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I’ll be giving a talk, as part of the 2008 ISOTech conference that will delve into use of web 2.0 in insurance. I’ve written before about what web 2.0 is and how to leverage it as well as about the rising adoption rate according to McKinsey.
Insurance is a specialized business and many people are very skeptical that the success seen in other industries can really translate into success in insurance. Jeff Jarvis in his blog “The Buzz Machine” wrote: “I can’t see any way that I’m going to see insurance as a social experience”
“I think our relationship with an insurance company is necessarily adversarial and one of mutual mistrust. Therefore it is impervious to social tools”
And Jeremiah Owian of Forrester Research wrote in his blog:
“Overall, without surprise, the insurance industry has not adopted social tools”
It seems that both of them are taking a very narrow view to what web 2.0 is and as to what social tools can do to help any organization including insurance companies in improving their internal and external communication and collaboration.
First, you need to accept that web 2.0 is more than just a technology. It is a set of attitudes that if adopted, govern the use of existing and new technologies.
I’ll discuss what these attitudes are, what technologies are currently in place and emerging to support them.
Insurance carriers have multiple audiences they target. With Producers internal or external) still being the engine of business development, getting them all the data and services they need to their job is critical and the web opens up new collaboration and interaction channels not available before.
The following map illustrates all the different areas of collaboration and interaction that an Insurer will need to address:
There are a few new and exciting trends that I’ll speak about:
- Social Computing: collaboration should not be limited to people. In a complex system like Insurance, multiple players, some human and some systems are all interacting through web based interfaces and services to complete tasks.
- Mashups: how can new mashup technologies help bridge the vast gaps in siloed data and trun it into a web format that is easy to understand and act upon.
- Agent engagement and Collaboration
- A few alternative business models that are emerging
- Power to the users: users now have all the information and power in their hands
- Social, Mobile and Location based applications
And I’ll finish up with some lessons from the trenches about what works and what to avoid in developing your web 2.0 strategy and plans.
The Issues in Web 2.0 in the Insurance Organization session scheduled for Monday, November 10th from 10:45 – noon.
Hope to see you there.
Document examples of manulytics (manual analytics) activities to illustrate hidden fixed costs. Any BI investment initiative needs executive support and budget. You need to make a case for the investment to improve your BI capability and show the business a ROI (Return on Investment). The cost of the current manualytics activity needs to be documented to highlight the hidden fixed costs of the current way of doing business to help build consensus to make improvements.- Identify manualytics processes to be moved to production and automate.
- Raise awareness of data as a corporate asset.
- Enlist and cultivate a C-level executive sponsor for your Enterprise BI effort.
- When the business asks a question that is difficult to answer – keep track of the level of effort expended to generate the information. How many analysts with spreadsheets are compiling information manually? When the answers accuracy are questioned, how much more time is spent proving the numbers are correct.
- Development and document metadata wherever possible – Build in metadata requirements gathering into your SDLC – Create and standardize a process to capture table and column definitions and business logic into a standard format. Get tribal knowledge documented so that the business can continue to operate if people leave or move on.
- Data Governance – develop a committee to work towards managing the data and IT assets of the organization.
- Create/Assign data stewards for each of the source systems to agree on service level agreements for your source systems and resolve data quality issues.
- Work to centralize your reference data – business hierarchies like department and product need to be centralized, agreed upon by all stakeholders – this is a task that can be driven by your corporate governance committee.
- Don’t boil the ocean – Look for candidate pilot projects with a narrow scope to show quick wins to the business (90 day max.)
- Work toward tool standardization – many organizations own one of each BI tool – work to standardize on one or two.
- Build a Center of Excellence around BI and ETL – work to centralize your internal expertise for BI and ETL.
Well we ended up with twelve items, any one of which could fill a book or whitepaper and may be the subject of a future post.
As we work with different organizations, similar themes emerge. Every organization is different and your road to BI maturity is different from other companies. Sometimes it pays to have a fresh set of eyes come in and survey your current state to get you started on the right foot.
