Nolan Study Says Executives Counting on Technology But Wary of Results

June 12, 2003

Insurance executives reportedly believe that technology is critical to compete successfully, but their current systems are not helping enough.

This is one of several findings uncovered by a new study conducted by the Robert E. Nolan Company, a consulting firm specializing in the insurance industry. The study examined technology strategy and implementation in the insurance industry and the relationship between technology and business performance. One hundred forty-eight senior-level insurance executives, including CEOs, CIOs and COOs from 122 insurance companies, participated in the study.

Other study findings include:

*Different perspectives – A significant difference in opinion exists between IT and business executives about how well projects meet expectations for being on time and on budget, and for delivering
promised results;

*The missing link – Though the situation is steadily improving, a significant gap still exists in how well business executives/managers understand new technology and, conversely, how well IT executives/managers understand the insurance business. This continues to hinder good decision making and results in expectations that are unrealistic or impractical;

*The more things change the more they remain the same – The key drivers for new technology expenditures continue to be service improvement and expense reduction;

*The troubling trio – Participants were asked to evaluate the major elements of their system development process: decision making, project planning, customer requirements, business requirements, system requirements, implementation planning, testing, training and rollout.

The study revealed: (1) Many organizations either lack or don’t follow
a well-defined system development methodology; (2) Most methodologies do not incorporate business process design; and (3) Measurement of results is weak.

*Lack of confidence – Overall, executives believe that system vendors do not adequately understand the insurance business. Respondents also expressed low confidence in outsourcing.

For more information on the report, titled “Technology Strategy and Implementation in the Insurance Industry,” visit the Robert E. Nolan Company Web site at www.renolan.com .

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