nEWS & TREnDS
Business Intelligence:
A New & Profitable
Frontier?
Integrated effectively, business intelligence tools can significantly boost the bottom line on the insurance claims process.
With the markets in continuous upheaval and the
debate about economic recovery still ongoing, BI can help
companies improve their decision-making capabilities, cut
costs and identify new business opportunities. These are
obviously activities that are important to insurers, brokers
and agents who want to grow their bottom lines and
position themselves competitively in a rapidly changing
marketplace. In addition, BI is an increasingly essential
element in making claims operations more efficient and
more effective.
It follows then that IT projects designed to establish
or enhance BI capabilities are extremely important to
any company. Such projects are not simple, however,
and they can be very costly, so it’s important to reduce
the possibility of failure. According to some, however, BI
projects fail at a higher rate than many other initiatives—a
scary prospect, indeed, considering that IT projects, over
all, fail at roughly a 67% rate.
Deb Smallwood, founder of Strategy Meets Action
(SMA), an insurance advisory services firm in Boston,
notes that at the 2010 Insurance Accounting & Systems
Association (IASA) Education Forum and Business Show,
SMA and IASA conducted a poll and found that out of
all the various technology-type projects, BI and data
projects had the highest numbers of failures. “Although
the numbers were relatively low, it still reflects the biggest
area of failed projects,” says Smallwood.
BY ARA C. TREMBLy
The ups and downs of BI initiatives
Why should this be the case? “Typically, data projects
are very complex and require full business participation
to work through the data-quality challenges, and to define
strategic and detailed needs,” she notes. “Normally, they
are IT driven with narrow focuses. This creates high risk
for failure.”
“I do not have numbers—largely because no one
would admit to a ‘failure,’” says Karen Pauli-Bradshaw,
an insurance analyst at TowerGroup in Needham, Mass.
“However, [BI projects] do fail and there are several
reasons for this. One reason is a lack of strategic business
goals. What outcomes is the carrier hoping to achieve? BI
initiatives have a tendency to have goals such as make
better decisions or make faster decisions. These are
clearly not specific enough.
“BI opens up a whole new lens into the effectiveness
and efficiency of the entire ecosystem of claims—from
internal operations to claimants to policyholders to third-
party relationships”
“Another reason is that BI initiatives are frequently
viewed as IT projects,” she continues. “Once the project is
ready for business rollout the business community wants
to know what they’ll get out of it all. Without business
participation from the beginning the results will be
amorphous and business leaders will declare it a failure.
A third reason is lack of enterprise focus. Frequently
BI initiatives are the pet project of one line-of-business
head. When other line-of-business heads are brought in,
they frequently will not agree with the project direction
and will not endorse its continued use.
Yet another reason, says Pauli-Bradshaw, is a lack of
cultural commitment to change. “Once carriers really
understand the deep details of their business, decisions
around process, products and distributors need to be
adjusted. Unless there is an executive commitment to
