As Bill Hartnett, director of U.S. insurance solutions forMicrosoft Corp., describes it, there is a tidal wave coming–80million consumers and employees whom the insurance industry willhave to engage as the people who buy their products and run theiroperations in the very near future. "Boards [of directors] arestarting to look at it as a crisis," he says. "How are they goingto attract the right employees and compete in the marketplace whereexpectations are being set by other firms?"

Millennials are the first generation arriving in the workplacewith prior experience with technology, notes consultant and author(Generation Blend) Rob Salkowitz. "Boomers and Gen X typicallylearned to use workplace technology at work and didn't come intothe environment with a lot of expectations about what it could andshould do," he says. "That's changed in the last 10 years as ageneration that grew up with the Internet and mobile devices alsosaw how useful and innovative these services could be on the Webfor doing important activities. You run the risk of having for thefirst time a group coming in that is more sophisticated than the ITdecision-makers."

The history of insurance always has been built around affinitygroups–people who share the same risks, explains David Piesse,global head of insurance for Sun Microsystems. "With socialnetworking, we're looking at the rise of some massive affinitymarkets: the underbanked, underinsured, the Muslim populationaround the world, and Gen Y–younger people who look at lifedifferently," he says.

Piesse believes changes are being caused by the next-generationInternet and everyone wanting to do things in different ways. "Withthe new Internet, everyone collaborates together," he says. "If Iworked for an insurance company and I offered young people aproduct, they most likely would talk to all their friends about theproduct before they buy it. Whereas people like me would just goout and buy it."

Usually it's the Web 2.0 implementations that are lagging in anenterprise environment, according to Salkowitz, pointing totechnology such as blogs, wikis, Twitter, location-based socialnetworking using mobile devices, and GPS that is integrated sousers can see whether someone is in their office or on the move."Typically, there's a three- to five-year lag to get things intothe enterprise in terms of security and compliance requirements,"he says. "What frustrates the end users is they don't understandwhere that lag comes from. What frustrates the IT decision-makersis the end users don't understand the security problem."

Oliver Young, a senior analyst with Forrester Research, pointsout there are good open-source tools available for a company to getstarted with social networking. The bigger issue, he maintains, isa cultural one–getting people to use the tools appropriately and totheir fullest effect. "It's not an easy culture to instill," hesays. "It's a big change to go from e-mail in a private set ofconversations to something that is out in the public space."

The best way for companies to begin is to start small, advisesYoung. "Because it's going to require a big change in how employeesget their job done–a shift away from e-mail to collaborationtools–it's helpful to bring employees along gently and do so in away that shows [users] concrete business value," he says.

Insurance firms traditionally are very slow to adopt technology,continues Young, but despite this, the Web 2.0 collaboration toolsare finding their way around the industry. "I have an inordinatelylarge number of calls and conversations with insurance companies[on this issue]," he says. "Fundamentally, these tools are abouthelping knowledge workers get their job done, and insurance is aknowledge business."

When blogs first began to become prevalent, they generated greatinterest among the upper management at Northwestern MutualFinancial Network to bring the communication tools into theenterprise. "What we wanted to do was be able to increase ourdialog between our employees and our field force, start toencourage idea sharing, enhance our productivity, and begin tocapture institutional knowledge and drive employee engagement,"says Paul Buss, intranet manager for Northwestern.

The key factor was employee engagement, Buss asserts. "Webelieve in open communication here and wanted to foster that bygiving people an open forum to allow for that instead of thetraditional [communication] methods that usually are one way," hesays.

The Northwestern blogs have created a lot of interest. "We'vebeen fortunate people latched on quickly and became comfortablewith it," says Buss. "They openly share ideas and comment back onthem. There are a few focused blogs that are regular features, butthat's a smaller amount of what we have out there."

There are no restrictions on blog topics at Northwestern,according to Buss. "They run the gamut from new technology comingout to more of the things that are happening around the enterprisethat impact everyone," he says.

The blogs are reaching Northwestern's millennial audience,reports Buss. "They are the ones that latched on the quickest," hesays. Northwestern does not allow anonymous blogging, so employeesput their name to their post. "When you go through the posts, youcan see it is a majority of the millennials doing this," he says."They've actually come up with some new ideas."

Social and recreational groups within Northwestern are allowedto use the blogs to promote their social events and as an openforum to discuss some of their events and ideas. There aren't anyposts about the newest movies or how the hometown Brewers will doin the coming baseball season. "We haven't seen many purely socialposts," says Buss. "People understand they are at work, so theyhave bought into it as a channel to share work information. Thereis some fringe stuff such as technology that gets talked about–evenblogging about blogging–but it relates back to either their job orthe company as a whole."

The time-wasting potential for this technology is immediatelyobvious to Salkowitz and many companies. "All of the abuses and thethings that happen on IM networks raise the eyebrows of HR andcompliance officers and are the first things you think of," hesays, adding the business value of social networking is moresubtle, though. "If you get a critical mass of user participation,you're going to get better ideas coming into the innovation processand more attachment to the brand because consumers feel ownershipof it," he says. "All it takes is one breakthrough idea to emergefrom the social networking collaboration system that could be worthmillions of dollars."

With past projects involving its vendor partner CSC, NorthCarolina Farm Bureau (NCFB) tracked updates on a CSC Web site, butKitty Price, operations division manager for NCFB, didn't feel herstaff used the site to full effect.

As NCFB began newer projects with CSC, though, the vendor'sWikonnect network proved invaluable. "Both of our new products[purchased by NCFB] have a page [on Wikonnect] and we found it wasan easy way to get information," says Price.

