Insurance IT Budgets 2009 – Strategic Planning vs Tactical Gains

The Insurance Industry, as with all other industries, are under pressure to reprioritise their business plans and initiatives as a result of the current economic climate (see previous post). They are reassessing thier positions and evaluating where and when to invest in new IT initiatives and equally importantly, where to cut back.  

Reading a recent article it became clear that various insurance companies have opposing views to what the future holds and how they will be moving forward in the short to medium term.

As far as the insurance industry is concerned, there was no such thing as a finalized IT budget for 2009. Most CIOs had their budgets in hand in January, but none knew just how far the economy would fall, how their organizations would fare or how technology spending would be affected as a result.

But while the overall economic picture remains in flux, insurers’ IT budgets seem to be falling into two key categories: those with a view toward the future and the strategic deployment of technology, and those that are taking a more tactical approach to technology in an effort to realize short-terms goals and ride out the recession.

BPM and SOA – Leading Modernisation Initiatives during the Downturn

In a recent article from CBR it states that research shows evidence that many organisations are focussing their modernisation initiatives around BPM and SOA technologies and approaches.

CIOs are abandoning the rip-and-replace culture in favour of modernising existing systems, research from Software AG has revealed. 

The research, which quizzed over 150 IT directors, revealed an appetite for implementation of BPM and SOA initiatives as organisations try to cut costs and improve service delivery in the tough economic climate. “Strategic investment in modernisation will deliver cost cuts and free-up talented IT staff to concentrate on business critical projects and fight the downturn,” Jim Close of Software AG said. 

A priority in ensuring success with modernisation is to choose a preferred set of common tools. In cases where organisations have many disparate data integration tools, rationalisation is required to esure a fit for purpose toolset. Not doing so increases maintenance costs, licensing and having to have a diverse and often specialist skills and resource pool.

Software AG found that 21% of respondents to its poll see application modernisation as a top priority with some 24% of the sites surveyed viewing business process management initiatives as the top choice to fight the downturn.  They said that sloppy process management damaged customer service delivery. 

In further research from Software AG, it found that in Germany companies report that business flexibility supported by IT is a key concern.