Over at CIO magazine, Bernard Golden recently published an update on Cloud Computing. In his list of the types of companies that can benefit substantially from computing in the cloud, he left off one situation that can reap tremendous benefits from this approach: newly acquired private equity portfolio companies that are being carved out from larger businesses.
For these companies, cloud computing offers the following benefits:
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Accelerated implementation timeline that dramatically reduces implementation costs
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Significant savings on support costs, which typically represent 60% of the IT budget
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Eliminates the dependency on staffing and retaining IT support staff
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Costs scale with number of users
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Repeatable implementation playbook
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Easily extensible for tuck-in acquisition
One of our senior architects, Martin Sizemore, has laid out the broad strokes of this approach in a short slide show.
It’s an especially attractive M&A technology approach in the middle market, where it can help drive annual IT budgets down under 4% of revenue. While it is most advantageous for creating a new operating platform to accelerate transition services (TSA) migrations, the transition to cloud computing makes sense as a value driver at any point in the asset lifecycle.
What? Operation what? That’s right, Mincemeat and I am not referring to scrumptious pies at Christmas…..no I am referring to the reality of misinformation. What was a successful operation and asset to the Allies has become a minefield for today’s enterprise and a thirst, or more likely a downright need, for the ability to utilize our valuable data in a meaningful manner.
Let me digress for a second……I do not think we all need to be reminded of what Business Intelligence can do for us today – the facts and the benefits are plain and clear – take your data and make it actionable. Remove the idea of reporting on data and realize the vision of using data….
So one wonders why we have not all embarked upon our voyage of discovery aboard the great ship “B.I. Enlightenment.” And when we start to walk up the boarding ramp, waving goodbye to the stale data of yesteryear and the meaningless seventy characters of green bar reports we never understood anyway, we spare a moment to think “are there any icebergs in this sea?”
Of course, when one makes that pause there is a realization – what are you really gaining intelligence into? For many enterprises, our data is split across several systems and platforms; some of which are real time in nature others of which may be a week behind the times.
From what I have seen, many people are requesting more information on the tools – Which is best of breed? What do I get out of the box? Can my analysts use it? Can my dog understand it as he brings me my Sunday morning paper? How quickly can you show me my data in action? These questions can all be answered and the “wow factor” of BI can take precedent and the definition of KPIs ensues full steam ahead for some people.
What is missing? I appear to be on the first landing but I do not remember taking the first flight of stairs…….well let’s flip back to “Operation Mincemeat”: or now to be known as “Is my data ready for Intelligence?” A critical step that must be considered lies not in the value of BI but in the readiness of your data. Misinformation was wonderful in the 1940’s but it has no place in the business arena.
When your data becomes an actionable entity you must be able to rely on its accuracy and ease of access. Reporting on reports was the way of the past – “That looks great Bill but can you cross reference that with data store “x” as sometimes we can be a little stale”. The true key to embarking on Business Intelligence is understanding where you are today in your data maturity and most important, how do you get where you need to be – reliable, reusable, actionable information.
So what does it all mean? It means, assess where you are before you set sail……the voyage is glorious and the sights not to be missed but make sure you have a ticket for the right ship.
Queue the movie Aliens: “…we’re screwed man, it’s over, it’s over! They’re going to come in here and they are going to…! Get a grip Hudson!”. That is what things feel like here at the moment. We are just welding up the armor around the bunker waiting for the Credit Crisis Aliens to get in and decimate IT with their acid blood and ability to plant parasites in our chests. I guess we do need to get a grip and figure out what to do to shift gears for a new reality.
Anyone want to travel to the C-Suite (Alien Central) to request budget for Web 2.0, Cloud Computing, Chrome, or Green initiatives? (Just leave your dog tags and gear here soldier, it will make it easier for us to split it up among ourselves). The whole thing makes me chuckle as I weld another piece of steel up over my door. The first book I go for in situations like these, given my experience and training, is George Orwell’s “1984″. Doublethink spin is the order of the day today. 
