"One of the biggest challenges facing companies trying to moveto the next level of business intelligence is management bandwidth.The ability to develop models requires relatively senior-levelmanagement insight, perspective, and collaboration to discuss thespecifics of what they are looking at. Management is overburdenednow, so finding the management bandwidth to dedicate to a projectlike this is difficult.

The second major challenge is the expertise to understand howthe different components of data inter-relate. It's an expertise inwhich a lot of companies don't have much depth.

The bandwidth issue is truly a matter of prioritization.Companies that are moving forward in predictive analytics andbusiness intelligence are recognizing [those tools] can providethem with competitive differentiation and they are prioritizingtheir efforts and allocating resources to focus on a particulararea.

The ones that have been successful are picking an area to focuson. In the property/casualty area there has been a lot of focus onclaims because the leverage of the claims dollar is so high. Inother areas it may be on customer segmentation because [insurers]are moving into a differentiated market. They realize profitabilityvaries with each customer so they are going to focus on the mostprofitable customers.

In terms of developing the expertise, there are some peoplewithin organizations that have worked with the data, particularlyin the actuarial department or the information reporting departmentthat have awareness. You can supplement that if you get toolsetexpertise that comes with the installation and development of thefirst project, so you need knowledge transfer to your internalexperts.

If you are trying to leapfrog the process you can contract theexpertise if necessary to get your first project in house. The goalwould be to get the knowledge transfer in place so you have yourown staff develop the data awareness to take you to the nextlevel."

Steve Callahan is practice director for RobertE. Nolan Co.