Renewed Focus on Process to Get Results from Technology

By Ben DiSylvester
Chairman

Did you decide to read this article because you keep hearing more and more about customer relationship management (CRM) in the insurance industry and you want to understand exactly what it is? Have you found it difficult to find two articles on CRM that describe the same thing? If you answered "yes" to both questions, then you're experiencing the confusing state of an emerging trend for our industry.

The change of pace in 2004 will increase over recent years. The economy is recovering and postponed projects are now coming back onto corporate agendas. Based on recent surveys of CEOs in the industry, including our recent survey on the use of information technology, companies will continue to focus on improving customer service and reducing expenses.  And, they see these improvements dependent of the use of technology.  However, the industry does not have a great track record for achieving the intended results through the implementation of new technology.  Too frequently, systems get implemented late, over budget and with only a portion of the expected savings.  However, we now see the tide turning in a significant way.  The need to reduce expenses continues to occupy the attention of life insurance companies, and the expectations for technology are changing.  Insurance companies can no longer afford to invest millions of dollars in new technologies without assurance that those investments will deliver what the business units need to support products and customer service, as well as expense reductions.

Technology think tanks have analyzed why IT projects have disappointed more often than not in the insurance industry.  Their conclusions, as also reflected in our own surveys, show at least four ingredients that are often missing but that are essential for success: 1) rigorous cost/benefit analysis, beyond what vendors prepare as part of a typical RFP response; 2) properly defining business requirements in sufficient detail so nothing is lost between what the business units say they want and what IT says they will deliver; 3) prioritizing the system implementation effort to roll out the most beneficial features first, versus rolling out what is easiest to complete; and, 4) process redesign that integrates business processes with the new technology.  If your IT implementation plan does not specifically link new systems features to changed processes and cost savings, right down to the desktop level where appropriate, then there is a good chance the system will fall short of delivering the intended results.  This kind of linkage means going beyond broad statements of expected savings and backing up those promises with specific quantitative information that demonstrates what must be changed and where to reap the benefits.

Other trends are impacting IT in insurance.  Certain technologies that have been emerging over the past few years, among them imaging & workflow and web functionality, are becoming accepted as “must haves.” Other important new technologies are just coming over the horizon and are in the early stages of adoption, such as business process management systems and mobile solutions for the field.  A common element in these technologies is their focus on process versus simply technology.  Yet another trend we see are companies considering replacement of their long-held legacy systems to better support new product development, reduce costs, and perhaps get on a firmer footing regarding compliance with Sarbanes-Oxley and/or HIPAA.

All of this new technology work will bring a renewed focus on process.  More specifically, it will bring a much-needed focus on business requirements and fundamental process improvements.  It will necessitate rigorous cost benefit analyses that go beyond the perfunctory vendor formulas and “best practices are built into the system” mantra.  It will require tracking those costs and benefits against the implementation plan to assure the roll out is prioritized properly.  And most importantly, it will require a new level of commitment by business users and IT alike in order to achieve success.

It will truly be an exciting 2004 and beyond.