Green Computing, becomes High Energy, Aggressive Server and License Rationalization Savings Initiative. Cloud Computing becomes Radical Infrastructure Outsourcing and Savings Program. Web 2.0 becomes Intensive Customer Acquisition and Support Cost Reduction Program by Having Them Do All of The Backoffice Work. Everyone admit it. You’ve seen names like these before; look at the name of any Congressional Bill, they use the same playbook.
Cynicism aside, the world has changed. IT needs to focus on providing solid data and tools to aid in planning and budgeting for the company to move forward given the new reality. Tactical cost savings initiatives need to be put on the table to keep staff occupied in a productive manner. This is the time to consolidate that server farm, outsource network configuration and maintenance, eliminate under-utilized software, and rationalize/outsource maintenance of the PC hardware base. Each of these are a steel plate welded on the doors to keep the Aliens at bay.
Continue low-cost planning initiatives in new technology — all things pass and this too shall pass in time. IT needs to be ready to move forward without skipping a beat and keeping this focus will help morale as well. New technology is the source of most of the major productivity gains and cost savings of the last 20 years. So the organization as a whole needs to stay tuned-in to any opportunities coming on the horizon.
Plus, think of the fun watching the trade press and the vendors being chased and harvested by the aliens, it could not happen to a better group. I cannot wait for the shift in editorial priority and ad focus. Get your copies of the “Aliens” and “1984″ ready for reference!
InfoWorld is listing five outside-the-box ways to cut IT costs, a topic which is sure to resonate in this week’s economic climate. While the recommendations make sense, their approach perpetuates an outdated and problematic relationship between the CFO and IT. Instead of focusing on across the board budget cuts, placing IT on a level playing field with other business functional areas, it might make more sense to look hard for savings opportunities within the core business functions and evaluate the total costs of operations for finance, HR, Marketing, etc. IT capital expenditures and support costs would be modeled into the total cost of ownership.
We’ve seen this TCO analysis work well for our private equity clients, who have varying tolerances for capital expenses versus ongoing costs, so we typically provide them with a month by month CAPEX projection for the transition period, and an estimated monthly operating cost model that includes IT, BPO monthly fees, and FTE costs for running a particular segment of the business.
When business decisions are made within the framework described above, strong leadership is required to align competing stakeholder needs. Instead of IT project teams, we pull together business transformation teams that serve up the necessary information (costs, risks, organization impact, business process impact, regulatory concerns, etc.) so that major business initiatives can be evaluated from multiple perspectives:
Business Architecture perspective: How does the proposed project impact the organization structure and the business processes? This perspective is owned and represented by the COO and the executive leadership of the affected business functions (e.g., HR, Marketing, Sales, Product Development)
IT Architecture perspective: What are the impacts on our enterprise IT architecture and its interfaces with third parties? This perspective is owned and represented by the CIO.
Financial perspective: What are the CAPEX and ongoing costs? What is the estimated impact on revenue? This perspective is owned and represented by the CFO.
A project execution framework should allow for multiple checkpoints for these key stakeholders to approve the scope and direction of the project over the course of its full lifecycle. The approach makes sense for any business, but within the private equity portfolio, it can be the key to driving asset value in ways that pure financial engineering approaches are unlikely to attain.
We have recently completed several web strategy engagements and have noticed how much the focus has changed in the last few years.
I remember doing a web strategy engagement for a major publisher, where the focus was making the site sticky, relevant and where the success metrics were visits to the site, length of stay and frequency of visits. The marketing team focused its budgets and efforts on generating traffic and shoring up the features, tools and information provided.
The challenge with this strategy is that introducing a new and valuable destination for users in the current saturated and fragmented web market is extremely expensive and hard to sustain beyond the initial marketing campaigns.
With consumers (and business users) spending more and more of their time in specific sites, social networks and through mobile devices, businesses are following suite and coming to the mountain.
