By now, I'm sure you have had your fill of lists—both end-of-year and new year's predictions.

But a list sent over by my long-time colleague Henry Stimpson caught my eye. The list of top 10 top IT challenges for the insurance industry, compiled by X by 2, an insurance IT consulting group, ranked “legacy modernization and replacement” as the No. 1 industry challenge for 2011.

Should it be the No. 1 concern—one more prominent than cloud computing or social media initiatives? As the consultancy described it, “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.”

This certainly is a non-trivial task for many insurers; as gigabytes worth of data and millions of dollars of investments are wrapped up in many mainframes or other legacy systems. There is always confusion about exactly what constitutes a “legacy” system—for the sake of argument here, I would define legacy as a mainframe or large-scale proprietary system more than five years old.

The ability to move legacy systems into the mainstream will shape every other top 10 challenge the firm identified, which include the following:

1. Legacy modernization or replacement

2. Cloud computing

3. Mobile applications

4. Social media and collaboration

5. Next-generation analytics

6. IT as revenue driver

7. Innovation

8. Industry and technology sustainability

9. Virtualization

10. Rich media

Legacy systems weren't designed for agility, responsiveness and analytics, but there are a number of tools and approaches that will bring legacy applications and data into the Web- and service-oriented worlds.

Worthy of note is No. 6 on the list as well—“IT as revenue driver.” IT is increasingly being looked upon as more than the folks who keep the data center up and running—they are the people that keep the entire business and running. Furthermore, all new innovations, products and services insurers design to reach new market segments will have a technology foundation. As we emerge from the recession and kick into rapid-growth mode, which looks like will happen in 2011, businesses will be leaning heavily on IT for competitive advantage. Forget all the talk about IT-business alignment—IT is the business.

That's why it's imperative to get moving on item No. 1. We know mainframes can take a pounding from an almost unlimited number of users and applications; they just need to be responsive and Web-aware as well.

Joe McKendrick is an author, consultant, blogger and frequent INN contributor specializing in information technology.

Readers are encouraged to respond to Joe using the “Add Your Comments” box below. He can also be reached at joe@mckendrickresearch.com.

This blog was exclusively written for Insurance Networking News. It may not be reposted or reused without permission from Insurance Networking News.

The opinions of bloggers on www.insurancenetworking.com do not necessarily reflect those of Insurance Networking News.

Register or login for access to this item and much more

All Digital Insurance content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access