Tech Slowdown Is Not Halting IT Projects, Study Finds
Despite a slowdown in the technology market, insurers and financial services companies, among others, are advancing their technological projects, a recent study reports.
According to results posted in “Digital Strategies Survey 2001,” a survey conducted by DiamondCluster International Inc., Chicago, 150 business executives from a range of industries remain optimistic toward development of Internet projects. Eighteen financial services firms and two insurers were involved in the DiamondCluster survey.
Kenton Morris, principal and leader of the survey, says 61% of financial services executives with ties to the insurance industry believe e-commerce will have a big impact on their businesses.
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“This says that they are recognizing the critical [nature] of the Internet,” Morris says.
Joan Lufrano, a representative also with DiamondCluster, agrees.
“Technology and the Internet are really the mainstream. In our initial study, they were peripheral. But now technology is really recognized by everyone,” she says.
Figures in the report show that 75% of senior executives say Internet technologies have become vital to their core business, while 48% believe the Web greatly affects corporate purchasing.
Forty-six percent expect the Internet to have a major impact on customer services and 30% see the Web having a major impact on helping firms reach new markets, the study says.
While business leaders from a range of large firms with at least $1 billion in annual revenue believe Web-based initiatives will ultimately improve their business operations, few have succeeded in maximizing their Internet capabilities in key areas such as customer service, the study revealed.
Of those surveyed, 15% report being very successful at handling customer service requests electronically, but less than 10% report success in selling direct to customers online.
Other results show respondents believe that 12% of all annual business sales will be conducted online in the next two years.
Still other results say e-business operations have moved from the back-office to mainstream business operations.
Figures posted in the report note that 30% of all respondents have fully integrated their Internet divisions with core business operations and 65% plan to reach that level of integration in the next 24 months.
State Farm, Bloomington, Ill., has made its Web functions a key part of its mainstream business, according to a company representative.
“It is pretty much an integrated enterprise,” says Zoe Yonker, a State Farm spokeswoman.
“The people that handle Internet operations are fully integrated into the companys core business,” she adds.
In line with the study, Yonker says a key benefit in providing an online service is providing improved customer service.
“It has helped our customer relations and also helped consumers, because they can research their policies online,” she says.
In response to the survey, Yonker agrees that Internet usage has become a main component of todays business model, but discounts optimistic forecasts that see the Web producing 12% of annual sales.
“The studies we have seen on insurance so far say online insurers have sold only about 1 or 2% of the products online,” Yonker notes, citing statistics compiled by Forrester Research Group, Cambridge, Mass.
Chuck Kavitsky, senior vice president and chief marketing officer at Minneapolis-based Allianz Life Insurance of North America, agrees with the survey that the Internets role has had a significant impact on the insurance industry.
“We are using the Internet to get closer to our customers. We will make choices available to customers who want to go online,” Kavitsky says.
A key advantage in providing a Web service is the ability to draw traffic away from insurer call centers overloaded with policy questions that could be answered with an online brochure, according to Kavitsky.
The insurer handles up to 8,500 calls per week on inquires related to fixed annuities, Kavitsky says, adding that a number of common questions can be answered online.
Allianz sells its insurance products exclusively through independent agents and has no plans to use the Internet to pursue direct marketing opportunities, Kavitsky notes.