Jumpers

IT people do understand the business side, according to Larry Danielson, a partner with Deloitte, but unfortunately the two sides don't always speak a common language. "When a technologist might say apple, someone on the business side might think orange," he says.

Danielson believes the problem relates to the tools and techniques used to learn and understand requirements. "I don't think [requirements] are written in plain language," he says. The use case is an example, points out Danielson. "It's a common technique that's used to understand requirements," he says. "A technologist sees it one way, writes it up, gives it back to the business people, and says, 'OK, approve it.' I don't know whether that's a fair expectation. Getting the process, the tools, and a common language will go a long way in solving this issue."

Danielson also notes Deloitte consultants have discussed different operating models, which could help resolve issues, with some of their clients. Some companies are creating an operations organization and a systems organization, he indicates. "The two work closely together, know each other, and though they have different focuses, they work hand in hand," he says, adding, the two sides generally report to a common individual. "I think getting that operating model correct is important," he says. "Once they are able to do that, setting the right expectations will take them a long way."

IT itself has diverged into two areas, observes Travers. One is more technology focused and usually is run by a chief technology officer. The second involves having a chief information officer–with information being the key word. "In some companies, you have someone who really is squared off with the technology and infrastructure, and you have another person focusing on information, data, management practices within the IT area, and business enablement," he says.

A reason for this split is the technology has become more dependable and reliable, continues Travers. "The technology we are relying on these days is very mature and easier to integrate," he says. "Technology knowledge–while it's critically important and a specialty–is not taking a front seat as much as it used to. The front seat is occupied by people who can apply those systems to enable the business and enable business people to come into an IT area and not concern themselves with the technology so much."

WHAT WORKS

Of course, there is an easier answer–one found by Jenkins when he moved to Penn National: inherit a veteran IT staff. "I don't see this as an acute problem here at Penn National because people have been here such a long time," he says. "The average tenure of an IT employee here is something like 18 or 19 years. They've grown up with the business. Just through osmosis, if nothing else, they've learned the business."

Jenkins indicates business knowledge is imperative. "When you talk about the competencies of an effective CIO, one of the first things you hear is being a good business person and understanding the business that you are supporting," he says. "If you can't speak the language, how can you relate to the needs of the business? That continues to be one of the top points people make when companies look for new CIOs–do they understand the business?"

Ernie Pearson, IT director in applications development with SECURA Insurance Companies, also is fortunate in that regard. "Many of our software developers and business analysts have worked in the insurance industry for 10 to 20 years, so they've come to understand the business of insurance pretty well," he says.

SECURA places great emphasis on insurance training, too. The company encourages employees to achieve their industry designations–CPCU, CIC, CISR, Certificate of General Insurance, and others. Most of those courses are taught or facilitated internally, explains Pearson.

In addition, SECURA has monthly classes on the business of SECURA. "It's a lunch-and-learn format," says Pearson. "It may focus on risk management, marketing, subrogation, or some functional area of our business. People are encouraged to participate in those."

Also, SECURA holds annual company-wide operating plan meetings where the organization's mission, vision, and annual operating plan are shared. "People understand what our business objectives are, what projects have been approved to support those objectives, how [employees] are affected by business decisions, and how [employees] contribute to the execution of that operating plan," says Pearson. "There is a lot of sharing of information."

Penn National offers several programs to help align the IT people with the business people. "When we undergo projects, we sequester the business people and the IT people in the same area so they work as teams and learn from each other," says Jenkins. "We also promote formally the pursuit of insurance designations."

A number of classes are taught in-house, and through the performance appraisal process, IT people are encouraged to pursue those designations. "It's not mandatory, but we encourage it," says Jenkins. "If they hit those designations, they get rewarded for it."

As part of Penn National's ongoing IT management meetings, individuals from other departments are invited to speak to the IT managers about the hot-button topics the managers need to hear about.

Penn National has its technologists give presentations to other departments, as well, to instruct on how IT is using technology from a creative standpoint and where they think they have done good work relative to technology's use in supporting the business. "Those are brown-bag sessions, and they sell out from the perspective we usually have three or four sessions on the same topic because people have so much interest," says Jenkins.

In Travers' view, cross-pollination of IT and the business side is a good approach. He believes IT people who have a knack for business analysis should be imbedded in the business side. Putting business people in the IT world helps clarify requirements and keeps projects true to their original purpose, he adds.

DOES SIZE MATTER?

SECURA is small enough to have close collaboration on projects, notes Pearson. "The IT folks work closely with our business users," he says. "There are not a lot of intermediaries who work in between to translate business requirements or things such as that."

The nature and size of SECURA's organization allows employees to see a project from end to end, Pearson relates. "They understand why we are doing the project, what the business objectives are, and what SECURA systems and workflows are involved to complete the projects," he says. "The line of sight over projects is pretty clear to people."

