Technology Phases

As I have progressed throughout my insurance career, I have noticed that insurers go through five phases of applying technology. The fifth stage may seem like a bit of a stretch but then not that many years ago, the fourth stage might have seemed to be really out there but we can identify examples from industry – even if it isn’t the insurance industry – where there are applications blossoming in the fourth stage.

Before discussing the five stages, visualize a graph with an X axis and a Y axis. The X axis marches away from the left-most point representing the historic past (which for insurers using technology means the 1960’s or slightly before) and the Y axis moves ever upwards from little or no EE (representing the confluence of effectiveness and efficiency) to higher and higher amounts of EE.

The Five Stages

  1. Insurers first apply the technology – whether hardware, software or telecommunications technology – to speed up the obvious. You know, it’s the “hey now we can do such-and-such process even faster than before’ … but who asks if the process should be done at all. But I digress.
  2. In the next stage, insurers then apply the technology to discard the useless. This comes about learning that even some processes sped up, well, are not worth doing at all. But really, how many processes or activities are really discarded? Enough to warrant my attention to define a second stage.
  3. In the third stage, insurers finally start to pay attention to their operational processes. In this stage, insurers use the technology to reshape existing processes … they wring out inefficiencies and ineffectiveness … not too much because we don’t want to overdo by ridding ourselves of too much legacy (remember it’s not just legacy systems; it is also legacy procedures, legacy protocols, and as importantly, legacy people)
  4. In the fourth stage which we are seeing with the emerging capabilities of analytics, insurers embed intelligence into their processes.
  5. Finally – because I haven’t yet identified a sixth or subsequent stages – insurers will use technology to create cognizance. This goes beyond embedding analytical capabilities into processes to actually creating processes that “understand” and can act on that understanding. In the evolution of the web, this is what the semantic web will deliver once it has moved from potential to actuality.

In reality, these are not step stages but rather are interdependent and interlocking.

Where is your insurance company today? What stage – and why do you think so?

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Published in: on August 6, 2009 at 6:49 pm  Leave a Comment  
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