Return of the Guru

IT Spending to Improve, But Not for Full-Time Personnel

Ara Trembly
Insurance Experts' Forum, December 16, 2010

As 2011 nears, a new study is calling for modest increases in spending on IT, but the one area that has been hit hardest—employment— apparently will remain unchanged.

According to Computer Economics (CE), IT spending will continue to be “restrained,” in the new year, “and IT executives will continue to be asked to deliver more with less.” The researcher adds, however, that organizations “are also receiving the go-ahead to take risks with projects that promise long-term improvements in the ability of IT to support new business initiatives.” 

Their study, Outlook for IT Spending and Staffing in 2011, forecasts that IT operational spending will increase by 2% at the median, based on a fourth-quarter survey of 136 IT organizations in the U.S. and Canada. (Editor’s note: click here to read INN’s recent coverage on the topic.)

“The anticipated growth is welcome news after two years of no change at the median, accompanied by substantial budget cuts by organizations at the 25th percentile. But the forecast is modest in comparison to the three years leading up to the recession,” says CE.

So where will this growth take place? According to CE, “IT organizations have been extending staff hours, adding temporary workers, and launching major projects that promise strong ROI or improved agility.”

Conspicuously missing from this list of new activities, however, is the hiring of additional full-time personnel. By extending existing staff hours and adding temporary workers, organizations apparently hope to squeeze more out of existing resources in order to move ahead, while simultaneously minimizing their own risk by avoiding the hiring of full-time staff. While this may or may not work in terms of new projects (just how much blood can one squeeze from a stone?), it remains clear that the organizations in the study are not confident enough in the future to begin replacing staff that many of them have shed in the past two years.  

While the survey takes in organizations across a wide range of industries, it certainly has implications for us in insurance and financial services, where we are still seeing layoffs. To be sure, insurance in particular lags behind other industries when it comes to technological advancement, thus it wouldn’t be surprising to see our industry wait longer than others to replace cast-off workers, assuming that ever happens.

The economy rolls on and trends will develop despite our like or dislike of them. What would make a lot of us feel better, however, is for insurers and other organizations, as they begin to spend for IT, to show a little faith in the future by beginning to replace the human resources that were shown the door since 2008.

Am I suggesting that unbridled optimism should rule the day? Not really. Still, a small bet on the future of your company and your industry could pay big dividends, in that when recovery hits full force, you’ll be ready for it with the needed resources—while others are digging through piles of old resumes trying to find the gems they rejected.

Ara C. Trembly (www.aratremblytechnology.com) is the founder of Ara Trembly, The Tech Consultant, and a longtime observer of technology in insurance and financial services.

Readers are encouraged to respond to Ara using the “Add Your Comments” box below. He can also be reached at ara@aratremblytechnology.com.

This blog was exclusively written for Insurance Networking News. It may not be reposted or reused without permission from Insurance Networking News.

The opinions of bloggers on www.insurancenetworking.com do not necessarily reflect those of Insurance Networking News.

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