Economic challenges continue to plague insurers, affecting their day-to-day decisions, their corporate objectives and even as their budget projections for 2010 and beyond. With IT budgets are flat or slightly up, this leaves CIOs with even more important decisions to make and policies to set. CIOs, tech vendors and industry experts gathered at
At one of the IASA EDGE Executive Discussion Breakout Sessions, Steven Boyd, CIO of
While the majority of the industry experts who attended the conference expect 2011 budgets to go up, they confirmed that 2010 budgets will remain the same, and where they spend that limited amount of money will vary. Matthew Josefowicz, director of insurance at
Virtualization and Cloud Computing
One area in which insurers are investing is virtualization, Josefowicz said. “There is a lot of server virtualization going on,” he says. “Many people are turning their mainframes to Linux.”
One such company investigating virtualization is
Cost savings is important to
The discussion about virtualization naturally progressed into talk about cloud computing, which
O’Neill, who said her No. 1 priority is data quality and integration, is not quite ready to embrace it. “There is no way I am putting my data out there,” she said, which was accompanied by a few nods of agreement from other CIOs in the room.
Boyd, however, sees some value in it. “This model is good for small to mid-sized companies versus an on-premise solution,” he said.
Novarica’s Josefowicz echoed the thought. “Comparatively, the power of the on-demand model has a lot of appeal, especially when you are doing multi-year loss runs,” he said. “You can ship data out and get it back. Larger cloud W.2.0—where you ship some here and some there—is not being embraced by insurance companies, and I don’t expect it to be.”
Open Source
A hot topic that emerged within the group was Open Source technologies, and their potential as the foundation for viable development efforts. Tower Hill’s Elsmore said much of its development is being done using Open Source. But, Dave Hanley, VP operations and business development at
“Open Source has the reputation as being for the yogurt-and-nut-loving, tree-hugging crowd,” answered Phil Hargrove, insurance technology adviser at
Craig Lowenthal, EVP and CIO at
Legacy Systems
Arrowhead’s Boyd posed the question about legacy systems, and whether insurers currently are replacing or maintaining those systems. The consensus among session attendees was that they are working with what they have.
“You want to leverage any investments you make,” Lowenthal said. “You have to watch maintenance costs. Plus, when you [make a huge systems change] and try to shove something down peoples’ throats—they run away.”
Boyd agreed. “It’s important not to shoehorn something. We have a Wiki on our IS system, and it ended up holding hundreds of documents so we said ship it (porting into the legacy system).”
On the other side,
Social Networking
CIOs in the session agreed that another challenge facing the industry at large is social networking, and how to—or even whether to—leverage it.
“You need to look at it as part of a distributed strategy,” Lowenthal said. “If you want to attract agents and do business in different ways it’s important to think about it.”
Other challenges and concerns include productivity issues among employees spending too much work time on social networking sites, and the need for strict oversight of how and what employees communicate about company business using the medium.
Aligning Business and IT
The business/IT relationship has long been a complex issue to sort out. “When I first joined the company, IT and business was very separated,” said Tower Hill’s Elsmore. “Now, IT is part of the decision-making process, and has turned into an applicable part of the business.”
He said he explores new lines of business for his company, and that although the job isn’t his, the responsibility ultimately falls back in his lap.
“Being a strategic player on the business side is important,” Princeton’s O’Neill added. “You have to come to the table knowing about the business.”
Boyd has seen a change in the relationship as well. “We are actually moving some IT people to other business functions.”
While the conclusion varied as to whether it’s easier to manage scope creep with a vendor than an internal staff, the discussion participants did agree that IT needs to engage business earlier in the process.