Now more than ever insurers need to take a closer look at their IT investment strategy. The soft market and global economic uncertainty coupled with continued emphasis on cost reduction along with the inherent risk of technology projects continue to be factors that impact business technology initiatives and overall IT budgets. IT departments are under constant pressure to deliver new services while keeping costs down. This naturally leads to strain between IT leaders and business executives. Business and IT linkage is critical element of success. Creating an IT Investment Portfolio is one approach/tool that has been successfully used to enable IT and business leaders leader to create this effective and sustainable linkage/synergy.
Similar to an individual's investment strategy, a firm needs to employ a portfolio management approach that links technology investments to the firm's own business strategy, or business driven initiatives. Is your firm you a high risk early adopter, looking at doubling its premiums in three years or is it in a mature phase, concerned with capital preservation and very disciplined technology decision making processes? Many successful firms develop their IT budgets by determining their own risk/reward appetite and balancing that against available resources. As with any investment plan, objectives and outcomes need to be defined along with roadmap and realistic timelines to achieve these goals.
While using benchmarks and peer data is helpful to provide relatively to your peers, it is often disastrous when spend is not effectively allocated within your portfolio. Using a portfolio approach will also enable you to take a strategic approach to optimizing their IT spend.
I welcome your thoughts on this approach and how we can turn this into best practice across the industry….
This is an excerpt from Kyle Odermann’s current research project on IT spend… Look for more research coming soon, on the insurance community on ebizq.net or contact Kyle directly at kodermann@smallwoodmaike.com
The Insider's Guide to Business and IT Agility
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