A Place at the Table

When choosing the Elite 8 insurance technology executives, Insurance & Technology editors and the Consultants Advisory Board consider the challenges faced by CIOs over the previous year. Who could have thought that this would include the interruption of services—including the destruction of corporate headquarters— by terrorist attack?

The events of September 11 will resonate forever. Some of what was taken away can never be replaced. But the day also showed the contribution of technology to the insurance industry's preparedness and resilience. Furthermore, even before the planes struck, the role of the top insurance technology executive had shifted from being a translator between technology and business to being a driver of the business.

And, as the economy took a downturn over the past few months, we saw technology officers given more authority and responsibility in driving the business forward. They were charged with producing results while meeting rigorous demands to make a business case, and were expected to directly influence competitive gains while simultaneously achieving greater efficiency and cost-savings. In the wake of the terrorist attack, those challenges are only likely to get tougher.

Apart from pushing disaster recovery to a higher priority, the events of September 11 can only intensify the role of the CIO as a partner with the heads of business, says Mike Adler, partner responsible for PricewaterhouseCoopers' Americas insurance consulting practice (PWC, New York). "But despite the huge impact of the disaster, CIOs require the same discipline and strategy that they had begun to follow in making sure they have the right business case, the right people and the right delivery approach to succeed in IT projects," Adler says

Technology Drives Business

This is a qualitative departure from the days when top technology executives played a more advisory role, according to Chuck Johnston, program director, insurance information strategies, META Group (Stamford, CT). "We used to say you have to manage your technology shop and be aware of what's happening with the business so you can be there to support it," Johnston says. "Now CIOs have to be aggressive partners in pursuing business goals because of the impact of technology on the way we do business."

With that requirement comes the need to be able to stake out a place at the strategic table—which may be a serious test for traditionally IT-oriented execs. "CIOs definitely have to be more political than they used to be, because they're no longer driving just the IT agenda," Johnston says. "Some of the most effective CIOs are having significant turf issues because they're entering the CEO's inner circle."

However it is not politics alone, but the possession of the right blend of expertise to execute a rapidly evolving role. "As long as you have top technologists in the organization, the CIO doesn't have to know how to code," says John Johnsen, managing director TCi Consulting (Cresskill, NJ). "In order to succeed, the IT executive must understand what the business drivers are, but also needs to have at least a high-level understanding of technology. Some of the best CIOs today come from the business side, and we see that trend continuing."

It's debatable whether such a trend was inevitable, since technology has already become intertwined with business processes. But the current economic circumstances have undoubtedly put fundamental cost/benefit business discipline ahead of preoccupations with technological fashion. As Glenn Sieber, managing partner, insurance industry practice, North America, Accenture (Chicago), surveys the prospects the industry faces, he says, "we're looking at low overall market growth, incredibly intensifying competition, increased value transparency and low differentiation between offerings from one company to the next."

Over the past 12 months, Sieber says, insurance companies' perception of IT has shifted from that of a "overhead" to a "key component of competitive advantage" in the initiatives required to meet the demands of the market. Nevertheless, he says, "I'm finding more and more today that both business and technology execs are very focused on quicker, shorter-term paybacks on the investments that they're making, and there is a reluctance to spend on those initiatives unless there is a rock-solid business case around the outcomes and results of the particulars spent."

Cutting the Fat

In addition to demonstrating the measurable value of IT projects, CIOs also have to deliver results with smaller budgets, according to Mike LaPorta, global leader, insurance, Deloitte Consulting (New York). "Many have attempted to develop more meaningful value metrics in an effort to fund those projects that will have the biggest impact on enterprise performance and eliminate projects that provide lower value," he says.

There is also an increasing imperative to cut organizational fat, asserts PWC's Adler. "Companies are actively looking for low-cost development and support organizations, such as offshore and ASPs, to complement or replace existing staff at lower cost," he says.

Still, as a business partner, the top technology executive no longer has the luxury of mere prudence. "A lot of CIOs seem to feel, 'If I manage budget flat, I'll please my clientele, I'll be OK,'" says META Group's Johnston. "That doesn't cut it anymore. Sometimes it's the CIO's responsibility to make their business clients uncomfortable." Wisdom may suggest, for example, that with the bursting of the dot-com bubble Internet initiatives should take a back seat. "The CIO may have to stand up and say, for example, 'We may not make investments in our claims system this year because e-business is still important in the insurance industry.' Though that may be the right answer for some organizations, it may a very unpopular position with a lot of exposure—it's much easier to be a hero during good times."

According to Accenture's Sieber, the attributes top technology executives need to survive and help their companies succeed in today's world are "fast decision-making, partnering, staying focused, making sense of the future and attracting and retaining talent." The immediate concern of those looking to hire a CIO today is "whether this person makes an immediate impact," Sieber says. But the successful tech exec must also be "a visionary and an innovator; someone with a thirst for knowledge as it can be applied to business problems and an ability to figure out how to adapt technology to that problem's solution."

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ELITE 8 2001CONSULTANTS ADVISORY BOARD

Mike Adler, partner, Pricewaterhouse-Coopers' Americas insurance consulting practice (New York)

Bill Bradway, co-founder, Meridien Research (Newton, MA)

Karen Furtado, vp, consulting services, CGI (Montreal)

Chuck Johnston, program director, insurance information strategies, META Group (Manchester, CT)

John Johnsen, managing director, TCi Consulting (Cresskill, NJ)

Mike LaPorta, global leader, insurance, Deloitte Consulting (New York)

Greg Ross, president, eStrategies Consulting (Acton, MA)

Glenn Sieber, managing partner, insurance industry practice, North America, Accenture (Chicago)

Benjamin Tomb, principal, Headwaters Consulting & Services (Westchester, PA)

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