One of the great things about being an analyst is that you’re expected to challenge the status quo on behalf of the companies you work with. The analyst-as-gadfly model was on display at Celent’s Creative Disruption workshop in Boston last week. Someone later told me, “You looked like you were having fun!” I surely was.
Celent’s message of “healthy discomfort” as a driver of positive change seemed to resonate with attendees, both carriers and their vendors. It came into virtually every conversation in some way. Here are a few nuggets I noted throughout the day.
- Disruption is generally respected but only lightly pursued. Like “change” and “agility,” disruption is a term with positive connotations for most people. But when you ask companies what they are doing to make it a reality, you mostly hear the sound of crickets.
- Agile methodologies are enabling change. And they’re not all about technology. They seem to serve as a signpost that corporate cultures are changing, giving staff a reason to rethink their traditional behaviors.
- Vendors have an important role to play in driving change. This is well understood, by players on both sides of the vendor/carrier relationship. But it’s easy to revert to old models, where vendor and insurer interests are in opposition rather than being aligned.
- Leadership will determine where disruption can thrive. Front line staff are thirsty for productive change. Being part of something bigger and more exciting is on most people’s wish lists, even if they don’t know it yet. But absent some passionate vision from the top, “big D” disruption projects are doomed.
You can expect more coverage from Celent on this topic in the coming months, as we think it is vitally important. Your ability to keep operational concerns and creative, disruptive thinking in a healthy balance will be essential for you to get to the top of a competitive heap.
A lot of interesting ideas emerged during Celent’s CIO Roundtable and Model Carrier Summit last week. (See Mike Fitzgerald’s excellent synopses of both events here.) One of my favorites came from a CIO panelist, who framed his rationale for IT project investments in terms of their intended payback periods.
“You’ve got to have some long projects in your portfolio, or eventually you’re going to find yourself hopelessly out of contention for the affection of your customers and agents and brokers,” he said. “But you need some short ones too—things that have a six or nine month payback period, where you can make some progress that will show up on your bottom line in a hurry.”
In the context of the current financial crisis and the microscope that many insurers live under, this idea has never been more important. If you made the 9-month payback your sole project approval criteria, what would you be left with? Cleaning up commission reports, making subtle tweaks to your portal, and maybe improving minor flow issues on your customer service UI. All good ideas, but hardly enough to get you on the radar of independent agents/brokers, especially. And certainly not an effective long-term lever if your goal is to double back office productivity.
On the other hand, should you be betting the farm on $100 million, 5-year policy administration replacement projects? In the words of an old boss of mine, “We could all be dead in five years!” I think his point was that anything beyond the 12 month mark is suspect because, well, stuff happens. Not “might happen,” but “happens.” It just does.
In the perfect world, you can cycle the gains from your “short” investments back toward your “long” portfolio. Those nine-month projects should be delivering savings just in time for your next budgeting cycle.
But we expect that scenario to get harder this year, for two reasons. First, CFOs are getting wise to the game. When you send them a business case with a payback starting in month six, many now expect to actually capture those benefits from month seven forward. Unlike the good old days, just because you save the company some money, don’t expect that it will become your division’s slush fund.
The second reason is that most companies are committed to an SOA vision, where reusability is key. This means that the field of play for short projects is shrinking, or at least morphing toward longer projects. One-off solutions—no matter how smart they sound or how much money they save—are on the path to rarity, if not extinction. Of course there are still savings to be found as SOA infrastructure is developed. But those savings are probably the cornerstone of your larger projects and shouldn’t be double counted.