Along with the budget crunch and demands for transparency and accountability, there has been a significant shift in the way IT is perceived and positioned within insurance companies. Increasingly, there are no such things as IT projects per se; rather, carriers are focusing on business initiatives that can't happen without technology deployment. That was one of the themes that emerged during the CIO Panel Discussion that took place yesterday at the ACORD Annual Conference 2003.
As Yury Zaystev, Swiss Re's Group Information Officer, put it, "There is no such thing as an IT project. All projects are business projects, and done for business reasons or benefits, or why are we doing it? Technology is part of the business."
According to Barbara Koster, VP and CIO, Prudential Financial, "In the last 12 months there has been a change at Prudential. We don't look at IT spending, we look at business process or business-related spending. IT is a piece of that. We are absolutely looking for a return, and 12 months is a long time."
Furthermore, "as a public company, we are totally focused on growth and the bottom line," Koster reported. "We're seeing shifts in the products being sold. We have to be quickly responsive to the marketplace." Where Prudential is focusing its IT investments is on what Koster calls the "value chain" that connects all stages and players in insurance processes. "The CIO needs to be working with each part of the chain, and they must work together to get the value out. It's not IT driving, but IT supporting the business. They have to own business cases together."
But the issue of IT/business alignment, much less CIO/CEO (or CFO) collaboration continues to be a thorny one, the panelists agreed. Part of the problem has to do with accountability, and that technology executives are pretty late to the game in terms of being able to quantify and measure benefits and results, not to mention real costs. "We are really struggling now with capital, and are focusing on where we can get value," remarked Jim Williams, CIO, Royal & SunAlliance (R&SA). "Last year I took 20 percent out of my budget, and I have to figure out where to spend what's left."
Williams did not spare himself in his acknowledgment that IT executives have generally been lacking in ability to provide CEOs and other business heads with some of the specific information they need. "There has been a failure among CIOs to communicate where they are spending that money," Williams said. "I had a general idea, but it's hard to pull out specifics. You have to be able to articulate what those costs are. There's a tremendous learning curve."
However, the responsibility goes both ways, emphasized Bill Jenkins, SVP, SolvIT LLC, and former CIO of CGU. "If IT is managed as a partner, management should know where the dollars are going," he said. "No progress would ever be made without CEO involvement, or what I call the 'two-by-four in the corner.' The CEO is the one who can bring everyone to the table. Without that backing, you will have a heck of a time getting business transformation."
Another shift is in the way carriers interact with their solutions providers, regardless of whether these providers are software/hardware companies or outsourcing providers. The rhetoric about vendor/insurer partnerships is becoming a reality, the panelists noted. As Chris Rawson, head, information technology, Lloyds of London, put it, "Managing diversity is what the insurance business is all about; it's collaborationand vendors are part of that. It's only an extension of what we've done for years."
Finally, it wouldn't be an ACORD event without some discussion of the significance of standards. "Prudential Financial has been very focused on our customers," Koster noted, "both insureds, and the customers who interact with our clientsbrokers and agents. It's very important for the information Prudential has to be integrated, back to the sales force and to customers. Important to that is standards. Unless we all speak the same language, it's hard to sell products, and hard for insureds to understand them. We are working diligently on straight-through processing. By defining common and shared activities we can get better pricing."
Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio