Not long ago, the operative words used when writing an article on upcoming IT budgets were "cautiously optimistic." Everyone was hopeful—but not completely sold—that the executive team and the board of directors would see the value of investing in technology. Fortunately, the insurance IT field has moved beyond that to this year's featured words in budget stories: "increasing slightly."
Slight increases don't seem worthy of getting excited about, but when you study the overall picture of the insurance industry today compared to where it was five years ago, slight increase sounds pretty good.
IT shops survived the worst economy of the last 75 years with their heads held high. IT wasn't immune from cutbacks that followed the financial collapse of 2008, but technology had finally earned a strategic value in the industry that carriers were doing whatever possible to keep IT moving forward to avoid the cutbacks that put business units behind braver competitors once the economy began to improve.
The lessons from the last five years are still fresh, but another predominant word we live with continues to be "lean." All of us—no matter what the industry—have dealt with "do more with less" for a decade now and there is little reason to expect that strategy to change anytime soon—or ever.
So even slight increases in IT budgets should be welcomed—if not with the clanging of church bells and the tossing of confetti—at least with satisfaction that what IT shops are doing today is valued as greatly as any other department within the enterprise. That statement was just a dream just a decade ago.
One reason for this is because IT spans the entire enterprise and the solutions that keep the operation humming are largely specific to IT. ITs value is engrained in every task handled by every employee. There is great value in that condition.
Money will continue to flow to IT. Maybe not in great chunks—unless your company is due for a new policy administration system—but likely more than what was needed to "keep the lights on" in the past.
It is important for carriers to realize this value because there are great challenges ahead—beyond that policy admin system. Insurers need to take dead aim on their data quality and storage; they need to reap the benefits of that data through improved analytics; they need better models to address the big ticket claims that come following catastrophes.
Technology investment will continue to grow—at least slightly—as long as IT departments continue to turn strategic challenges into strategic advantages. So let's salute "slight increases" for the 2013 budgets and turn them into powerful solutions for the future growth of our companies.
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