Across the country, insurers' IT departments are waging battles on many fronts. Rapidly changing business needs, new regulatory demands, and aging legacy systems all require time and personnel. And let's not forget the challenges of a struggling economy and a competitive insurance market.

The way to win this battle, according to Mike Sciol?, is not to pull back and retrench; it is to go forward and innovate. "We're still using old ways to solve new problems, and many of the supposedly 'innovative' ideas being proposed today simply are repackaging of old ideas," says Sciol?, CIO of Burlington Insurance Group and Guilford Specialty Group and panelist at the 2009 IT Town Hall this morning at 9:30 a.m.

Exploring innovative and emerging technologies and the best ways to leverage systems for competitive advantage is the focus of this year's Town Hall. Moderating the panel discussion will be Rod Travers, senior vice president of technology at Robert E. Nolan Company, who explains the goal of session organizers was to bring together a cross-section of backgrounds and experience for attendees.

"Our panel will consist of analysts with a broad industry perspective, solution providers who have a front-row view of what's being developed, and CIOs who manage the confluence of business and technology every day," he says.

Economic Uncertainty

They may be feeling the pressure, but they are continuing to make strategic technology investments. "Companies still are spending money on technologies that enable ease of doing business and help differentiate them in the marketplace. There are vendors out there having record sales, particularly on the P&C side, where we're seeing buying decisions made on large-scale software," says Deb Smallwood, panelist and founder of insurance strategic advisory and analyst firm SMA.

"Less than half of P&C insurers have reduced IT spending or delayed significant projects," adds panelist Matthew Josefowicz, director of insurance at Novarica.

Panelist Don Goodenow, a director of insurance solutions product management at StoneRiver, has seen firsthand the strong interest that continues in P&C software and believes he knows why. "In every recession there have been businesses that have seized the moment to try to make changes they might not otherwise have had support for," he says. "The sense of urgency is higher to find ways to make companies more competitive and flexible."

"In some cases, the economic dislocation is providing cover for very large potential changes in operations and IT, since the excuse 'what we're doing is working fine' no longer applies," Josefowicz says.

On the life/annuity side, the spending picture is less rosy, with Josefowicz describing what he sees as "significant pullback" in IT projects at some carriers. "Life/annuity insurers are more closely tied to the market and are facing the double-whammy of reduced demand and reduced investment income," he says. "However, many forward-looking and well-capitalized life insurers are moving ahead aggressively with significant IT projects designed to improve their competitive positions."

Governance and Growth

"We are seeing more diligence in investments and making sure those investments are tied to strategy," says Smallwood, reporting she has consulted in recent months with several carriers that have rolled out new governance processes.

"They're having conversations and asking questions they never did before: 'What will this do to my top line?' What will this do to my bottom line?' 'What is the cost of the project?' I'm finding more and more carriers applying priority filters to projects based on metrics and in terms of cost/benefit analyses," she observes.

In turn, these analyses have impacted purchasing time lines in both P&C and life/annuities. "Companies are being more deliberate. Sales cycles were already long, and this new scrutiny has made them even longer," Goodenow says.

Sciol? sees the rising importance of governance having an impact not just on the ultimate investment decision but on the particular systems carriers acquire in IT. "We are seeing an expansion of governance, regulatory, and compliance systems. That's going to continue, particularly in light of talk about greater federal regulation," he says. "Companies also are reassessing enterprise risk management strategies, including both how IT affects it and is affected by it."

Of course, the economy is just one challenge insurers contend with today, and there are a host of other business issues to which IT must respond. "Although the environment has changed significantly, the top technology priorities have not: speed to market, distributor and customer service, optimized workflows, and business intelligence based on the ability to better use internal data," Josefowicz says. "Insurers have major strategic needs in these areas, and those have not changed due to the crisis. If anything, the needs have only gotten more intense due to competition in the shrinking market."

Another significant challenge companies face, he adds, is ineffective communication. "CIOs and IT departments more broadly need to be able to facilitate effective communication with their business partners about priorities, capabilities, and project management. As 'information technology' is recognized as a critical component of the 'information business' that is insurance, IT execs and staff must develop better communication skills and structures to make sure they are effective partners to the business. IT must be able to understand business challenges and put the creation of business value at the center of their goals," says Josefowicz.

Better communication will lead carriers not just to respond to change but anticipate it through innovation and by gaining what Sciol? calls a "holistic view" that merges IT and business. "Despite all the focus on alignment, IT still tends to look at things from an IT perspective, and business looks at things from a business perspective," he says.

As it has in the past, the Town Hall will be a lively forum to discuss how companies can use IT not only to adapt and survive but to lead and thrive. "There are companies that are not simply weathering the storm but that are making money and looking to grow," Smallwood says. "In any market, technology helps carriers capitalize on business opportunity."

"The Town Hall provides a unique setting where the audience members drive the discussion via their questions and comments," Travers remarks. "Industry peers share their ideas, air their frustrations, and just simply talk about what is really happening here and now as they manage their IT operations through unprecedented times."

Special Reports /

Town Hall Highlights IT Changes and Constants in a Challenging Economy

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