Is the death of the Insurance CIO possibly around the corner?

Oct 19th, 2010 | Posted by

It was during a conversation over a year ago someone raised the possibility of the “best-before-date” of a CIO. He made the point that in 10 years time, IT would be a commoditised service consumed as and when it suited the business. He was really pushing the envelope – he meant all of IT from infrastructure services through to core insurance applications. I nodded sagely, as analysts do, and agreed with him in the principle but not on the time frame. 10 years… surely not.

The conversation was with a UK CIO of a mid-sized P&C operation and it’s been replaying on my mind recently. Against the backdrop of increasingly meaningful conversations about cloud, the idea of an IT organisation being commoditised to the point of removing the necessity of a IT management structure suddenly seems real.

There are two interesting case studies. Firstly, the UK Royal Mail moved from an internally managed mail system for 37,000 users, to an external public cloud by moving all the users to the Microsoft cloud. That’s a significant and meaningful change in strategy for a large organisation such as Royal Mail. The CIO said it was driven mostly by a need for agility rather than cost-savings. The Royal Mail had decided to focus on delivering parcels and letters, and let an external supplier deliver internal email via the cloud.

The second is an insurance specific test case. A UK insurer is testing a policy administration system in the cloud. This in itself is significant – this is a large insurer testing out the idea of a core system in the public cloud. It’s still under test but the insurer is excited about what this can mean for their agility in IT delivery.

With the growth of traditional sourcing models, it’s easy to accept that infrastructure could be moved from a private cloud with a traditional hosting company into a public cloud. What’s much harder to get agreement on is a vision of the world where core systems live in a public cloud. And there is good reason for this. Regulators, customers and insurers alike will have concerns over security and data privacy. There will be concerns about being tied to a large cloud provider with little interest in commercial issues. There will be (and have been in the cases above) some hand wringing over the gap in SLA’s delivered in the cloud versus what traditional sourcing models might offer.

The examples suggest an inexorable move towards the commoditisation of IT. It may well be too early to talk of the death of the CIO, but there is little doubt that the responsibilities of a CIO could shift towards supplier management as cloud offerings mature and become a viable solution to new outsourcing models.

  1. Anthony Burke
    Oct 19th, 2010 at 22:33
    Reply | Quote | #1

    Good post. I agree but the commoditisation of IT still has a long way to go but the cloud is offering many new IT models to businesses – large and small. If the CIO has to do one thing it is protect the company data and over many years they have done this pretty well through a series of people, process and technology controls – secure data centres, firewalls, segregation of duties, levels of application controls, etc….it is a very long list! However, because of Web 2.0 and the explosion of social media (corporate and personal), the CIO is now no longer in control of the corporate data vault. A huge amount of data on companies (both good and bad) is now circulating around on social media sites where the CIO has no control. This, I think, is a bigger threat.

  2. Catherine Stagg-Macey
    Oct 20th, 2010 at 00:13
    Reply | Quote | #2

    Anthony,
    Those are great points and certainly an area we will spend more time in as web2.0 matures.
    Catherine

  3. Gururaj Rao
    Oct 20th, 2010 at 21:56
    Reply | Quote | #3

    As on date, a lot of activities which the CIO purviews are outsourced in some form or the other. Given the technology complexity and heterogenity of skills required, it is difficult to run a self-sufficient IT department in an user organisation. Cloud computing only provides another model of sourcing IT services. A lay user is transparent to whether his services come from within the organisation or outside – he only knows that the CIO is responsible for satisfying IT based needs. Similarly, the top management expectations from the CIO do not change because of availability of a new model of working. As regards the skills demanded of a CIO, the same has been changing over the past 20 years and will continue to do so.