What's the secret of running an IT department at a major brokerage? To find out, Insurance Networking News asked Fred Danback. As principal and head of global technology services for Integro Insurance Brokers, Danback is charged with developing the technology infrastructure organization.INN: What's the most important goal of an IT department?
FD: Information Technology is a large part of a company's capital budget. The IT department has to behave like a separate company-and the most important goal of any company is to understand its market. In other words, an IT department must reflect the business strategy of its company, while also recognizing that a single company may house several market segments with differing value disciplines.
IT can be viewed as either a big expense or a significant investment. The goal of IT is to be an integral part of the business, given that it does not contribute to the overall corporate bottom line. Building IT as a microcosm of the business with transparent connections to the business objectives ensures a unified marketing plan.
INN: Where should IT focus in today's changing corporate cultures?
FD: If a company's value discipline is customer intimacy, then the IT department must build customer-intimate systems like customer relationship management (CRM) and business intelligence. If the company's discipline is operational efficiency, where margins are small but volume is high, the IT department must concentrate on offering in-house systems that generate revenue for the company as quickly and inexpensively as possible, such as supply chain management and cash-to-order processing systems.
The same principle applies to a value discipline focused on product leadership. In all of those scenarios, IT must align with the company's marketing plan to ensure it contributes to the value proposition.
INN: How would that apply to an insurance agency?
FD: An insurer must use technology as a differentiator and serve as a pioneer in customer knowledge and efficient use of technology to provide complex risk solutions to clients.
The value proposition of an insurance broker is to bring markets and clients together. That's why it's crucial that IT products enable the broker to identify and meet customers' needs.
The value is recognized at the corporate level to the extent that an IT department understands the needs of its company's varied segments and the company's myriad products and finds the most appropriate way to marry the two.
INN: What are some of the obstacles to IT success?
FD: Every IT manager has to cope with at least some of the following challenges:
* Installed Base. Existing technology can impede new technology initiatives. Legacy Technology. With deep roots in unknown places, legacy technology may not be so easy to unplug.
* Bureaucracy. Cultural roadblocks could make seemingly obvious technology decisions difficult or even impossible to implement.
* Maturity. Young companies are agile but have limited resources. Older companies move slowly but can reorganize with little change in headcount.
* Local Influence. Local laws and culture could run counter to a company's strategy.
* Regulatory Requirements. IT needs to plan for the needs of an important client-the government.
* Chargebacks. Emotions run high with chargebacks of IT services and products. Strive for accuracy and transparency about costs. Full disclosure is the best policy.
* Mixed Culture. Some cultures plan meticulously and focus on architecture and engineering. Other cultures favor iterative and collaborative design. Know those cultures and stay sensitive to their needs.
* Conflicting Demands. IT should never make business system and technology decisions on its own. Build a strong governance model, and IT will apply solid, value-rich solutions that align with business objectives.
INN: What other factors should IT consider?
FD: Product. Who will use IT's products? What's driving demand?
Price. What's driving costs? Can external providers do this better? What are IT's capabilities and what are the users' expectations? Can IT meet expectations with the existing price, based on the existing cost?
Place. Where is service needed and where is IT capable of delivering it?
Promotion. What is IT's communication plan? How does the department provide feedback to clients?
INN: How can IT gauge whether its attention is in the right place?
FD: IT should remain transparent so insurers and customers recognize efficiencies and value. Transparency encourages feedback-both positive and negative. The IT manager should also regularly ask himself or herself the following questions:
* What is the corporate value discipline? Does the company differentiate itself through products, price or intimate knowledge of its clients? How does the company rank in other disciplines?
* What does the IT department's governance model look like? Is it senior enough? Is it too geography-based or not enough? Is it based too strongly on profit centers or not enough?
* What products make sense? Which do not? Can IT products be segmented?
INN: Should IT re-think its place in today's marketplace?
FD: Advances in information technology are accelerating so rapidly that the IT team must reposition itself as a marketing organization within the company. Today's IT department needs to state its purpose and establish its value. Others should see IT as providing "intelligence" value to the company.
Don't let the business side view IT as the in-house entity that makes itself available to implement every new technology.
The IT department's greatest assets are the value it contributes to the company and the ability to communicate that value within the organization. IT can succeed in its corporate mission to the extent that it aligns with core value disciplines and then asserts its accountability for the success or failure of the company.
CORRECTION
In "Let Feds Monitor Carriers" (May 2007), Joe Beneducci was referred to as president and chief operating officer of Novato, Calif.-based Fireman's Fund Insurance Co. However, Beneducci was promoted to president and chief executive officer at the company. We regret the error.
