The Wrong Stuff: Cautionary Tales of Insurance IT
Diagnostic Skill
A crucial skill of the elite technology executive is the ability to independently diagnose the value of solutions, rather than relying on brand or other companies' sucesses. It's also incumbent on the technology executive to demand to actually see something before deciding on a solution. Without a solid proof of concept or other concrete demonstration of the solution's viability, "you could be custom-developing a Web-front end, for example, and find yourself nowhere after two years," Drucker cautions. "You have to see it work before you're willing to write that check."
But some IT executives, preoccupied with cost-reduction, indulge in an opposite vice, according to Mike Adler, partner, IBM Business Consulting Services (Armonk, N.Y.). Under pressure from business leadership, technology executives may negotiate very hard with software, hardware and service vendors in order to be able to say "Look how little I'm able to budget this thing for!"
"But at the end of the day the scope is the scope, the effort needed is the effort needed," Adler remarks. "Success and quality have to take priority. The CIOs who don't balance cost-management with realism about what success requires are the ones who are going to fail."
Similarly, while outsourcing can provide excellent cost-control opportunities, its use should be regulated by other considerations as well, such as geographical distribution of risk and the relative strengths of available workforces. "The successful CIO is one who leverages internal people for the things they're most competent in and outside service providers for what they do best," Adler says. "The ones who either don't outsource anything or outsource everything without the appropriate governance and review are the ones who run into significant issues."
Another common vice, Drucker asserts, is simply throwing money at the problem. "While that may seem obvious, it's not how the rank above CIO thinks," Drucker argues. "The CEO says, 'Well, the CIO has told me what the problem is and I'm going to spend $100 million on it,' and the CIO says 'Great: I have $100 million to blow on this and that's going to get it done.' But an unlimited budget doesn't guarantee success. In fact, at some level, the more money you spend, the greater the risk."
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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