In many circles, codependency is frowned upon. But when it comes to IT implementations at insurance companies, codependency may be a good thing.That's the philosophy behind the IT success at Selective Insurance Group Inc., a Branchville, N.J.-based holding company for seven property/casualty insurance companies.
"Our business projects and IT projects are codependent. We have joint business and IT managers who work on every project," says Jeff Kamrowski, senior vice president of business services. "To be successful, there has to be a direct connection between the business and IT. The two have to work hand-in-hand. As a result, we are implementing information technology that makes sense and meets the business requirements."
With the synergies between the business side and IT side of the insurance house acknowledged, more insurance company leaders are realizing that IT application portfolio management (APM) and project portfolio management (PPM) can no longer operate in separate silos.
APM enables company leaders to assess the applications in the portfolio, evaluate potential changes and understand the risks and impact of these changes. APM is a discipline and a tool set CIOs can use to respond to the pressures of managing an application portfolio.
PPM enables company leaders to organize a series of projects into a single portfolio that will provide reports based on the various project objectives, costs, resources and risks. APM and PPM software is available to facilitate both of these functions.
Although stand-alone APM and PPM initiatives have garnered results for many years, when these initiatives are melded together and tied to overall company goals, the positive returns multiply.
Why, in this case, is it a good idea to create dependencies and links between the two disciplines? Consider the following: Recent industry studies show that 40% of capital investments are wasted mainly due to lack of alignment with business strategy, according to "The Seven Habits of Highly Effective Portfolio Management Implementations," a whitepaper from UMT Consulting, a New York portfolio management consulting company. As a result, there is a need for a more holistic view that enables organizations to connect projects to overall business objectives and, thereby, more successfully utilize their resources.
According to the whitepaper, the advantage of analyzing both applications and projects through a portfolio lens is becoming clearer as the industry matures. Company leaders must examine and manage the synergies between applications and project portfolios.
For example, in order to understand what new projects to invest in, it is essential to understand existing applications and what areas of the business need future support. A holistic view of both APM and PPM can help uncover redundancies, address gaps and reduce waste within an organization's IT portfolio, according to Gil Makleff, a consultant with UMT and the author of the whitepaper.
To create this synergy, insurers should establish and prioritize seven to 10 objectives related to various aspects of their operations, such as finance and human resources, Makleff says.
"Then, look at the IT projects you have and ask how they are supporting the objectives. First, you choose the right projects. Then, you start to implement plans to make sure you are implementing them efficiently," he advises.
To measure how closely IT projects support business objectives, leaders should develop impact definitions, employ key performance indicators or use a balanced scorecard. By tapping into these tools and taking a broader perspective, project management efforts take on a whole new meaning in today's environment, Makleff adds.
"Project management used to be a technical tool that allowed managers to get into the nitty-gritty and focus on how technology would be implemented," Makleff says. "Today, it has become more collaborative and actually helps to drive innovation."
The integrated approach is becoming more prevalent and even more useful as insurers realize that they can no longer simply add technology for technology's sake, as was frequently the case during the 1980s and 1990s, says Julian Dobbins, director of product management at MicroFocus, a Newbury, England-based software developer.
"There is a greater pragmatism now. In the U.K., there is a movement called 'sweating the assets,'" Dobbins says.
With this in mind, companies are taking a more conservative view. "The conversation today is how to maximize the value of what we already have on the table," Dobbins says. To support such efforts, MicroFocus offers enterprise application modernization and management software, which enables organizational business applications to respond to market changes and embrace modern architectures with reduced cost and risk.
A COHESIVE EFFORT
Bringing IT and business sensibilities together was the impetus for the formation of the enterprise project management office in the year 2000 at Selective Insurance Group, according to Diane Petercsak, vice president and director of project management.
"From a high level, we wanted to provide executive oversight and management of business and IT initiatives," she says. "We wanted to meld the two disciplines.
"The mission of the enterprise project management office is two-fold," she adds. "We review and approve proposed projects within a standard framework. And, on an ongoing basis, we look at whether the projects we are implementing contribute to our success as measured with standard business metrics."
The enterprise project management office consists of all executives who report directly to Selective's CEO or to a senior-level vice president. The group meets every three weeks to review the status of all projects and their contributions to the organization's goals.
"All the project managers submit status reports on projects each month, and we create a project scorecard to see if the various milestones are being met. This information is reviewed with the senior level management," Petercsak says.
By presenting the status of various projects to senior level managers, the project management actually rolls directly into the overall strategic initiatives at Selective.
"The enterprise project management office goes a long way toward preventing silos," Kamrowski says. "There is no way all the senior managers can be a part of the enterprise project management office and not know all that is going on in the organization."
In addition to integrating the PPM with the overall APM, Selective uses a structured project management methodology to make sure all IT projects are completed in a cost-effective and timely fashion.
All of the project managers routinely use tools from a standardized projects management tool belt, which is housed on the company's intranet.
The tool belt includes processes and templates and tools associated with the four phases of a standard project management lifecycle: scoping, planning, execution and closure, Petercsak says. "The tool belt also contains different templates and tools for different levels of projects. The more detailed and complex tools can be used for large projects and the simpler tools for the smaller projects."
Indeed, by integrating APM with PPM-and implementing a standardized project management approach-Selective experiences success with IT implementations. Typically, companies only experience a 35% success rate with IT projects, while 19% fail and 46% are "challenged," notes Petercsak. But Selective has not had a project fail since 2002, and last year only 12% of the projects experienced a challenge.
"Almost 90% of our projects succeeded last year. We continue to outpace the industry. Our methodology is clearly working for us, and we have made significant improvements since we started," Petercsak says.
The IT projects are helping to move the company toward the realization of the insurer's strategic goals.
"We are implementing technology that consistently meets the company's objectives," Kamrowski says.
More is better Saad Ayun, former CIO of sales and service at The Hartford, a Hartford, Conn., life, automobile, homeowners and business property/casualty insurer, says that his organization also has begun to merge APM and PPM strategies into one effort.
"For us, project management is an element of overall portfolio management," he says.
To make this a reality, each division of the organization has a project manager who acts as a divisional CIO. As such, these project managers not only focus on the intricacies of individual IT projects, but also take time to consider how various projects are contributing to the overall APM and, ultimately, the company's overall strategic direction.
"They develop a very broad overview of what needs to be done," Ayun says. "They have a good understanding of the organization and all the organizational processes."
One of the ancillary benefits of this approach is that the project managers expand their skill sets.
"In classic IT organizations, the project managers are very focused on the technical. Here, the managers develop the skill sets that a CIO needs. It is a great training ground for CIOs-in-waiting because they acquire a great understanding of what the organization as a whole needs to do to succeed," Ayun says.
