IT budgets have already been eroded over recent years and this trend seems bound to continue as recession bites – with the result that insurers may lose key staff and find it increasingly difficult to satisfy regulatory requirements. In the longer term, a decline in IT capacity may make it much more difficult to capitalise on any recovery when that comes.
So how is the CIO to make the case for continued investment in IT during this difficult economic period?
In this article we discuss one part of the CIO’s agenda – IT projects. When resources and budgets are directed towards discretionary projects, IT can be an easy target for immediate cost-cutting. But in this volatile business environment, there is an opportunity to take a more radical approach that shows how IT can offer quick wins while also preparing the business to emerge from recession.
Many insurers, wondering whether they will still be in business in 12 months’ time, have lost their appetite for long-running IT projects. Instead of the traditional planned incremental improvement, they feel the need to deliver more radical change. Such is the pressure to maintain solvency that many feel they can no longer assume that the business will still be in the same shape in the future.
Sacred cows are being challenged. For many years, insurers have interpreted regulatory compliance strictly, fearful of risking any infringements. In recent months, however, they have become more willing to challenge the costs of compliance, and look for new ways of
implementing the regulatory framework. Increasingly, they want to realise genuine and irreversible benefits from change, so that they are not tempted to revert to the old way of working.
So is the recession simply a threat or might it be an opportunity too? As our case study shows it need not lead to a reduction in activity. On the contrary, it can become the trigger for a transformation in the way that the IT department works with its business colleagues, especially if insurers concentrate on three key areas:
1. Set up projects to deliver rapid business benefit
2. Make the most of what you already have
3. Get more out of partners and suppliers.
This article is an extract from PA perspective on insurance. For a full version of this article, a copy of the latest edition, or to speak to one of our experts in this sector, please contact us.