External benchmarking data is an important tool for insurer CIOs in both self-assessment and communication with senior business management. Benchmarking data can provide critical support for spending and budgeting decisions, as well as highlight potential areas of concern.
Novarica’s new Quick IT Benchmarks for Insurers is based on 69 responses from the Novarica Insurance Technology Research Council and highlights key issues to consider when benchmarking. A few notable statistics from this report include:
- Insurers spend 20 percent of their IT budgets on maintenance fees for hardware and software they already own, nearly twice as much as they spend on new hardware and software.
- Insurers spend half their IT budgets on running the business, about 30 percent on growing the business, and only 20 percent on transforming the business.
- About half of large insurers and less than 10 percent of midsize insurers have IT staffs that are mostly outsourced.
- The average number of IT staff per enterprise application ranges from about 3 to 6.
In addition to the report’s findings, what makes this report significant is our “Supply and Demand” approach to IT assessment. Rather than focus exclusively on spending levels, our report contextualizes spending levels (Supply) against company size, new project volume, and current state of the organization, technology infrastructure, and product volume and complexity (Demand). This approach allows insurers to look at IT spending in a valuable new way. Benchmarking data is presented and understood within the context of the variation between peer circumstances and business needs.
A free summary of this report is available at: http://novarica.com/quick-it-benchmarks-for-insurers-2015/
This blog entry has been reprinted with permission.
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