The IT Shop Today
And this, if you will, is where this story started, with a CIO from
a smallish, regional carrier saying, “If you are going to succeed at
legacy replacement it’s not just the software, you have to choose a
suitable SI partner.” Which raises the obvious question: What the
heck is the IT department actually doing anymore?
IT doesn’t code the system anymore; the software vendor
does that. Increasingly, IT no longer does the configuration,
implementation or integration of the new system, the SI does
that, or at least the majority of it. IT departments aren’t getting
any smaller, as measured by head count and budget. In fact,
they are growing slowly, yet their purpose appears to be shrinking in significant ways.
Several trends explain this. The first, as we have noted often
in the past, is the sheer size and complexity of core system
modernization projects. An IT shop that has been doing mostly
maintenance for 20 years has neither the skills nor the head
count to pull off such an undertaking. We all become what we
Second, the insurance industry, like the rest of the world, is
an increasingly complicated place. The IT department is dealing
with issues and supports applications that didn’t exist 20 years
ago. The list is obvious, just look at the headlines in the trade
press. Security. Cloud computing. The Internet of Things. Social
media. Mobile apps. Big data. In this regard, the remit of the IT
department has expanded enormously and continues to do so.
Third, there is specialization. There are vendors that
specialize in core systems development and delivery. There
are systems integrators that specialize in the myriad aspects
of system implementation. There are advisory firms like my
own company, CastleBay Consulting, that specialize in helping
insurance companies select those software vendors and SIs.
Specialization is generally a good thing and tends to lead
to higher quality results. But what does the IT department
specialize in and what should it specialize in? Currently, IT departments must at least have special knowledge of the business
and its wants and needs, and knowledge of the legacy systems
and its data. Increasingly, as we have seen, the IT department
also needs to become a specialist at selecting and orchestrating the vendors, which are retained for their specialist skills,
knowledge, and products. There is, of course, and always will
be, the generalist role of doing everything else that falls within
the purview of IT.
The IT Shop Tomorrow
What is the fate of the IT department? The industry had a
major flirtation with IT outsourcing about 30 years ago, which
had a lot of disappointing and unfortunate results, so it’s unlikely that we will try that again, at least in that form. Given the
growing recognition of the central role of IT in any significant
business initiative, it’s hard to see an informed CEO trying to
get rid of IT for the narrow purpose of saving money.
So, if IT is to persist, what will it look like in the coming
decade? The trends we
see now will probably
continue. IT will always
have internal company
business and technical
knowledge. In com-
bination with internal
knowledge I think the IT
differentiator in the fu-
ture will be the selector/
orchestrator role men-
tioned above. In a world
of specialization, no other
entity is better placed to
know the business needs
and how best to source them.
There should also be a structural shift within IT. If configurable systems deliver on their promise, maintenance, as a
portion of the IT budget, should fall significantly, presumably
releasing funds for other more innovative uses. Fewer staff
members will be shackled to system maintenance. More focus
will be placed on data-based initiatives as IT moves from “
keeping the trains running” to becoming an information generator,
aggregator, and broker.
The Prognosis for All Things?
Planet Earth will continue to spin around her Sun for longer than
any of us can possibly imagine. Our solar system will persist as
a pin-point within the vast and beautiful Milky Way, our spiral
galaxy home. The Milky Way will continue to pin-wheel away
from its neighboring galaxies into whatever it is expanding into.
These things we know. But all those legacy replacement projects
and the IT departments that support them? Who’s to say? ITA
(George Grieve is a popular writer and speaker on the
subject of insurance technology solutions and is the author of the book “Shop Talk.” He is CEO of the consulting
firm CastleBay Consulting. The views and opinions in this
column are those of the author and do not necessarily
reflect the views of the Insurance Technology Association
and its members.)
and its wants
and needs, and
knowledge of the
and their data.