Optimizing IT investments for Insurance carriers
In these times of global uncertainty and budget cuts, insurers are unsure how to decide on spending the limited resources available. Costs of maintaining existing legacy applications continues to rise and this is leaving very little money left for any discretionary spend. At the same time, business groups are demanding returns on the IT investments.
Most Insurance carriers tend to spend upwards of 70% of IT budgets on maintaining existing (IT infrastructure, application maintenance and support) applications. In this situation, some carriers do end up resorting to ad hoc prioritization processes resulting in sub-optimal results. Therefore, it has become very imperative for carriers to manage their expenses meticulously.
A structured multidimensional IT investment model can help in better budget allocations and effective prioritization of initiatives. Following are the few basic principles to manage the portfolio to optimize the return on the spending.
•Ensure identification of the right projects / programs / initiatives by using a structured two-dimensional analysis (Corporate Objective vs. Investment Objective) can easily help in balancing the portfolio
•Regular evaluation of projects whether they merit continued spending in line with the objectives
•Define and adhere to a structured approach to identify and track business benefits
•Effectively leverage variable cost model provided by IT outsourcing industry
•Have a structured method to identify value drivers and impact on key operational metrices and articulate that justify spending on portfolios of initiative
Finally Organizations having clear sponsorship and accountability on the delivery of benefits will be the one’ s coming out of this crisis sooner than the others and will be better positioned to take a giant leap on the path of robust transformation.
Comments
Good article.
Posted by: Vishal chopra | August 6, 2009 09:24 AM