I recently led a workshop on IT value metrics and financial management at Novarica’s 11th annual Insurance Technology Research Council meeting. The framework for the discussion was based on our recent research on leveraging business KPIs as IT value metrics and on IT financial management maturity levels. Some of the key themes we discussed included:
Defining Metrics
Business units often find it challenging to define desired outcomes and appropriate metrics for measuring the success of their IT efforts. This is an opportunity for collaboration between IT and its business analysts outside of their traditional requirements-gathering role. Ideally, business value metrics are defined upfront as part of the IT governance process to establish a baseline for benchmarking project success.
Aligning Value and Metrics
Projects initiated to drive revenue growth, such as product innovation, new market entry, or channel automation, are especially dependent on the business to be successful. Ultimately, these are business metrics, and they should be owned and measured by the business units. Metrics such as these can form a valuable feedback loop to learn from projects with disappointing outcomes, such as channels for brokers that aren’t used or new markets with low numbers of appointed agents.
One attendee runs a business value metrics report that scores proposed technology projects to prioritize IT investments and ensure alignment of strategic objectives across business units. Per the attendee, the scores generated from the report enable IT to focus on projects that have maximum value to the enterprise. The score is a combination of ROI and qualitative factors, such as impact on agent service.
Agile
Attendees generally agreed that traditional IT governance does not support Agile projects very well. A solution common for multiple carriers is allocating buckets of funding to enable the product owner to perform their function and prioritize the feature backlog. This approach tends to work better for Agile teams that are oriented toward systems rather than processes, such as application intake. The advantage of orienting Agile teams around process is that it often fosters innovation. Some carriers in the room mentioned using this approach for waterfall system “business as usual” spending.
For more on metrics to demonstrate IT value, see our recent reports, IT Value Metrics: Six Common Measurements of Business Impact and Novarica IT Financial Management Maturity Model, or contact us at [email protected] to learn more about our research and advisory work in this area.
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