What are some of the strategies insurance tech executives use to manage their budgets? Seven industry leaders reveal how they're maximizing IT dollars to keep their firmscompetitive.
Review Projects Often
Dan Cavanagh, EVP of IT, MetLife (New York)
By working closely with business partners on each new project, examining the potential ROI of each project and maintaining good relationships with leaders in the technology field, we are able to determine the best ways to incorporate the latest technology and roll-out applications that benefit MetLife.
As a line of business requests a new application, an integrated team of business and IT representatives is formed to discuss the parameters of the application. If approved, the team meets often to review the project status and revisit the requirements to ensure the product is what the business requires. After determining that the application makes sense, the project itself undergoes a strict review for ROI.
Maintaining relationships with technology industry members helps us learn about the latest technology and brings the appropriate cutting-edge technology to MetLife. This is useful not only for developing new apps, but also in determining the infrastructure we develop and the architecture we build.
Managers Get Budget Control
Jim Lester, CIO, AFLAC (Columbus, GA)
AFLAC is using and is in the process of developing several budget management processes to maximize the use of IT dollars. The management of the budget is being decentralized to give budget center managers more control over their budgets. This budget management system is providing them with more information than they have had in the past. It is giving them the opportunity to update their outlooks, and in turn managers are being held accountable for their budget center's performance.
In order to better manage how resources are used, the IT budget has been split into two distinct budgets. One budget is for tactical expenses. The other is for expenses related to implementing IT's strategic plan. The strategic budget is then organized by strategy, so that a strategy sponsor can track and account for the amount that is spent.
A direct-charge system is in the development stages. This will allow the IT division to charge its internal customers for money spent on projects. This will likely have the greatest impact on stretching IT dollars by encouraging the project originators to be more conscientious of the need for and the payback on each new project.
Focus on Process Management
Russ Bostick, SVP/CIO, Zurich Life (Schaumburg, IL)
Zurich Life has traditionally had a significant outsourcing component to its IT delivery model. Consequently, we are reevaluating all of our outsourcing arrangements and are renegotiating many of them. In the past two years, Zurich Life has made significant strides in defining and improving its Capability Maturity Model (CMM) index. The increased emphasis on process management, documentation and negotiated hand-offs has made a significant difference in on-time, on-budget project delivery. The combination of strong external sourcing with improved process management is leading Zurich Life to evaluate off-shore development as a strategic sourcing alternative.
Zurich Life is also using Conference Board reports, META Group analysis and management consulting to identify process candidates for cost reduction and quality improvement. The Zurich Life IT senior management team has constructed a large database of cost management ideas and is negotiating with both clients and suppliers to implement those ideas. These ideas focus on whether business management is really creating value from IT deliverables and on whether suppliers are creating value in software and hardware maintenance agreements.
At the heart of Zurich Life's process improvement efforts are the more than 150 employees who play key roles in project management, business analysis, programming, quality assurance, engineering and operations. They are the point of leverage that enables Zurich Life IT to work with all outside parties to create value for the business.
Inventory All Infrastructure
Byrne Chapman, VP Information Services, American Family Mutual Insurance (Madison, WI)
The current economic environment provides an excellent opportunity to pause and review strategies associated with maximizing the return from the IT budget. Competition is a fantastic tool to make sure the best value is delivered in software or hardware acquisitions. We are making sure that every significant acquisition includes a competitive proposal and quote from multiple vendors. In many cases, we have seen vendors improve the creativity around the solution, decreases in costs of the solution, and, in many cases, reduced prices.
It is time to inventory all infrastructure hardware and software if it hasn't been done before. This provides an opportunity to eliminate products that are no longer needed. It also provides an opportunity to discover functional overlaps. One outcome of this effort should be a plan to obsolete products that have little value.
It is imperative that the information services management team understands the total cost of ownership for computing platforms. It is relatively easy to build a rudimentary model of computing costs by computing platform.
Build applications using software that is transportable between computing platforms. This is important in an environment where there is risk in the volume of work changing and in a time where software and hardware costs change quickly.
Review long-term enterprise software agreements for obsolete or little used products. Take the initiative to contact vendors and reopen contract issues. This can be a great test of the partnership you thought you had with a vendor.