I write regarding the predictions made by Datamonitor (30 May, Insurancetimes.co.uk) that investment in IT is beginning to pick up. A good sign we might think, but I fear the investment will not be executed wisely. Today investing in IT must be about controlling costs not jumping on the latest sexy IT bandwagon.
In my experience, too few directors in large insurance companies are considering investing in IT to achieve cost control and more long-term strategic objectives. Integrating and creating self-managing systems can both strip out long-term maintenance costs and the costs of performing duplicate tasks. But it seems that stopping a project in its tracks or cutting out a business function are the most popular ways of managing expenditure problems.
It is easy to chop out IT as result of down-sizing. But perhaps now is the time for the chiefs within large insurance companies to take a bolder approach to controlling their costs, such as investment?
By using techniques such as rapid application development (RAD), which can give long term benefits, quick ROI, and significant cost reductions for the life of an operation, insurance companies will soon realise there is more to technology than meets the eye.
I firmly believe now is the time for large insurers to invest in 'quick wins' that will give them long term benefits in line with company growth. But they must invest wisely, otherwise many will face the consequences of cost cutting measures with no longevity or scope for accommodating economic expansion, or be forced to make today's IT investments redundant in three years' time, because the next big thing wasn't so big after all.
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