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Making Metrics Work for You: 5 Tips from the Experts

Using key performance indicators to manage your IT resources isn't as easy as simply collecting data. It's what you do with that information that allows you to effect change.

Information technology lends itself to a wide range of measurements. Some are tied to budget, some to workforce productivity and some to performance; but most are tied to a combination of all three. And they're not set in stone, according to Brian Foley, chief of staff and senior director for Jacksonville, Fla.-based Blue Cross and Blue Shield of Florida ($2 billion in total revenue as of Q1 2011). As technological capabilities and expectations have changed, so have the ways insurers measure them, he says.

"I've been working with IT metrics for 20 years, and [metrics are] so dependent on the environment," Foley explains. "For example, Gartner had its function-point view, then that changed when client/server came along. We've tried so many different ways to do this. What you have to do is benchmark against yourself and make sure you're continuously improving."

It's not necessarily about which metrics you use, but how you use them, the experts say. Insurers, consultants and analysts tell Insurance & Technology that the most effective IT department managers are those who are able to go beyond the raw numbers to get deeper insights from the data and adapt the metrics based on the changing technological environment. Here are five tips to help organizations get the most out of the raw data gleaned from key performance indicators:

1. Use Other Insurers As a Benchmark

Most experts agree that metrics are only as good as the internal improvement they track. But how do you know how much you need to do to improve those numbers without a standard?

Cincinnati-based Ward Group offers insurers information about where they rank among their peers based on more than 1,000 IT metrics. According to Leah Hollstegge, a manager with Ward Group, digging into this data helps carriers discover the incurred expenses related to the entirety of IT, and even how long the development cycle takes at their peers.

"Where we find the most value is at the more granular level, starting with IT expense as a percentage of premium," Hollstegge says. "All IT organizations are looking at that in comparison to their peers, and often it's still too big of a number for companies to digest."

The granularity comes from dividing that key number into even smaller metrics, which allows a fuller view of the IT operations in-house and throughout the industry, Hollstegge explains. "We have 19 different functional areas we're looking at -- for example, how much does desktop support cost, how much does the help desk cost, how much do the mainframe and servers cost?" she relates. "That way you can compare the components of that expense ratio and get a more valuable comparison."

2. Don't Rely on Just 'Technology' Metrics

There's more to evaluating IT resource needs than uptime and downtime, according to Enrico Ferrante, senior vice president of business operations for Sparta Insurance Co. ($270 million in 2011 written premium) in Hartford. When weighing the key performance indicators that he looks at quarterly, policies sold is at the top of the list, Ferrante says.

"By looking at the volume of policies we're pushing out, we can see if we're staffed up enough and if we are responding to all of our customers in a timely fashion," Ferrante explains. "We have a small, lean and mean shop here, and when we get to a certain size, we know we're going to have to add staff."

Of course, the core of the insurance business is selling policies, and in a world where consumers expect policy issuance to be easy to accomplish online and to take less time, the speed and number of policies issued through digital means is an important indicator of performance. As such, a significant portion of the IT spend is focused there. "Let's take, for example, an organization that's been focusing on straight-through processing," says Ward Group's Hollstegge. "You can ask, 'What's our pass rate for new business, and what's our pass rate for renewal business?' and make sure that's on par with the investments you've made in those areas."

3. Don't Jump to Conclusions

Minneapolis-based Allianz Life ($5.6 billion in total premium for the first half of 2011) CIO Jeff Palm is fond of metaphor. He notes that approaching metrics is like approaching a bicycle if you haven't seen one before and trying to ride it with no instructions.

  1. Use Other Insurers As a Benchmark
  2. Don't Rely on Just 'Technology' Metrics
  3. Don't Jump to Conclusions
  4. Have a Single Version of the Truth
  5. Be Consistent
"You can grab a bicycle in many places, but only the handlebars will help you steer," he says. "There are a lot of things in IT that can be measured, but measuring just for the sake of measurement doesn't help unless you can steer."

Sparta's Ferrante explains how this works through one metric: help desk calls. If you're getting more help desk calls than you can handle, the problem probably isn't that there are too few people staffing the desk, he says.

"Maybe you're not doing enough due diligence before you put major enhancements into production -- if you do some better testing up-front, the help desk calls drop, and then you don't need a new staff member," Ferrante explains. "We've automated some more lines of business because we were spending too much time doing quality assurance work. We could take those people and put them on more complex QA projects, or give them more help desk time. You don't want to become less efficient through automation."

Nathan Golia is senior editor of Insurance & Technology. He joined the publication in 2010 as associate editor and covers all aspects of the nexus between insurance and information technology, including mobility, distribution, core systems, customer interaction, and risk ... View Full Bio

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