A recent statement from one of our clients summarizes the change nicely - “We need to be where our audience lives, not focus on getting them to us.” An updated strategy would try to make content and services available where people already spend time. In addition to the central site, companies are finding ways to leverage their content and services throughout the web.
It is much harder than building a great website and doing expensive SEO/SEM. Not that these can go by the wayside, they are still very important but additionally the following must be considered:
- Who are your different audiences? What are their online habits and communication preferences? Should you revise segmentation models from site activity focus to external behavior and web usage patterns?
- What information and services will make sense to expose? In what format? Is it sufficient to provide text based RSS, audio podcasts, Video Webcasts?
- What can be packaged in widgets, plugins and applications?
- Do you have location specific services and applications that will help users with mobile devices?
The benefits can be substantial, expanding reach at a fraction of the cost needed to get people to the company’s site, and are much more sustainable over a period of time.
In addition to its impact on marketing, the new outreach strategy has a large impact on the technology. Bringing renewed value to service oriented architecture and modular design, the ability to segment and deliver slivers of content and functionality to remote users can only be achieved if the applications are built using open standards and accessible through web API’s.
The new darling of the technical media and every product company, Cloud Computing, is searching for it’s Killer Application. That seems to be the topic of every article and PR announcement. Every show and seminar proclaims to have previews or insights to this great new Holy Grail. This Grail is the software that will launch the Cloud Computing platform to prominence and make everybody billions. Really! Whatever they are smoking can I get some too! What totally scares me is being “one” with Larry Ellison. How did I ever get in this philosophical state?
During prehistoric times as a college student, a professor of mine returned a paper I submitted with a simple comment; “If this is the solution, what was the problem again?”. The professor gave me the Stalinistic ”opportunity” to resubmit the paper with either the same or (hint hint) modified solution (wrong choice: Gulag for you). Believing he was the south-side of a north-bound mule, I knew there was a trick to this situation. Disassembling the paper logical thread by logical thread revealed he was right; the solution the paper proposed did not map to the original case study problem and an all night typewriter-based re-write was in order ( I hate when that happens!).
Pardon the rambling dementia, but we have the same situation here, Cloud Computing does not necessarily lead to a new Killer Application. Logically, Cloud Computing will lead to a new range of hardware, not software innovation. Cloud Computing presents the opportunity not to be enslaved to a classic server based data center or even a PC. It will supercharge mobile computing via advanced cellphones and drive further mobile gadget innovation. Cloud Computing drives pervasive computing, that is it’s Killer Application.
Image courtesy of King Megatrip
Manualytics (manual analytics) is the labor intensive, manual process of creating information. It involves finding, loading, correlating and consolidating data into spreadsheets to answer a particular question.
The business leadership asks a question which initiates a number of analysts to start sift through the silos, usually with spreadsheets.
The answers from different departments don’t agree. That spawns a second round of analysts with spreadsheets trying to prove whose numbers are correct.
The business is left with an answer they don’t trust which leads to decision making with inordinate risk.
Does this sound familiar? Can you give examples in your organization that resemble this process? You are not alone. Manual analytics exists in virtually all organizations because the business can create questions faster than IT can provide answers.
The problems with Manualtyics include:
- It is inefficient and labor intensive
- It produces inconsistent results and can compounded errors
- It buries complex business logic in spreadsheets
- It introduces uncertainty and confusion
- It engenders mistrust of the data
- It leads to risky decisions
- Second and third layer of analysis
- Data Untraceable from Target to Source – compliance anyone?
One of the largest problems is that Manualytics is a hidden overhead cost/activity in many organizations. If the manual spreadsheets (or any desktop system) are run every month and are business critical – then they need to be productionalized and automated.
If you don’t have a program to improve your BI capabilities and limit/reduce the amount of manual analytics then you are treading water at best.
This siloed architecture and manualytics activities describes what we call a typical BI current state. We see this situation to varying degrees, in one form or another, in virtually all organizations.
So how do we break out of this cycle?
How do we position our systems and people to obtain actionable information?
How do we overcome our siloed architectures and maximize our long term IT investments?
