IT 20/20: Is your IT ready for the digital age?
The speed of current technological breakthroughs has no historical precedent, and the pace is exponential rather than linear,” says Klaus Schwab, the founder and Executive Chairman of the World Economic Forum (WEF). The financial services industry beats at the heart of the digital revolution, and a quick glance at trends in the insurance segment brings it home:
“Digital intelligence (machine learning, advanced analytics) is enabling micro-segmentation of insurance customers based on their social context, risk appetites and price sensitivities. Shared economies (Uber, Airbnb) and soon autonomous machines (drones, cars, robots) are challenging the traditional actuarial models. Emerging peer-to-peer insurance businesses are threatening the role of the central authority. Connected everything (wearables, IoTs, smart cities) is promising to transform the industry’s raison d’etre from a ‘loss compensator’ to a ‘risk adviser” by influencing or even controlling the risky behaviors of the insured, whether it’s a human or a machine.”
Advances like these are profoundly impacting the business models, competitive forces, customer behaviors and regulatory environments. The ability to exploit the speed of business change has therefore become a key competitive advantage. The question we want to explore is whether the traditional Enterprise IT in the financial services industry is ready for the digital age; and if not, what needs to change.
Since its inception over half a century ago, the traditional Enterprise IT has been functioning as a project organization to deliver change, where IT projects serve as the primary currency of interactions between business and IT. They facilitate distribution of funding, organization of work and deployment of change. Behind the multi-decade success of the project organization paradigm lie two important factors: First, these organizations mastered an assembly line like sequential methodology, a.k.a. waterfall, to efficiently deliver large-scale business change. Second, they relied on a mature, battle-tested management theory, called the program and project management, for successful execution of the waterfall methodology.