During my interview for the company for which I now work, I was asked, “How would you create an IT strategy?” That's easy because we're not a technology company, we're an insurance company. There is no “IT strategy,” just an IT element of the business strategy.

I've been a part of initiatives driven by IT that were technology for the sake of technology. For example, an “AS/400 Java new core systems” project was great technically, but didn't solve a pressing business problem (result? FAIL). On another project, we were building some amazing components using very cutting-edge technology. The only problem is that we weren't delivering business value (FAIL).

Now before you walk away from this blog post thinking I'm a complete failure in life, I've learned a lot from those failures. Most importantly, IT is a business support function first and a technology function second. The IT cart can never come before the business horse.

How do you align to the business, then? Start with this: It's not the responsibility of the business to understand IT, but it is IT's responsibility to understand the business. If you can't digest things like time to market, product/state variability, compliance, and soft/hard market swings, you can't develop the IT elements that complement the business strategy.

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For each element of the business strategy, figure out how to adjust, replace, add, or remove IT capabilities to accomplish those goals. For example, if getting quotes out the door quickly to increase market penetration is the business goal, then integrate with third-party systems; increase the speed of applications with hardware upgrades; and describe, understand, and adjust the business process to maximize operational effectiveness. The point is to support the business, not override it with techno nirvana.

I believe there are opportunities for IT to drive business initiatives, but that's usually in execution. IT may find new channels (see Facebook), more efficient information processing, or even develop new services. But I've seen too many leaders start with such thinking. That's like flying before you walk, and the results are usually less than stellar.

For the sake of completeness, there are a couple elements of IT that are industry agnostic, including:

Software strategy: The three main approaches are vendor lock, best of breed, or hybrid. With lock, you choose a platform, stick to it, and get engaged in larger cost-effective deals. Benefits include reduced procurement, easier integration, and reduced support costs (since you have fewer vendors to understand). Detriments include loss of flexibility, and “lock-in syndrome,” where both the company and the vendor become complacent. With best of breed, you pick software ala carte. Benefits include flexibility and a healthy tension caused by the urgency of competition. A hybrid means picking areas to lock (e.g., systems management) and areas to choose (e.g., business applications). The most common approach is hybrid, almost by default because most business applications are ala carte.

Hardware Strategy: Just like software, companies can lock, pick, or hybrid. It's common to see some form of lock, but the vendor can vary between servers and desktops. The same benefits and detriments exist as with software. (On a side note, smart phones and tablets are forcing hybrid approaches.)

Don't let me mislead you—even in those two cases, the IT elements must still support the business strategy. For example, if the business is looking to expand through acquisition, it's probably not the best time to deplete cash stores by refreshing the entire hardware environment. Seems so simple, but I've seen such errors more than once.

I once worked at a small non-standard auto carrier and spent a lot of time with the CEO. He was the first person I ever heard say, “We're not an IT company, we're an insurance company.” That is the compass that directs my decision making. The simple truth is there is no such thing as IT strategy in insurance, just the IT element of the business strategy.

Special Reports /

Building An IT Strategy In Insurance

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