. Utility Management: Unfortunately, in today's world, much of what IT delivers is considered a utility. Network connectivity, data center services, voice and data services, print, desktop support, the list goes on and on. These are critical tools and infrastructure much like electricity, heat, and air conditioning. No one really appreciates these expected services until they are no longer delivered. An IT organization must exceed expectations in this area to get any credit for reliability.

4. Operational Focus: Let's face it--the strategic new stuff is glitzy and glamorous. The cool new technology or the newest trendy gadgets, methods, and buzz make life fun. No one gets ahead with the mundane, tactical operations minutia. But they're also like spice--important, but you can't make a meal on it. For CIOs, many get replaced for getting too focused on the 'cool stuff' at the expense of running a well-run operational unit. An IT organization that can focus on "operational excellence" will more likely position the business for success. Those CIOs who chase the newest and coolest technology and IT fads will keep the business in turmoil.

5. Innovation Delivery: Much of the IT spend is on "utility services." Failures in the utility plant will damage the corporation and the IT relationship. At the same time, if this activity is the only delivery from the IT area, no business moves ahead. While having electricity available is good, having appliances and machines to use that electricity is what improves lives. The same is true with IT services: the infrastructure and utility services are important; however, what can be accomplished with those utilities is what exponentially improves the business. IT leaders must balance the operational focus with the need to bring innovation to the business. Failure to champion innovation puts the business at risk by allowing the competition to gain advantages.

Focusing on these five areas of "doing" and "not doing" can be the foundation of a successful IT organization. Managing this balance is key to maintaining IT's focus in leading the day-to-day delivery and service activity, while shepherding the company toward long-term sustainable success.

About the author: Gerald Shields is Practice Director, Healthcare IT for The Nolan Company. Gerald has over 30 years' experience managing enterprise scale IT functions, with a focus on enabling the business through effective automation. At Aflac, he served as CIO and in senior IT management for over ten years, and is a respected thought leader and innovator in the areas of IT management systems, technology strategy, and mobile technology.