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New IT thinking brings relevancy: information technology will need to innovate in several business areas for an impact to be felt enterprisewide.

This year's MIT CIO Symposium included sessions on innovation in information technology. The Outsourcing Institute, a global professional organization, recently cited a "common and growing frustration among outsourcing buyers." This frustration was due to the "lack of innovation brought to the table from their outsourcing service provider."

Why the recent scrutiny on innovation and why the frustration with IT, including service providers, in bringing forth innovation to the business?

In a nutshell, there has been a continued emergence of innovative technologies and a continued evolution towards greater flexibility and reduced cost/commitment in their use.

In contrast to this forward progress of technology, the pendulum has swung back from IT's having a more strategic role in the corporate hierarchy and in being given carte blanche budgets.

Despite this greater spending scrutiny, IT has been asked to provide leadership in emergent and increasingly important areas such as records management and compliance. While critical to business operations, these areas of additional responsibility aren't those that will help drive business innovation.

To realign itself as a driver of business strategy, IT will itself need to become an innovate entity.

Some carriers have resources and appetite for $100 million IT initiatives in strategic areas such as policy administration systems and master data management. But more carriers find themselves paralyzed by the lack of immediate return for such large expenditures.

This is where IT's need to "integrate to innovate" becomes most evident, where they need to innovate strategically for enterprisewide impact.

When neither a huge budget nor a short-term return on investment for policy administration system replacement exists, carriers can innovate using best-of-breed solutions. Paying on a per-policy basis, "cloud-based" systems can be used to test complex policy migration. The role of innovative IT then becomes one of capturing and planning integration requirements for related systems processes.

For data innovation, master data management projects can be started with a small business unit such as distribution, where the biggest ROI in consistent data can be realized. Options such as reference hubs or cloud services can quickly be defined and piloted with the business unit. Rather than being in a build/ operate mode, an innovative IT department will define the solution, manage the pilot and plan for current and future integration requirements to support required data access and currency.

In re-establishing themselves as business strategy enablers, insurance IT departments will need to create their own innovation culture. Those that build upon their experience, expertise and vision to gain the business' support and confidence will be the same who integrate; those who "meld with and become part of the dominant culture."

Gates Ouimette is a Best's Review columnist from Massachusetts. He can be reached at

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Title Annotation:Technology: Technology Insight
Author:Ouimette, Gates
Publication:Best's Review
Geographic Code:1USA
Date:Oct 1, 2011
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