Over the past decade, insurance IT executives have devoted significant energy to the business/IT alignment, but few business executives have reciprocated.

On one level, this doesn't come as unexpected. IT exists to serve the business, not the other way around. As one of our research council members once said, "When the CIO and the CEO disagree, guess who's getting fired?"

However, insurers depend on IT to communicate with customers and distributors, manage internal workflows and analyze data for pricing or operational improvements. Given this dependence, business/IT alignment should be as important to business as it has become to IT.

Here are nine ideas to help business executives maximize the value of their IT investments:

1. No more IT projects. Business leaders need to incorporate technology development into their units' day-to-day responsibilities and realize that developing new capabilities requires active communication. More important, it requires an investment in the outcome equal to IT's. Many IT leaders have banished the phrase "IT project" for this reason. Business leaders should follow suit.

2. Improving capabilities is everyone's job. To be fully invested, business units must participate in these projects as a core part of their jobs. By extension, business leaders need to consider whether the capabilities they're requesting are important enough to invest their team's time to co-develop.

3. Invest in education. Effective organizations invest in education, and that means educating IT people about business, business people about IT and everyone about project management.

4. Plan with technology. Since almost any new initiative that involves a new product, channel or process will be enabled or constrained by technology, having IT involved in early discussions allows business leaders to make more-informed decisions about costs and time to implement initiatives.

5. Focus on capabilities, not tools or systems. Business leaders should focus on the capabilities they need rather than mandating specific tools or systems. Unless they have a comprehensive view of how a tool will be implemented and integrated, it's generally better to let IT leaders select a solution or technical path.

6. Build for change. Information technology has a shorter lifespan than it used to. Many decades-old insurance applications continue humming along, but it's nearly impossible to make legacy systems adapt to modern business requirements. Business execs should plan for change and understand the applications they invest in today are unlikely to meet the business challenges they will face a decade from now.

7. Question your assumptions. The evolution of the insurance industry was driven by the need to solve information technology problems. How do we find out enough about prospective insureds to determine we want their risk and price it? How do we tell them we want to underwrite their risks? How do we manage the information we collect and analyze it? How do we communicate across a multi-party value chain? The answers are changing as rapidly as our methods of communication, data storage and analysis. Business leaders should start by asking, "Why do we do it this way?" If the answer is, "Because there was no other way to do it," the next question should be, "Is there a better way to do it now? Do we still need to do it?"

8. Reconsider what's possible for you. Business leaders should consider the impact of ubiquitous computing and low-cost third-party data. How might processes change? How might decision-making capabilities change? What is possible today and what will be in the near future? Business leaders need to be certain IT leaders can help explore these strategic questions.

9. Reconsider what's possible and desirable for customers. Ubiquitous computing and data also are transforming customer expectations, and business models based on information disparity between sellers and buyers are under threat. However, intermediaries aren't disappearing; their value is shifting to that of value-added advisors from transaction processors.

Insurers also shouldn't assume customers prefer current practices, as most never have had real alternatives. Insurers also must consider how customer expectations are being set by tech leaders, such as Google, Amazon, Charles Schwab and Chase.

Effective IT leaders have assumed strategic roles in guiding their companies. At the same time, a smaller but growing number of business leaders have made understanding and maximizing the value of IT a critical part of their missions. This trend is likely to continue, and insurance business leaders who embrace these nine ideas should be able to increase the value of IT investments and the level of their business capabilities.

INNSight is exclusive commentary from Novarica. Matthew Josefowicz is a managing director at Novarica, a research and advisory firm focused on markets, operation and technology in insurance and financial services.

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