Solving the Rubik's Cube of Insurance IT Prioritization

Recently, I joined a meeting that's typically attended by PEMCO's CIO and CFO and key members of the IT management team. We meet to prioritize technology work. That means the group decides what's important, how to use resources efficiently, and how to ensure unsurpassed quality.

Invited guests include leaders from our product management and business operations departments depending on the agenda. The dynamics of the business and market shifts constantly add pressure to the mix. It's like a Rubik's Cube being twisted and turned by many hands. This team's job is to align the colors of the cube to keep our business priorities moving forward with top quality, quickest speed, and lowest cost. I learned a lesson long ago: you really can't optimize all three. "Good, fast, or cheap. Pick two."

I attended the meeting because of an unplanned opportunity. PEMCO was recently awarded the chance to market directly to a major affinity group in our region. For the first time, we can make value-added offers and apply discounts to this high-value, important market segment. The affinity, however, can't be defined by any of our existing data elements – not geography, profession, age, credit score, or any of the usual factors. So offering an affinity discount requires us to enhance our existing infrastructure. This will cause unplanned work that impacts pre-existing priorities.

Rod Brooks, PEMCO

We determined the most direct route to a solution is a temporary fix within the rating algorithm that spots our customers' affinity relationship, then triggers an appropriate discount. To me this fix seemed straightforward and simple. Ultimately we'd replace it once we develop a longer term, more integrated solution within the rating engine. We estimated it would take about six weeks to complete work for the affinity program.

But hold on, business leaders! There's more to the story.

This opportunistic enhancement is like twisting the IT Rubik's Cube. Colored squares and dependencies shift in ways that only an IT architect or program manager might anticipate. One seemingly simple addition to the program impacts every side of the cube. The conversation was eye-opening.

[Previously from Brooks: Fighting Tips for Challenger Insurers]

PEMCO's director of Business Technology Services noted that, in reality, this "one factor" program is much bigger than a simple enhancement. He listed several areas within our systems that would be touched and, as a result, would impact several of our IT teams and their productivity. The "top 10" list of variables affected:

• Multiple lines of business: auto and home

• Multiple geographies: Washington and Oregon

• Multiple rating engines (both user interface and business processor)

• Output

• Online self-service platform

• Comparative raters

• Business information systems

• Platform for downloading customer and transaction detail to agency partners

• Customer information management system

• Integration with a new outside vendor/data-port to confirm affinity membership. This is an unknown area, and we won't know the real impact until we learn more.

At least six independent IT workgroups and several other departments would feel the impact of a new affinity program. Because those teams are working at capacity, and because sacrificing quality for speed is never an option with customer data records, the only element in the equation that could be adjusted is cost – either the cost of adding contractors to the mix (which would take too long to implement) or the opportunity cost associated with delays to other work that we'd benefit from.

I've said several times in previous columns that marketing and technology leaders must find ways to collaborate and work closer together than ever before. Whether it's due to consumer trends, technology advancements, or market opportunities like our affinity program, our business success largely depends on the skilled hands that twist and turn the IT Rubik's Cube to align the colors.

The savvy CMO understands that just as brilliant marketing strategy is more complex than it appears, so is the delivery of seemingly simple implementations of IT solutions. And the savvy CIO finds ways to be responsive to market opportunities when they are presented, regardless of the existing project timeline. Winning in the market is neither simple nor easy.

About the author: Rod Brooks is VP and CMO of PEMCO, a regional P&C insurer in the Pacific Northwest.