Productivity Is The Buzzword Of The Hour
Productivity–enhanced and enabled by technology–was the buzzword of the hour, as vendors and insurers met here recently for the IBM Global Insurance Executive Conference.
While the conference was sponsored by one of the worlds leading information technology (IT) vendors, most of the presenters, including those from IBM, emphasized the need for efficiency, company differentiation and resiliency (leading to productivity) to help insurers succeed.
In todays economic climate, success means “a relentless focus on execution,” stated William Pieroni, general manager, Global Insurance Industry, for IBM Business Consulting Services, based in White Plains, N.Y. “Efficiency must go beyond cost cutting to productivity.”
“Productivity is the watchword for the coming years,” stated Ginni Rometty, managing partner, IBM Business Consulting Services, in her address to the conference. “Long-term earnings are going to come from productivity improvements.”
Rometty pointed out that many insurers still rely on legacy systems that “are not responsive” and can hamper productivity. “Many of us still have [information] silos, and often work is replicated between them,” she explained.
The solution, she stressed, lies in integrating systems across all parts of the business, rather than in a single piece of “killer application” software. This would provide an “on demand” computing scenario fusing business and IT functions for better organizational productivity.
Rometty focused on five components of an insurance business:
Insight: customer analytics and campaign management.
Distribution: policyholder services and channel management.
Core insurance: policy administration, claims and underwriting.
Risk and financial management: treasury, fraud and trading oversight.
Infrastructure: human resources and procurement.
She recommended that insurers who are not competitive in any of these areas look for a partner to support those functions. “Outsource what is not core,” she suggested. “Are you world class at a business component? If not, partner.”
Rometty emphasized that technology in the future “wont be islands of automation.” She pointed to a need for standards to integrate technology, a need to decide who is responsible for governance of customer information that is part of enterprise data, and a need for “resiliency” in a companys operations and systems.
Such integration will help drive productivity, she noted. She cautioned, however, that, “there is a difference between ROI and ruthless cost cutting.” The focus should be on measures that will provide sustainable growth, she explained. “Theres nothing wrong with ROI. Its not going away, but value now is in improving customer satisfaction and cycle time.”
Yury Zaytsev, group information officer for Switzerland-based Swiss Reinsurance Company, said his companys current focus is on productivity.
“Productivity is the amount of units of information delivered to the professional who needs to do a job,” he explained. “Its not about IT, its about business. We dont have IT projects; every project is a business project. If it doesnt benefit the business, you should not do it.”
While acknowledging a role for standards in technology, Zaytsev noted that, “Standards dont produce volume. Peopleproduce volume. Supply them with information and technologyat the time they need to use it.”
He stressed the need for focusing on people in the business culture. A management culture that “embraces and supports” such a focus will enable a company to be successful.
“If its not there,” he added, “the company most likely will fail.”
Reproduced from National Underwriter Life & Health/Financial Services Edition, September 26, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.