I have been in the Life and Pensions industry for a long time – long enough to have witnessed almost the entire evolution of IT within the sector.
I remember green screens and 3.5 inch floppy disks, as well as the punch card and magnetic tape!
I have seen IT move from the margins to being absolutely essential to the daily operation, as well as the strategic direction, of every financial institution. All good, I hear you say. Well, yes and no.
Over the past decade I have noticed a trend where many Life and Pensions organisations have become more like technology companies and less like financial institutions. Others have noticed too that IT is taking more; management time, more budget and more manpower.
Many Life and Pension Companies are ‘IT Centric’
Many Life and Pensions organizations could be described as ‘IT Centric’. That is their products; strategies and budgets are being shaped increasingly by IT, rather than by the market, or the customer. From being an enabling technology, IT has taken over.
Take the issue of getting new products to market. Although clearly this should be market-driven, most organisations are only as innovative as their IT systems will allow.
For most organisations the real challenges in terms of launching new products are technical, not managerial, actuarial, marketing, or channel related.
Why is Everything a £20 Million Project?
Few people blink anymore when IT budgets cost into the hundreds of millions and projects run on for years.
But I have noticed something of a backlash beginning to appear. This is typified by the exasperation of a CFO in one of the UKs Top 5 life assurance companies, who proclaimed - ‘why does every IT project cost 20 million and require 18 months to deliver?’ ‘A very good question indeed’ I replied.
More and more L&P companies are getting ‘back to basics’. That is focusing more on what they do best - manufacturing and selling financial products, and less on IT. They are recognising that IT is not the business - IT is just the enabler.
That means managers are placing new demands on external IT vendors and internal project teams alike. With outsourcing options on the table in many organisations, decisions regarding major IT systems projects are being cast in a new light.
One positive impact is that IT vendors must focus less on selling technology and more on helping organisations achieve their business goals. At Exaxe, this is something we welcome.
Norman Carroll, CEO, Exaxe