Curing the IT Governance Blues

Get the Right Prescription for Keeping Projects on Track

After years of working with insurance companies on major IT projects, Joanna Creamer can spot the symptoms of an ailing governance program immediately. Some of these are pushing back deadlines, an ever-expanding scope and  finger pointing between IT and business over project failures.

"If your approval process is taking longer than the actual project or you're developing three to five different business cases to justify the same initiative, chances are you've got a problem," said Creamer. "The governance process at many insurance companies is dysfunctional, with many layers of approvals and poor mechanics that simply don't support an effective working relationship between IT and business."

In many cases, the fundamental problem is a lack of trust. Veteran business unit managers are historically risk-averse, and they probably remember an IT project that took too long or failed to yield the expected results - or both. Creamer noted that the days of "IT knows best" are long gone. IT shops can't just throw a new solution over a wall and expect users to embrace it - especially when the project is being funded based on the business value.

"In the new world, fostering trust and building relationships is now required for effective IT management," Creamer said. "CIOs must understand the business environment, the business processes, and the business drivers and use that information in a collaborative fashion."

Crossing Lines of Business

The need for good governance has grown acutely apparent for insurers in the process of modernizing or consolidating legacy systems. These IT projects typically cut across the enterprise and multiple lines of business. For example, FBL Financial Group, a West Des Moines, Iowa-based carrier, has recently completed the consolidation of 20 legacy policy, claims, and billing administration systems, most of which were inherited through acquisitions. The company licensed two new systems, CSC's Exceed for personal lines billing and POINT IN for commercial lines.

"We make sure our IT initiatives are aligned with our business initiatives. Our business sponsors clearly understand where their investment's going, giving them the opportunity to control that spend," said Dan Pitcher, VP of FBL Financial's Property and Casualty Companies. "That's done through a well-defined governance process. You've got to make sure everybody on the project understands the scope of the initiative. What are the goals? How are you going to measure success?"

Affecting Millions of Policies

The same sort of challenges faced American National Insurance Company as it consolidated five life and annuity systems and more than 3 million policies onto CSC's CyberLife enterprise software. The company started with a large block of acquired direct marketing business, using a traditional steering committee to oversee key decisions. Users were getting many new features, but management soon learned that 30 years of entrenched processes were leading to numerous modifications to the software - resulting in significant growth in the project's scope.

"Initially, the attitude within the company was if the old system could do it, then the new system should do it too." Meredith Mitchell is the VPof Life and Annuity Systems for Galveston, Texas-based American National. "We wouldn't complete the project in this decade if we continued on that course. It would cost too much and take too long. So once that change in philosophy took hold  the business units were working alongside of us to find other ways for the system to do the same things."

American National implemented a more rigorous review process and appointed a full-time staff member to coordinate with business and IT. In short order, nearly all of the requests for modifications were eliminated. "Of course, there were some spirited discussions," Mitchell added. "If we couldn't reach an agreement, a senior executive in the company would make the final call as to what was in and what was out."

Answering the Right Questions

The direct participation of senior-level management is crucial to the success of enterprise IT projects, according to CSC's Creamer. Every major project needs an executive sponsor, a steering committee that meets monthly and a core leadership team that meets weekly.

The process should include three tiers of reports - project team details, program status for the steering committee and cross-program status for executive management. This oversight improves communication between senior business and technology leaders and enables quick escalation and resolution of problems.

"Senior business managers need to do more than just sit in on steering committee meetings," she said. "They need to be advocates for change and ensure the right decisions are being made to achieve the best results."

C-level executives would be more likely to look to IT for transformational results if they could clearly understand the business value of a new project. That's why it's incumbent to answer the right questions, for example:

• CEO: "What distinctive or differentiating capabilities are provided?"
• CIO: "Will it improve our ability to react?"
• CFO: "How quickly will it pay for itself?"
• COO: "Does it meet our business requirements?"

Applying a Little Psychology

In addition to understanding the case for change, today's CIOs must also know a little about psychology. Some key stakeholders may be proactive and entrepreneurial, while others may be reactive and risk-averse.

"People who tend to be risk averse may see the value of transformational technology but are willing to settle for tactical departmental results," Creamer said. "Uncoordinated, short-term projects often perpetuate the core issues that hamper the entire business operation and significantly impact processes, employee skills and service delivery."

Creamer advises CIOs to look for change agents among the senior business ranks and arm them with an overall vision for the company's technology program. Those executives can influence critics by emphasizing the overarching need for change and helping them see what can be accomplished using new technology.

In some organizations, the IT department leads while in others the projects are driven by the business, with the support of IT. In either case, there must be a heavy focus on change management and delivering business value along with technology.

The primary issue is with people, not technology. The focus needs to be around what can be done to improve the partnership between IT and business.

"If business and IT disagree on fundamental issues, then you will have a very difficult time completing the project successfully," Creamer said. "When both IT and business operations agree and are aligned in how to achieve the goal, you have the potential for game-changing behaviour that can produce innovative results for your company."

Learn more about IT Governance and other CSC consulting services.