2013 a Pivotal Year for Insurance CIOs: Gartner

Insurance CIOs must begin to address legacy issues and skill deficits in order to be able to meet the service, operational efficiency and profitability demands of the next decade.

During the coming year, pressures will converge on insurance CIOs to make 2013 a pivotal year, according to a Gartner report, "Combined Pressures on Insurance CIOs Driving Transition in 2013," authored by Kimberly Harris-Ferrante. Increased business demands will put CIOs on the spot at a time where legacy systems and skill sets are impeding top insurance IT executives' ability to respond adequately, the report suggests.

Faced with the need of the insurance industry to evolve rapidly to meet consumer needs, digitize business processes, comply with new regulations and reduce operational costs, CIOs have been thrust into the limelight, according to Harris-Ferrante. The business is demanding more from CIOs, but many of organizations are short on the staff or skills needed to deliver required business capabilities. Gartner reports that 48% of life insurers and 58% of P&C insurers believe that they have insufficient resources in their IT departments. The researcher surveyed 62 companies, fairly evenly divided between P&C and life, with greater than $100 million in total net 2010 premium.

In addition to staff and relevant skills deficits, insurers struggle to provide new capabilities because of the proportion of resources required to maintain legacy systems. "It is imperative that the cost of legacy system maintenance be reduced during the next two to three years to allow for greater investment in strategic initiatives," Harris-Ferrante writes. She insists that this is especially true for organizations in the throes of strategic initiatives and differentiation efforts. She adds, "The only way to ensure appropriate funds are available for strategic business initiatives is to significantly limit growth in IT legacy systems expenditures year-over-year."

While she sees the next two to three years as critical for CIOs to get on the right course, Harris-Ferrante sees a longer-term evolution of IT organizations into leaner teams refocused on the creation and support of more modern capabilities between now and 2020.

"Today, IT departments are often heavily composed of programmers and people with skills that will be less needed during the next five years as technology evolves," she writes. In the Gartner report, Harris-Ferrante cites responsibilities for which a modern IT organization will need the corresponding skills, including the following:

■ Configuration versus customization for off-the-shelf solutions;

■ Business process management (BPM) methodologies and BPM solution management;

■ Improved vendor relationship management to work with software and services partners;

■ Understanding of how to use and manage cloud computing for infrastructure as a service (IaaS) and software as a service (SaaS);

■ Analysis of the impact and opportunities of emerging technologies;

■ Deployment and management of top emerging technologies, such as mobile and analytics.

[For more on Gartner's outlook for the coming year, see Worldwide IT Spend to Rise 4.2% in 2013: Gartner .]]

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio