The insurance industry has a long, established tradition ofchanging slowly. Yet, it must function in a world that is shiftingat lightning speed as technologies that focus on information andcommunication converge and become incredibly powerful.

Insurers must find new ways to capitalize, cope, and keep pace.A large share of the responsibility for success sits squarely onthe shoulders of the CIO. Fortunately, the alternatives forbuilding and assembling information technology capabilities areincreasing and providing new ways to execute strategies.

There is a real, although sometimes quiet, revolution occurringin the way information and communication resources can be procured,delivered, and used. Options for sourcing are becoming morerobust—fueled by forces such as rapid globalization; increasingavailability of computing power and data storage capacity at areasonable cost; steady advances in software developmentmethodologies; and the affordability of higher and highercommunications technology bandwidths. There are many new ways forIT to do its work and to create a nimble organization with fullycoordinated people, processes, technology, and information. Onethat is able to adapt and thrive in an uncertain future.

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IT organizations have a boatload of new responsibilities thatrelate to sourcing: managing traditional insourcing and a varietyof outsourcing flavors simultaneously, selecting the best approachfor balancing the cost/value equation, and identifying viableoptions as well as determining how they relate to businessobjectives and capabilities. New conversations need to take placeabout the possibilities. There are new considerations for theinvestment in keeping the infrastructure current and secure.

Computer hardware, software services, telephony capabilities,and human resources can quickly be assembled and used to handlespecific tasks. Large, fully-staffed centers of excellence offerservices to businesses anywhere on the planet. Workload sharing andbalancing among computing resources can be refined to maximizeinvestments. Telephony technology for automated call routing,predictive dialing, and resource allocation can provide support forcall centers oceans away.

New software delivery models are increasing flexibility. Usingcloud computing, all computing resources or assets (servers,storage devices, networks, and software) can be hosted or managedin the cloud. With a Software-as-a-Service (SaaS) model,applications run on a remote computer and usage determines thepricing. There are other IT components that can benefit from amodel where the user/consumer of the services does not own thecomputing/software/telecom assets—includingCommunications-as-a-Service (CaaS), Platform-as-a-Service (PaaS),and Data-as-a-Service (DaaS).

It is helpful to consider the following in determining which ofthe sourcing models might be the most suitable:

• Is management of the physical resources a requirement foraccomplishing your objectives?
• Is there any advantage to owning the computing infrastructure,software, and communications assets?
• Does it really matter where the physical resources are located?Is it of concern to you if the resources are shared?
• How confident are you about your own ability to provide secureIT systems? Might another organization be able to provide a moresecure environment?
• What pricing mechanism will give you the most flexibility andbest fit your business model?

Overall, the increasing flexibility of IT provisioning modelswill be positive for the insurance industry—particularly forinsurers that have invested in creating a modern, flexiblearchitecture and data model. Plug-and-play solutions will becomethe norm. New sourcing modes will allow rapid implementation of newapproaches, variable cost structures, and on-demand usage modes. Inthe coming years, new business models will take shape, changing thefundamentals of the insurance business itself, how work gets done,and interactions throughout the insurance ecosystem.