In today's increasingly complex world, midsize insurance firms are focusing more on using technology to drive growth, client value and market differentiation. And, the steps required to achieve those goals are more complex than ever.
People search for and purchase insurance in entirely new ways. Face-to-face meetings with local insurance agents have been replaced with online research and discussion forums. Before making a decision, there may be a quick call to an agent for further information-or not. It's a very different environment. Long the engines of economic growth, these midsize insurers recognize the game-changing role technology can play, not only in how they run their business but also in how they build relationships with customers. More and more of these businesses are embracing new technologies for breakthrough change and innovation.
"Inside the Midmarket: A 2011 Perspective," a global survey of 2,112 midsize businesses commissioned by IBM and conducted independently by KS&R Inc., shows a strong strategic focus on growth and customers among the 240 insurance firms that were surveyed.
Globally, cost reduction/improved efficiencies, improved customer service, increased employee productivity, and new ways to reach customers have become top business priorities and critical challenges for the insurance industry. They are rethinking the fundamental role of information technology and are exhibiting a real hunger to use technology to deliver real business outcomes.
In light of new, powerful technologies becoming increasingly affordable and available, 57% of the insurance firms surveyed say they are planning to increase their IT budgets over the next 12 months. As a result, these companies are investing in a wide range of priorities including regulatory compliance, security management, IT infrastructure improvements and business analytics.
Emerging Technologies
Two emerging technologies are commanding the interest and investment of midsize firms: analytics and cloud computing.
Once reserved for big companies with big budgets, business analytics and predictive technologies are now are easy to use, appropriately priced and an increasing priority for midsize businesses. In fact, 62% of the insurance companies surveyed rate analytics as a top priority, and more than two-thirds said they are looking to analytics solutions to improve decision making, operational efficiency and collaboration. These firms know that the most important aspect of smarter systems is data and the actionable insights that the data can reveal.
Midsize businesses also are beginning to fully grasp the potential benefits and value of cloud computing. In fact, more than half of the respondents have cloud computing projects in progress or are in the planning stage, citing optimizing costs and reducing redundancy while increasing availability and scalability as primary benefits.
With a cloud solution automating the infrastructure, many are finding they can refocus their IT staff on projects that will help to differentiate their companies.
To support their shift in strategic focus and to advance their new business priorities, the survey found that 75% of insurance firms are seeking a consultative, rather than purely transactional, relationship with their primary IT provider. Other actions midsize insurance firms should consider to achieve their goals for this year include:
- Retain and grow current customers by improving quality-of-service offerings
- Identify new markets and new ways to reach customers
- Foster innovation across the organization
- Improve operational efficiencies to help reduce and manage costs
- Use data and information more effectively to make better decisions
- Become a more flexible and nimble organization
The Internet and globalization continue to shrink, flatten and make the world smarter, creating tremendous opportunity. Midsize businesses are turning their attention to driving innovation and building stronger customer relationships. In the process, these companies are finding new ways to use information and technology to be smarter about how they work, where they invest, and the way they interact with their customers.
Smart insurance firms realize that aligning business and IT priorities isn't enough. Investment in the right technologies and associated solutions is the vital next step in generating greater value for their customers and sustained growth for their business.
Mark Lewis is the general manager of IBM's Insurance Sector.
