Bringing together the IT department and the rest of the business has always been problematic. Although the IT department is often represented at the boardroom table, there is still a question mark from other departments as to whether IT is an enabler or an obstacle to getting things done. This dilemma is no more evident than in the insurance industry, a sector looking to transform the way business is done.
Research we conducted recently in conjunction with analyst firm Quocirca indicates just that. Principal analyst Rob Bamforth concluded, flexible IT systems that are well aligned to internal business processes were seen as vital to the industry, but there were doubts about the role that IT might play in the provision of this. These reservations were not about the software used or product suppliers, but about the IT department itself.
This highly conservative industry is changing in the same way that many others are doing or have done already. There is a drive for increasing sales, doing more online and automating or streamlining what were once manual business processes. However, for a business to be 'agile' it needs to not only have the right IT underpinnings, but also to ensure that these align appropriately with the business from an operational perspective.
Internal IT departments need to have a good understanding of the key business processes and must be able to communicate effectively with all departments so they can advise on what is available, and how it might best be exploited.
The Quocirca study would indicate, however, that there are inefficiencies here. For example, insurance companies are keen to drive up sales volumes and, according to the research, see brokers as their most important channel. Although they might extend their systems to this channel, relatively few have systems that can be tailored by individual brokers. As Quocirca analyst, Rob Bamforth pointed out, this is a missed opportunity as enabling that to happen would not only build a closer relationship with what companies see as their most important route to market, but it would also allow brokers to streamline IT tools to the way they operate, improving their own sales efficiency.
The research also showed that the overall potential for increasing the online route to market was also being overlooked. Unlike other industry sectors where online tools are being used as a great leveller, in this case it seemed that smaller insurance companies were more reluctant to invest in online than the larger players. Some of this may betray the more conservative nature of the insurance sector, where smaller businesses are often long standing partnerships, but it also indicates a lack of confidence in the industry’s approach to IT.
Those tasked with IT management, especially in smaller companies, might find themselves bogged down in the day to day challenges of just keeping everything running, but a little more investigation and awareness of what the market has to offer could reap significant rewards.
The problem is that without decent IT guidance, those managing particular lines of business might adopt a ‘Do Your Own Thing’ approach and just opt for IT products that appear to fit the needs of the moment. Not only does the business then run the risk of missing out on longer term benefits, it can also make the organisation significantly less flexible if different departments are locking in to disparate systems and reinforcing poor processes.
Allowing IT to go out on its own and make expensive choices independent of the business is no solution either, so even in smaller organisations it becomes important to pair IT and business expertise to facilitate transformation. That significantly lowers the risks of either missing out on new ideas or making bad investment decisions - and surely insurance companies are always keen to mitigate risks?
More details and results from the research into business process efficiency can be found in the free report – “What’s costing you dearly?” commissioned by Mercato, delivered by Quocrica.