MCINTYRE: Honestly, we have been doing
more than just keeping up for the past few years.
My business partners understand the positive impact that technology can have on business growth.
Whether it is new products, new features, making
it easier to do business with us or creating efficiencies, we have been focused on freeing up funds that
in the past were focused on running the business
and been able to refocus those funds on investing
in the business growth.
ROY: We have a very close working relationship
with our internal business unit customers. I, along
with my IT leadership team, have continuous dialogue with the business teams to stay in sync with our
businesses’ growth strategies, customer needs, and
competitive dynamics. Since we have these regular
discussions throughout the year, securing funding for
new projects is not a difficult exercise. It becomes a
joint decision between IT and the business because
we can clearly draw a line from the project to financial impact for the company.
For example, we just launched our Smartphone
Loan technology, which enables loan applicants who
are credit union members to begin the loan application process from their smartphones. The technology is a mobile version of CUNA Mutual’s loanliner.
com product, which is used by more than 500 credit
unions nationwide. This is a clear example of technology and business remaining aligned to drive new
market and customer growth long before this product
How has the process of setting an
IT budget changed over the past
The CIO and CFO:
A Long Way to Go?
CFOs tend tO have a lOw OpiniOn
of the CiO and the entire it group.
such is the sobering finding of a 2011
Gartner survey of 344 CFOs at
north american companies,
including insurance, financial
services, health care, manufacturing
and other fields.
The survey, conducted by
Gartner and Financial executives
international, an association for
CFOs and other financial executives,
the CFOs felt the it department
“delivers the technology innovation
needed by the business,” or that it
“has the right mix of skilled people
to meet business needs.” Finally,
only 18% of the CFOs said they
thought their it service levels “meet
or exceed business expectations.”
interestingly, the survey
revealed that 42% of it organiza-
tions now report directly to CFOs,
“and that is expected to increase,”
says Gartner analyst John van
insurance CiOs have other
challenges: Those charged with
creating enterprise-wide efficiencies will be more likely to find favor
with the CFO if they are able to
communicate the long-term
benefits of initiatives that have yet
to prove solid, long-term returns,
such as cloud computing or
virtualization. Further complicating
matters is the CiO’s pitch for core
systems replacement (versus
modernization), in which several
cost-benefit analyses are offered
with few short-term results.
van drecker says that the
study’s findings point to the need
for the CiO and others in the it
department to engage the CFO as
often as possible, and communicate
clearly why certain it investments
are being advocated by the it
department. Further, having the CiO
engage on matters of business
strategy can only help fuel further
discussion on why investment in
certain technologies will enable that
strategy’s success. —Pat Speer
EDWARDSON: Historically, much of the process seems to have been focused on long-standing
maintenance or service agreements. In recent years,
our process has shifted to reevaluation of such agreements to determine need and value. Demonstrating
this practice to the CFO and other key stakeholders,
has helped facilitate a more flexible budgeting process. Now the discussion can truly focus on what will
provide value versus justifying a need.
FOERST: Changes to the process have varied by IT
budget category. Establishing our target for non-dis-cretionary line items hasn’t changed much. The expectation that we’ll pursue alternatives that make this
spend as cost effective as possible may be heightened
to a degree, but it has always been our role.
Where we’ve seen the most change is in the
area of discretionary investments. The discipline
around the selection and justification of projects has
increased. Projects must fit into the strategic plan
and prove themselves through a business case model
that looks at the cash flow over the projected lifetime
of the asset. Justifying projects isn’t new for us, but
the rigor exercised around this effort has increased.
There are many competing forces for investment dol-
lars, and we need to maximize our long-term return.
MCINTYRE: There is more focus and transparency during the process at senior executive levels.
There is a process in which the business strategy is
aligned to the projects and reviewed closely. It isn’t
automatically “flat;” it might end up being flat, but
there are many discussions before that final IT budget
ROY: We have changed the budget process for IT
from a reactive state to a more proactive planning
process with our business lines. We set a target for
IT infrastructure and security and vet this with our
executive team for top-down decision making.
For projects, we partner with our internal cus-
tomers and have regular discussions about business
strategy, product development and new market
planning. These discussions focus on the business
need that we, in turn, can translate into how IT
can support these plans. These proposals are then
presented to a new committee we formed several
years ago called the Business Investment Council
(BIC). BIC oversees funding for all large projects
in the company and includes myself, our CFO, our
chief product officer, head of operations and head
What are some of the keys to business
and IT working together to set the IT
EDWARDSON: Many areas of the business
provide direction in terms of their long-term expectations. This has helped tremendously from a staffing
perspective. An example of this includes pricing and
rate implementation; we have a good feel for what
might be normal volume, so we can staff accordingly.
If there are planned increases, the responsible group
will provide advance guidance so we can adjust.
July/august 2011 insurance networking news 17