Strategist: Invest In Next Generation Technology
By Ara C. Trembly
The economy may be lagging, but business author and educator Larry Downes insists that insurers need to invest in the next generation of technology infrastructure in order to avoid being left behind when economic fortunes improve, as they inevitably will.
Acknowledging that the dot-com “boom and bust” was caused by “a misunderstanding of the fundamentals of business,” Downes noted that “now we think the [current] recession will never end.” However, he pointed out that in cycles that repeat over the years, “we always live to regret that when things slow down, we go slower, too.”
In the case of aging technology infrastructure and systems, he said, companies may regret not taking the time to replace them.
Downes remarks came in the opening keynote at the ACORD 2003 Annual Conference held here last month. He is the author of “The Strategy Machine: Transforming Your Business for a New Industrial Revolution.”
“When the going gets tough, its time to invest and think strategically,” Downes stated. In the insurance industry, companies have resorted to “cost cutting and other short-term measures” to bolster shrinking bottom lines, but these efforts do not constitute a strategic plan. “You cannot save your way to success,” he said.
“Your biggest enemy,” he emphasized, “is inertia.”
Downes reminded conference participants that Moores Law (which states that every 12 to 18 months computing power will double while pricing remains constant) “has not been repealed.” The down economy has had no effect on that trend, he noted, and that kind of growth should last for “at least another 10 to 20 years.”
When the economic recovery comes, “information technology will have moved along,” and those who dont start updating systems now will find themselves left farther behind,” he said.
Downes then laid out five strategies he said will help insurers get ready for the “inevitable” economic recovery: