Partners in Strategy
As insurance technology continues to mature, so does the appreciation of IT - and the CIO's role - on the part of the business. In an era of increased technology investment, these factors are transforming today's senior insurance technology officers into influential strategic partners.
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The nature of technology, and hence technology leadership, remains something of a conundrum in the insurance industry. Evolving technology architectures continue to make the management of information an increasingly vital component in any business, and especially so in an information-centered business such as insurance. At the same time, many insurance CIOs continue to be preoccupied with legacy system-related challenges and face perennial concerns such as application maintenance costs and compensating for the inefficiencies of manual processes.
But even if there still is some justice in the characterization of the insurance industry as a technological laggard, the industry is moving forward, with increasing speed, in the adoption of technologies with the promise of end-to-end functionality. This special issue of Insurance & Technology is dedicated to honoring some of the industry's best technology executives, and, in this article, I&T discusses with members of its Elite 8 2005 Consultants Advisory Board how the role of the insurance CIO is changing, and what issues and technologies are driving senior technology executives' best efforts.
While insurance technology officers of the past struggled to influence business leadership, today's CIOs may find themselves struggling to meet the expectations of the business regarding IT's strategic contributions. That pressure, in turn, is changing how CIOs approach their IT organizations.
Shifting Focus
Many CIOs have shifted their focus from optimizing specific lines of business, processes or geographies to enterprisewide strategies, relates Mike Adler, global leader, IBM Business Consulting Services (Armonk, N.Y.). "We're seeing CIOs ask the question, 'How do I take business processes and applications in silos and look for synergies and efficiencies across them and the enterprise?'" Adler reports. "We've seen a number of CIOs come in either from a business background or from other industries in order to bring an outside or business view to the enablement of business through technology." Also, CIOs have gained greater influence by reporting directly to the CEO, participating in executive management teams and taking an active role in business strategy development.
This expanded business responsibility means that insurance CIOs increasingly will be required to have business-oriented skill sets, asserts Joe Guastella, principal, Deloitte Consulting (New York). "There are people who are good at both strategic business thinking and technology, but when companies have to choose between them, they're choosing the strategic thinker," he says.
In addition to business acumen, CIOs must have the trust of executive leadership, without which a strategic technology vision is moot, Guastella continues. CIOs also must have the ability to communicate IT plans persuasively to everyone involved in their adoption. "It requires someone with a good grasp of technology who can simplify the issues so that consensus can be built," Guastella says.
Today, more CIOs are building that consensus around revenue growth-oriented - rather than strict cost control - measures than in the lean years of the recent past. Preoccupation with cost isn't going to go away, just as more-rigorous governance is here to stay. But cost is not the overriding concern it has been in the past, according to Matt Josefowicz, Celent Communication's New York-based insurance practice manager. "Just because spending hasn't gone back to those insane times doesn't mean it's not more forward-looking," he says.
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
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