CIOs Embrace the Innovation Initiative
Building credibility from the ground up through restructuring and core systems initiatives helps creative cultures thrive.
Insurance Networking News, May 1, 2012
As information businesses dependent on IT, most insurers have elevated the role of the CIO to that of a core strategic executive. The CIO's cross-functional perspective allows him or her to bring a uniquely valuable enterprise-level view to planning discussions with other senior business executives. Most insurers also rely heavily on the CIO to maintain an external perspective as well, and keep the other business leaders informed of potential changes in the broader IT landscape, from the consumerization of IT to the growth of big data.
At a recent Novarica Insurance Technology Research Council meeting, a group of more than 50 insurer CIOs discussed steps they're taking to improve delivery and help drive the innovation and change that their peer execs increasingly expect from them.
While this is a welcome opportunity, it also increases responsibility and challenges. To be a trusted strategic voice among the leadership, CIOs need to first deliver on their base mission of developing technology-enabled business capabilities.
CIOs at the meeting stressed the importance of reliably delivering to build credibility within the organization. While IT has a critical role, IT execs cannot participate meaningfully in strategic discussions if they're not recognized as reliable parts of the organization.
The group also discussed the importance of bringing business executives into the IT governance process and the need to educate them on how to be effective project-owners within this process. Some members are also focused on more general executive education in order to broaden other leaders' understanding of the systemic complexities and risks that underlie their businesses.
At the same time, CIOs are also engaged in their own organizational re-engineering and efforts to make sure their groups are optimized to meet their new goals. For many, this includes some level of outsourcing or blended sourcing. Notably, the drivers for creating these blended organizations tend to be focused on flexibility and the ability to create new capabilities rather than cost-reduction for existing capabilities. An important part of these efforts is examining what roles to retain as part of the core organization and what roles can be more effectively provided by partners. Business analysts and project managers generally tend to be regarded as core.
Another challenge CIOs are facing is how to adapt traditional structures and project management practices to support agile development methodologies. While agile does not obviate the need to manage scope and budgets, project management methodologies may need to shift from focusing on predictable schedules of tasks to focusing more on expectations management and team coordination within the scope of a high-level plan. This can require a major readjustment of both practices and expectations. But the benefits of agile development, especially in terms of increased business/IT alignment and understanding (not to mention project quality), make this adjustment worthwhile.
Finally, insurer CIOs continue to address the task of modernizing and rationalizing their application portfolios. Our studies show that CIOs rate their core application business functionality as barely acceptable on average, and rates of replacement or significant enhancements for core applications such as policy administration systems, claims and business intelligence at an all-time high.
Optimizing organizational structures, improving project management and modernizing application portfolios gives CIOs a better delivery platform. This enables them to better meet the need for innovation. Some CIOs from larger insurers have separate dedicated innovation groups, either within or adjacent to IT, with dedicated staff. Typically, these groups are designed to collect ideas from the broader company, sift for potential winners and prototype promising ideas. One member's company created ad hoc innovation teams from within IT, which were separated out from their daily responsibilities for brief periods to prototype specific capabilities.
Some companies are also looking to their entry-level staff to help them innovate. With a fresh perspective and a native fluency with current technology, these employees can help insurers look at their products and processes differently and ask the critical question "why?"
However the approach to innovation is structured, the most important element is organizational culture. Employees need to feel like they have more to gain (monetarily and culturally) from daring something new than they have to lose by failing. The biggest inhibitor to innovation isn't a lack of ideas, but a fear of proposing and driving change in a risk-averse environment.
This mirrors the challenge that many CIOs face. While they may be able to envision an operational transformation enabled by technology changes, the risks of driving that change can be high. As a strategic executive, the CIO must be able to design that transformational vision to meet the strategic goals of the business. Then they must be able to communicate that effectively to partner executives and create a shared vision that will take the company forward.
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