Technology and Innovation are Keys to Transformation in the Insurance Industry Date:   Sunday , December 01, 2013 Based in Illinois, the Allstate Corporation (NYSE: ALL) is the nation\\\'s largest publicly held personal lines insurer, serving approximately 16 million households through its Allstate, Encompass, Esurance and Answer Financial brand names and Allstate Financial business segments. The insurance industry in the United States is mature and highly competitive. Among the biggest players, you see what amounts to an advertising arms race. In the property and casualty space alone, the top five U.S. advertisers spent $3.6 billion in 2012. That is a seven percent increase over 2011. Still, when you see ad expenditures like that, you need to make sure you seize every advantage to create value for the customer. That\\\'s where technology comes in and innovative application of technology will transform this industry. Those three trends are connectivity, cloud computing, and decision sciences, big data and analytics. They enable almost limitless ways to create value for the customer. The Importance of Connectivity Connectivity represents the convergence of increased bandwidth, processing power, internet capacity and device proliferation, to name some elements. As a whole, it allows customers to have ubiquitous access to their agent, a call center or information about their policies. Connectivity even helps to bring the best IT talent together from anywhere in the world. So the possibilities to create value by giving the customer something he or she needs are limited only by our creativity as technologists and business people. We can create many value-added touch points with our customers to identify the products that we need to develop, to deliver those products, and to add value to those products. Technology companies need more tailored products and services that serve immediate needs and some of the services we need from them cannot be viewed and dealt with as commodity services. While hardware platforms are becoming more off the shelf, in some cases the choices are very limited. Vendors can position themselves better to provide the value-ads that CIOs are looking for by just getting better informed about the specific business needs. Changing Role of the CIO Because of the role technology can play in moving a business forward, the role of the CIO has to change, too. It is an evolution from technology implementer to change agent, from strategy-taker to strategy-maker which does not happen overnight. It takes a strong team working with the CIO to make that journey. Like Allstate, we have mapped out that path across three major stages. Each one is a stepping stone to the next: Operations and Execution: First, the technology organization has to prove it has mastered the basic operations and execution the business requires. I call this \\\"keeping the lights on.\\\" It is about keeping all of the systems running at the highest levels of quality and availability. It is also about managing costs and improving productivity so that you are continuously wringing out the costs of inefficiency. Enabling and Developing: With that stage behind, one can move on to what we call the \\\"enabling and developing\\\" stage of the change journey. That is when there is automation, simplification and optimization in the business. It is at this stage where you begin acting as a catalyst of change. Innovation and Differentiation: In the third stage of the journey, technology becomes a driving force in transforming and shaping the future of the business. Thought leadership, value creation and business differentiation are all credited in a meaningful way to the technology organization. At this point, technology often leads initiatives to innovate and differentiate in the market place. There is a balanced approach that includes both strategy-driven technology initiatives and technology-driven strategy on the other. In the former, technology supports the business strategy. In the latter as a result we see that technology enables new strategies. Further from there, the process starts all over again. If you remain status quo, you risk losing your advantage to the next player who comes along with a disruptive idea. Current Issues The issues that we face and which come to mind is making sure that you are playing an active role in the direction of the business. That means the conversation in IT needs to focus as much on creating value as it does on technology trends. A key driver of value is being customer-focused. So it follows that leveraging technology to bring the company closer to customers is the primary focus. I think a second issue is developing great talent. We have lots of ways to address issues and target our needs, internally and using outside vendors, and striking the right balance can be a delicate thing. But the most effective way is to think globally. That way we can leverage talent from around the world as we plan our projects. I am consistently impressed with the tremendous technical talent and leadership we have available to us in India. That ability to find talented people ties into the third issue, which is vision. It comes back to the challenge of seeing how today\\\'s subtle trends are going to be key issues for an industry five years down the road. As a CIO, a lot of what you want to accomplish comes down to being properly positioned for the next big thing. I really like the latest technology built into new cars. You have Google Earth with 3-D satellite imagery, a Wi-Fi hotspot, adaptive cruise control to keep you at a safe distance from other cars, advanced LED lighting and the latest entertainment systems. They combine comfort, information, entertainment and safety and as the cost of those features fall, the more prevalent they will be as standard features.