Top 10 Tech Challenges for 2011

As insurers enter the New Year, they face a rapidly evolving technology ecosystem. To put this landscape into perspective, X by 2, a Farmington Hills, Mich.-based consulting firm specializing in enterprise and application architecture for insurers, has enumerated the technologies it believes will have profound impact for insurers.

“We’ve chosen the issues with the widest impact on core business and technology issues because enterprise architectural challenges and opportunities are ultimately concerned with both,” said X by 2 principal K. Ram Sundaram.

In order of importance, the technologies are:

1. Legacy Modernization and Replacement –The emphasis will continue to be on forward-looking IT value-adds to companies in the areas of agility, responsiveness, and analytics – things that legacy systems weren’t designed for. Insurers face critical decisions on whether to continue to modernize old systems or replace them.  

2. Cloud Computing – The concept of virtual applications and infrastructure will continue to garner momentum for its promise to provide a unique combination of expense management and infrastructure elasticity.  IT leaders should prepare good answers to the inevitable questions from executive management about security and dependability in the cloud.   

3. Mobile Applications – Many analysts are predicting that by the end of 2011 there will be well more than 1 billion users worldwide of smart phones and other mobile devices.  Many of them will be agents, policyholders, and insurance company employees, and they will expect to interact with function and feature-rich mobile applications from their insurer.  Carriers that fail to meet these expectations will see their policyholders and employees vote with a single click of their fingers.    

4. Social Media and Collaboration – Business applications and social technologies are rapidly intersecting.  Insurance carriers should embrace, rather than resist, this inevitability and re-factor their internal architecture and systems accordingly.  Those who do so first will gain a competitive advantage in at least the short term.      

5. Next-Generation Analytics’ Impact on Infrastructure – Improved predictive modeling and information-savvy software platforms are making it possible to model and analyze risk data as never before.  While this is welcome progress from a risk management perspective, the technology infrastructure of many carriers, particularly the database, storage, and network components, will be challenged to keep up.   

6. IT as Revenue Drivers – For all of the hue and cry from IT leadership that they do not always have the best seat at the table (if they have one at all), once at the table they will be increasingly expected to do more than just keep the lights on and the systems up in the data center.  They’ll be expected to help drive revenue through increased processing efficiencies and effectiveness.

7. Innovation: a Core IT Competency and Competitive Advantage – This should be a core competency for all IT divisions and one where there is ample opportunity for IT to play a lead role in an organization.  In 2011, forward-thinking IT leaders will have the processes and platforms in place to lead their organizations through the innovation-as-a-competitive-advantage cycle.   

8. Industry and Technology Sustainability – Increasingly, organizations will be leaning on their business technology capabilities to provide long-term solutions that address their specific IT sustainability challenges.  The savvy CIO should be engaged in leading the discussion for the development of long-term information architecture and business-system plans.   

9. Virtualization – Virtualization will move from the data center to the desktop, and with it the need for IT divisions to support anytime, anyplace, and any-device computing for their internal employees and external customers.      

10.  Rich Media – Video- and audio-heavy applications and services will become more the norm in 2011 and beyond, and that will put stress on business technology platforms, infrastructures, and personnel.

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