Other parts of this series:
Large insurers need to roll out and support digital products and services vital for their survival. But they must also maintain the complex legacy systems that support their operations. Multi-speed IT enables carriers to overcome this tension and use their IT resources much more effectively.
The rapid rise of the digital economy is severely disrupting the insurance industry throughout the world. Traditional sales, marketing and distribution practices are being turned on their head as insurers grapple with rising customer expectations, growing competition from agile start-ups and a mix of threats and opportunities from digital ecosystems.
Nowhere is the pain of digital disruption being felt more keenly than in the IT organizations of big insurers. They’re under increasing pressure to roll out and support digital products and services vital for the survival of their organizations. They must also maintain the performance and availability, as well as the regulatory and risk compliance, of the complex legacy systems that support their operations.
Chief information officers (CIOs), and other executives responsible for IT resources, are frequently torn between these two, often opposing, demands. They need to allocate scarce capital, talent and resources to both their digital and legacy environments. Furthermore, CIOs often have to oversee a host of diverse projects and initiatives that are crucial to the business but have very different timelines. The growing ‘democratization of technology,’ which allows users to perform tasks once reserved for IT specialists, has further increased the complexity of these challenges.
Insurers, as well as many other businesses, are certainly becoming aware of the growing burden on CIOs. Eighty-one percent of executives we recently canvassed believe most IT organizations do not know how to operate effectively while supporting multiple objectives at the same time. Many organizations are responding to this situation by starting to split their legacy and digital resources.
Simply separating legacy and digital resources, however, is not smart. It doesn’t solve one of the biggest challenges facing businesses in the digital economy – operating in multiple environments at multiple speeds. Insurers don’t work in a two-speed universe but have to contend with a wide range of different demands that have varying degrees of urgency.
Carriers should tackle this challenge by creating a separate technical service layer that connects the legacy environment to the new digital world. They can further improve internal connectivity, as well as strengthen links with other companies, by implementing application programming interfaces (APIs). While the use of APIs is common among banks around the world, insurers have been slower to adopt these communications standards.
Our research shows that high-performing CIOs are adept at managing their IT resources to meet the multi-speed requirements of their business. They don’t focus just on cutting costs, increasing productivity and automating processes. Instead, they strive to provide the right information to the right people at the right time. Their IT resources operate at varying speeds, and in differing modes, to deliver information when and where it is required. Furthermore, high-performing CIOs constantly look for better ways to interact with customers and deliver new services.
Insurers most likely to succeed in the digital economy will be supported by multi-speed IT organizations. They’ll combine legacy and digital resources by operating concurrently in different modes to support the strategic objectives of the business.
In my next blog post, I discuss some of the main advantages of multi-speed IT.
Until then, take a look at this link. I’m sure you’ll find it helpful.