Prioritizing IT Projects and The Fine Art of Knife Throwing

As the TV watching public and networks gear up for their Halloween scary movie marathons, it’s worth a look back at what used to horrify audiences before television and the movies.  Back before all that computer-generated special effects wizardry, if we were in the mood for a little terror, we’d sit through circus or vaudeville acts specializing in that more dramatic expression of the skill of knife throwing:  impalement arts.

In this performance art form, the thrower would launch any number of knives at a human target, often a lovely female assistant.  The audience would shriek as each throw narrowly missed the young helper.  The knife throwers would spice things up, using restraints to keep the assistant from fleeing and even rotating backstops that add further drama with each knife throw—with each spin, would he keep hitting where he was aiming and miss her?

It turns out that there’s a lot more to knife throwing success than just having good hand-eye coordination.  Along the choice of knife, technique (spin versus spear, for instance), and tons of practice, there’s a lot of science involved,  like distance from the target, angle of the wrist, arc of the throw, and even if the thrower is moving, too.  At the end of the act, the thrower will take a bow; the assistant will come back for another performance; and the audience will have gotten the value that they paid for.

So, what does knife throwing have to do with setting insurance priorities?  As I’ve blogged about before, insurance IT executives have a lot of decisions to make, including weighing which projects will deliver the greatest benefit to policyholders, agents, or employees for the lowest cost.

This year Forrester found that North American insurers:

• Spend a greater percentage of their revenues on IT than other industries. When it comes to IT investment, the average across all industries is 4.1% of revenues; North American insurers spend 15% more than that—almost 5% of revenues on IT
• Expend more of their IT budgets on people. Between direct staff and third-party contractors, insurers spend more than half of their IT budgets on people resources.
• Under-invest in the IT needed to change the business. This year, North American insurers will spend a paltry 2% of their IT budgets on research and development initiatives.

To make the most out of what they have at their disposal, insurance CIOs need to blend art, entertainment value, science, and a lot of practice to make their IT strategies pay off for the business.

Take ISO updates, for instance.  Insurers get at least 50 of these a week and even with that volume, most insurers are doing their updates manually and potentially putting their businesses at a variety of risks, from compliance, premiums, and even market risks associated with missed opportunities. Fixing the ISO update process must be a priority for insurers, since freeing up staff consumed with manual updates mean more resources to take the emerging trends and opportunities that will change the business.

The trick to maximizing IT business impact is getting the mechanics right:  picking the right project having the aim, technique, tools, and the steady assistant that will deliver the outcomes that the business stakeholders will value.

Ellen Carney is a senior analyst with Forrester Research, serving insurance eBusiness & Channel Strategy professionals. Her research focuses on the eBusiness strategies; technologies; adoption trends; and best practices of property and casualty, life, group, and health insurers globally. Ellen works with insurance clients to understand how market forces are changing how consumers, groups, and distributors engage with insurance carriers and the role that technology plays in maximizing new opportunities.

'To make the most out of what they have at their disposal, insurance CIOs need to blend art, entertainment value, science, and a lot of practice to make their IT strategies pay off for the business.'