CSC can post information on the product page and Wikonnectserves as a repository, so there's documentation to which customerscan gain access. "We use it to post our status when testing," saysPrice. "We found it was a good collaborative area where we couldwork together."

Price has been pushing her staff to use Wikonnect in order tobuild relationships, not only with the CSC staff but with other CSCcustomers as well. "We've begun to develop relationships with other[CSC] customers," she says. "I could not have imagined doing that acouple of years ago. As [CSC] customers become more familiar withWikonnect, I can see it really taking off."

It used to be considered taboo to discuss anything with anotherinsurance company, Price remarks, but today both sides realize theyare looking at the same issues. "We aren't looking at it ascompetitors but as a way we might be able to help each other," shesays.

Millennials on the NCFB staff were quicker to respond toWikonnect than others, who, Price explains, needed some prodding."We were not afraid to ask [younger staffers] questions becausethey were familiar with the technology," she says. "Those who wereyounger and more familiar with the navigation were able to sharethat with us."

If you are a member of CSC's Wikonnect, you can connect with allother members, according to Myra Frailey, director of Wikonnect forCSC. "We have more than 4,000 users now," she says. "Each one ofour products is forming its own community. There are lots ofdifferent ways [users] can participate and find people who are likethem."

Currently, Wikonnect is a closed community, indicates Frailey."We are exploring ways where we can have private communities, butwe're also looking at ways to open sections of Wikonnect forpartners of CSC and partners of our customers."

Frailey thought all the communities would be product based, butnow she is seeing groups, such as the vendor's BPO customers, thathave created communities to discuss a particular interpretation ofsomething. "It's allowed them to manage and create communitiesbased on the way they think," she says.

To enhance communication externally, Northwestern directs blogsto its independent agency force. "We've allowed forpassword-protected blogs so we could reach specific groups," saysBuss. "It's a good vehicle for [agents] to share ideas and helpwith some innovative selling techniques. It's a lot like any othertechnology; there's a group that latches on quickly. I don't wantto say it's by age, but it is by comfort level."

Northwestern is interested in exploring how social media canhelp the company support its relationship with clients andpolicyholders, according to Buss. "We're investigating thoseavenues, but since we're in a tightly regulated industry, we wantto be careful before we start rolling out things," he says.

Connecting people outside the enterprise is one of the biggerchallenges for social networking, indicates Buss. "It's easy to doit in the home office; it gets a little trickier when we want tocommunicate out to our field force because of compliance and legalissues, and when we want to go out to our policyholders, it getseven more challenging," he says.

Northwestern is investigating some of the technologies that havetaken hold since the blogs first started to see how the companymight be able to deliver those out to its three primary groups–homeoffice, field force, and policyholders.

Regulatory compliance is an extremely legitimate reason some ofthe social networking tools are being kept out of the office,contends Salkowitz. "The CIOs are paid to make sure thosecompliance requirements are met," he says. "On the other hand, whatwe see in some organizations is the compliance requirements areused as a rationale to be more conservative about the applicationthan they need to be. There's an inclination on the part of the ITdepartment to say it doesn't see the business value of this stuff,so rather than go to the trouble of exploring how to say yes, IT isgoing to just say no and explain it's a compliance issue."

E-mail had to fight this battle earlier this decade, points outSalkowitz. "In the financial services industry, there werecompliance issues around e-mail as late as 2002," he says.

It is easy today to build interactive and rich transactionalapplications on the Web so customers get a better experience indealing with your company, suggests Hartnett. "Those aren't reallyexpensive to deploy. But the problem is unless you have the pieceson the back end and have transformed the employee experience, youactually are setting up a situation where you have a decline incustomer experience and a really frustrating employee experience,"he says. "The knee-jerk reaction would be to say it is easier toinvest in the customers because of the cultural change involved inbringing in new technology for the employee base. The initialinvestment on the consumer side might be a little less, but it'snot a simple equation."

Nevertheless, according to Young, the customer-facing side ofsocial networking, especially for insurance and other regulatedindustries, is scary. "A lot of companies want to engage theircustomers in a social way but don't feel they can," he says. "Atthis point, there is no precedent out there, and none of thesecompanies are particularly interested in becoming thatprecedent."

Piesse sees a massive change in the way people do business–bothin buying and how employees work. "We're looking at a buyingculture and an employee culture with social networking," he says."We call it a disruption because insurers are not really the onlyplayers [in the insurance space] anymore. We have nonfinancialplayers looking into financial services–Yahoo, Google, andAlibaba–and these already are doing social networking. Thisdisruption has nothing to do with management; it's anorganizational change. If companies don't recognize this, they arelikely to find themselves in a world where they no longer exist.It's extremely important companies move to social networking forfinancial services."

With almost any technology change, Hartnett believes, it becomesa cultural challenge. "Cultural issues in the insurance industryrelate to this generational shift," he says. "The older peopledon't want to see any wholesale changes. The cultural change ofmanaging through that environment where you have to createapplications for the newer group of people combined with theexpectations of no change for the older people, it gets difficultto balance."

Millennials might relish working for a company that offers thelatest technology, but Young disagrees with those who believeemployees won't come to work for a company if it doesn't offerthose tools. "Even in good times, I didn't believe that was thecase, and certainly not now," he says. "If we were to take this toits logical extreme, everything else exactly equal, would a youngemployee prefer a company with collaborative tools over one thatdidn't? Probably, but [such an occurrence] is never the case."