We have daily discussions with insurers about how to balance the tasks involved with the maintenance of a legacy system environment with those required for strategic system renewal. It brings to my mind the analogy of “fixing a plane in mid-flight.” Most IT shops have neither the capacity nor the skill sets to do both with their in-house staff. These needs have created a large market for ITO, BPO, and system integration services. In observing this expanded sourcing model in action, it occurs to me that the whole organizational design of information areas is undergoing a change.

Most “shops” were built on a manufacturing design. The work was handled like this: “You, Mr/s. Insurance Business Person, tell me what you want (give me the specifications) and I will have my craftspersons (programmers) build it. We will then test it and deliver it to your “door.”

Many efficiency and effectiveness improvements have been realized by insurance IT areas adopting production techniques such as TQM, Six Sigma, Lean, etc. However, instead of a manufacturing paradigm, the multiple vendor and relationship management challenges faced in 2010 brings to my mind more of an air traffic controller analogy – multiple planes in the air with the common objective of getting to the destination safely (first) and on time (second).

This would all be a cute analyst musing except that the skills involved with delivering in these two environments are very different. Manufacturing requires a technician’s precision; air traffic control requires a detailed understanding of flight (but you don’t have to be a pilot) and a keen sense of anticipation of what is likely to happen next. The people in the tower must be able to guide without their hands on the controls, must be able to see several steps ahead, and must have an effective guidance system.

For executive leadership in an insurance company, the analogy leads to a different search profile for a CIO. It is not necessary to fill these positions with the best technician, but is critical to have someone in place with the required “soft skills” to coordinate effectively.

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