November 7, 2011 – Russ Bostick, president of Bostick & Associates, took to the stage at Celent’s Creative Disruption – A Core Systems Strategy Workshop in Boston on Nov. 3, 2011, to share his experiences as an insurance IT executive in building successful business cases.
He started out by saying the process must start with problem or opportunity, not a capability, which IT professionals tend to do. Bostick, whose consulting company focuses on life, annuity and supplemental health insurance, said another necessity is doing a SWOT (strengths, weaknesses, opportunities and threats) analysis. Using some of these classic business tools will help figure out what the real issues are right now and gain some consensus around them. “Ironically, determining what or where to attack has the greatest impact on business case outcomes, not what you actually can do,” he said. “Yes, the technology department’s primary focus is execution. The vast majority of staff need to show up on a project plan at the right time and perform the task correctly and with excellence in order to be realized, but that has to do with execution, not with project selection and business case.”
Bostick referred to a September Celent report, “Reviving the Insurance Core Systems Business Case,” that reveals that technology isn’t the biggest challenge when it comes to completing a project. It’s creating the culture change necessary to maximize benefits of the modernization, followed by creating consensus within the IT and business organizations about the best path forward. Making a hard dollar business case was identified as a modest challenge for respondents.
“People always say it’s not about the money,” Bostick said. “But, of course, it always is.” Accordingly, different types of financial measures—internal rate of return, return on investment, cash payback period and embedded value—have their places in the business case. “It’s important to use financial measures to eliminate bad ideas. It can shorten the amount of effort spent on evaluating other alternatives. It’s a great place to find the money to fund innovation; not a great place to find innovation.”
While hard dollar benefits have traditionally been of major importance, showing soft dollar benefits are of increasing importance. “Soft benefits and vision should put you on an innovative cycle; hard benefits and detail should focus on execution,” Bostick said.
When asked by an attendee who should present the business case, Bostick responded by saying it needs to be a combination of experts, including actuarial, finance and sales,. “It’s difficult to assemble a crowd, where no one function can supply an integrated view of what a business case should look like,” he said. “So it’s going to have to be consensus and collaboration. You’re going to have to have those people at the table.”
Bostick explained that insurance technology leaders can build a modern business case to effectively enable transformation if they combine business strategy, cost and risk management perspectives and develop a consensus about addressing weakness and opportunities. “A business case is not just a spreadsheet, it’s somebody willing to write an essay, if you will, on why they think something should be done and stake their career on that,” he said.
This story originally appeared on Insurance Networking News.
Register or login for access to this item and much more
All Information Management content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access