Smaller carriers seem to get this communication done correctly, Danielson maintains. His reasoning is the technology and the operations people work closer at smaller carriers. "There isn't as much separation between the two sides," he says.

The larger organizations have divided up their jobs too much, Danielson continues. "The smaller players need to [communicate] to survive," he says. "In larger organizations, because of the division of labor, that's not a factor. That's not to say there aren't really good people [with large organizations] who can do it, though."

Travers sees the disconnect between the two sides in all sizes of companies and all lines of insurance. He points to leadership as the determinant between those that communicate well and those that don't. "That sounds like a clich?, but in driving a culture of collaboration between the business and IT in a company that's working really well, you can see somebody or a group of people in leadership positions who are driving that," he says.

While there still may be some issues in terms of who has what knowledge of the other one's discipline, good companies don't let that stand in their way in terms of getting to the desired result, explains Travers.

There needs to be a concerted effort from the leadership of both the operations and technology organizations to engage each other and do it in business terms, contends Danielson. "[Carriers] need to let people get good at it, and then it will become part of the culture of what they do," he says. "I know that's hard, but there are organizations that are very good at speaking business. That translates all the way up to the CIO. When you look at CIOs who have progressed within an organization to the highest levels, they really understand the business and can speak in business terms."

SPENDING MONEY

The carriers collaborating well are the ones spending money on it, asserts Danielson. "They have people dedicated to [bringing the two sides together], and they have people who are trained," he says. Those doing it right also are making sure the communication is part of their project work plans. "If it takes six weeks to do requirements and another week or so to get the requirements written correctly, from a business perspective, that takes more time," he says. "Companies willing to do it right are spending money to make sure the technology staff can establish common vernacular and a common framework."

Carriers also are setting metrics. "Ultimately, if you don't measure people, they aren't going to do it any differently," says Danielson. "You may have to spend a little more to get the right talent and spend a little more to do a project, but the end result is [the investment] pays off in multiples. You are getting that much better quality of product."

As budgets get tighter and people try to do things more economically, Danielson points out it takes a carrier time and energy to put requirements in business terms. "It costs money to do it, and in many cases, people aren't willing to spend the money on [training]," he says.

There are worries the economic downturn might force companies to eliminate some discretionary spending, such as for training, but Pearson doesn't anticipate SECURA will move in that direction. "I don't know whether our programs around insurance are that expensive to administer or implement," he says." I don't think it's an investment we would want to cut to save a dollar."

BUSINESS vs. IT

The intricacies of insurance make it more difficult for IT people to make the crossover to the business side, Travers remarks, but they are the ones who are on the innovation side of the equation in terms of what the business side can do with technology. "[IT people] are familiar with the new frontiers technology can take you into–whether those areas involve service differentiation, cost savings, or conducting business on the Web in new and different ways," he says. "They have an awareness of these capabilities."

Travers doesn't believe the business people have a better handle on technology than the IT people have on the business, but he suggests the business folks can apply their knowledge in information systems rather than in the pure technology side of things. "Where their knowledge is most valuable is with the applied use of the information, not with the technology itself," he says. "There's probably a threshold where a business person should stay a business person and not try to mess around in the sandbox of the very technical parts of IT. That's a very specialized discipline."

Business folks probably have the same argument the other way around, adds Travers. "The IT folks who are very technically focused have a harder time translating that knowledge to the business environment," he says.

Which side has it easier–IT or business–in understanding what the other is doing depends on the individual, suggests Jenkins. "The people of the millennial generation have [technology] so woven into their day-to-day lives they have to have at least a decent grasp on how technology can help them," he says.

Furthermore, continues Jenkins, business people can't plan adequately unless they understand how technology can help them do their jobs. "Part of my job is to make sure I go through an educational process with the business as to what new technology is available, how it can help, and how the competition is using technology to compete against us," he says.

STILL AROUND

One reason the discussion has not gone away is insurers need to react to changes in the way healthcare and banking have done, claims Travers. "What you tend to see both in healthcare and banking is their pace in terms of technology adoption is quite a bit faster than insurance, and [they are] quite a bit more sophisticated, so their culture dictates change is a given," he says. "They are used to that pace. They don't stand still. They are forced to work better together."

According to Danielson, technology workers "typically think of the environment they are in and the context they are in and answer everything in that context," he says. "Sometimes folks in a technology organization lose sight they are working in the insurance business and not working for a technology company. That mindset has to be reinforced. You can't get enamored with the technology and see everything through that lens."

At the root of the issue, though, lies a difficult reality, concludes Jenkins: A person doesn't need to be in this business a lifetime to understand that insurance at a high level is fairly simple–carrier and customer share the risk–but how they go about sharing that risk is much more complicated. "Someone can be in this business for 30 years," he points out, "and not understand all the nuances."