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New World IT Planning

Making sound technology investments involves defining the right priorities, identifying technologies, a thorough product selection process, and flawless implementation.

By: James Watson, Todd Hollowell and Linda Andrews, Doculabs

It's the time of year when insurers ordinarily gear up to develop their IT plans for the coming year. These are not ordinary times, however. In the aftermath of the terrorist attacks of September 11, CIOs in the insurance industry face an unprecedented set of challenges. To put it bluntly, technology planning efforts for 2002 are being undertaken in the face of the worst insurance disaster in history.

Even before the disaster, insurers were operating in an environment of increased economic pressures. Now, with a dramatically altered business climate, executives find the focus of their technology priorities has undergone a drastic shift. Many IT budgets will be realigned in the short term to address concerns such as security, contingency planning, disaster recovery and system and network redundancy.

The insurance industry is being called upon as never before to demonstrate its commitment to its customers. But the people who buy, build and manage technology need to address the long term as well as the short term. How should executives make technology procurement decisions, against this backdrop of uncertainty?

Obligations of IT Management

Within insurers' IT departments, there is a renewed awareness of the professional obligation to both internal and external customers. Many IT managers worked overtime in the wake of the disaster to ensure that internal systems continued to run—and in the process earned tremendous credibility with their internal customers. But even more is on the line now, as insurance companies' claims processing capabilities are put to the test. Records that are up to date and easily accessible, customer service that is responsive and available 24/7, and timely claims payment—all must come together if an insurance company is to deliver on its promise.

Making that happen requires solid systems planning. And at a time when many technology vendors are less than solid themselves as a result of the economic slowdown, IT planning presents even greater challenges. Determining which strategy to take, while also making educated guesses as to which vendors have staying power, becomes a critical consideration—and all this in a time that allows no room for error.

It's All About Planning

For insurance companies, IT plans and technology procurement practices take on a heightened importance. An insurer must make informed decisions relative to its IT strategies and solutions while also under considerable pressure to contain costs. Ultimately, however, making sound investments in technology involves defining and setting the right priorities, identifying the appropriate technologies, undergoing a thorough product selection process, and creating and executing a flawless implementation plan.

The IT Lifecycle

Putting together a solid IT plan for 2002 requires an approach that takes into consideration the technology lifecycle. This may be called different things by different people, but the lifecycle typically starts with the strategy and planning phase, moves on to the definition and selection stage, jumps to the detailed design and implementation activities, and finally closes with a new solution in production. Throughout the lifecycle, various appraisal and quality assurance tasks are also being undertaken (see Figure 1, above). During the time it takes to traverse this lifecycle, the most critical factors in an insurance organization's success are dependent upon how well it tackles the initial phases.

We have seen some customers that have launched into a solution implementation without having undertaken the appropriate planning up front—without identifying any potential interdependencies or impacts, and, in some cases, without even defining the problem to be solved. These approaches can originate in any area of an organization—IT, line of business groups, etc.—but the challenge is to ensure that steps are built into your planning and selection processes to minimize the likelihood that this will happen in your organization.

The article will focus on the two initial stages of the IT lifecycle: planning and selection.

Defining Objectives

The IT Planning Phase is undoubtedly the most critical to an organization's success. That sounds obvious, but in many cases the best IT gurus have not always focused on this stage. A key requirement that must be met whenever developing an IT plan is to articulate the specific business problem the technology needs to address. This business problem may be part of the organization's overall business strategy, or it may be a tactical problem being faced by a specific business unit. Irrespective of where the problem originates, however, it's the responsibility of the IT planner to appropriately identify IT approaches that can enable the organization to solve the problem.

For example, executive leadership may have identified customer retention as a key issue facing the organization. In the face of rate increases, for example, it's possible that many customers may seek coverage with other carriers. The leadership team wants IT to play a role in enabling the organization to be more responsive to its customers, while at the same time offering improved, more efficient services-and deliver all of this within or under budget. Based on this objective, the IT planner must identify, at a high level, the strategies to address this concern.

In this case, the IT planner may determine that a CRM strategy must be developed, focusing on both customer service and marketing automation solutions. Whatever the business problem, however, the goal of this planning stage is the same: to identify these high-level strategies and then define the more tactical initiatives to achieve the overall objective.

Key outcomes of any IT planning phase should consistently include a standard set of deliverables. From the outset, an organization should clearly define the general objectives and guiding principles. These goals are typically established and/or communicated by the organization's leadership team, but it is these goals that the information technology plan must address. Secondly, the plan must include any key assumptions made throughout the planning process.

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