We will only get the best out of IT when we can precisely articulate the business requirement, says Mike Hannan.
As we approach the end of the millennium, it is appropriate to consider the changes currently taking place in the industry and the impact that information technology (IT) will continue to make. Although it is treading on very unstable ground to anticipate the future, nevertheless, let's have a go!
We see change in all directions at present. These changes are global phenomena, not just London oriented. Consolidation and restructuring of businesses continue apace, roles are changing and so is the nature of the business itself.
A major contributor to this continual change is technology, which is affecting all areas of life. When we look at other industries, medicine for example, the advances that we see today were undreamed of a few years ago. Information technology has the potential to make a substantial difference in our industry as well, but IT can no longer be regarded as just an anorak activity. It must be seen as fundamental to every business strategy.
How often is this the case? Historically, IT has been regarded as a back room activity hidden away from the corporate gaze with an unfortunate mythology of being very expensive and delivering very little benefit. It is time to debunk the myths and consider how we can use IT to our benefit in the business.
It is not too fanciful to say that IT is a creative activity and, as such, it thrives in an atmosphere which is stimulating and open to new ideas. Standing in front of a Monet or a Jackson Pollock, we each interpret what we see in our own way and derive pleasure and understanding in different ways. It might be self-indulgent to regard IT in the same way, but there are parallels. IT is a very precise discipline, and just as an artist understands the properties of a pencil and its capabilities, so too the IT specialist understands the capabilities of his or her tools - computer hardware and software.
Yet we will only get the best out of IT when we can precisely articulate the business requirement. This is the dilemma that arises: without understanding the capability and flexibility of IT, how can the business manager properly define the business requirement? The development of an IT solution is an iterative process, requiring regular consultation and communication. IT specialists must get closer to the business realities, and business managers must become more knowledgeable about IT developments.
We are already witnessing a significant movement away from the old business model, away from the old market divisions which have little relevance in today's world. The synergy between the company market, as represented by the International Underwriting Association (IUA), and Lloyd's is being exploited by the development of a common view on issues. At the operational level, the London Processing Centre (LPC) and Lloyd's are working together on an ever increasing number of projects which are designed to streamline the business processes and use IT to advantage. At LPC, we recognise the potential contribution that e-commerce can make to improving the business processes; if we can achieve this across the whole market, then significant benefits could be gained.
The international process compliance (IPC) project is a critical initiative, since it brings together all of these objectives in a common process for closing and accounting. The process is internationally compliant and provides brokers with a single process interface. This approach has the full and active support of the IUA, Lloyd's and brokers, and it is the model which can be applied to other important business areas. Initial planning has begun on the steps which could be taken to improve the handling of claims.
But improving the business process is only one of the steps that need to be made, albeit a fundamental one. It is also vital that business practices are reviewed and changed. There is an important distinction between the business process and the business practice: while operating the process is an operational activity, the business practice is concerned with the way practitioners use the process.
Clearly, processes have to support the business practices, but once they have reached a high level of efficiency, attention must be given to improving the practice. This may in turn lead to opportunities to improve the process further.
IT has even more to offer. Soon we shall see systems that take full advantage of the modern approach to information handling. Electronic repositories will enable documents to be held in a readily accessible form, and browsers will enhance the way systems are seen and used by practitioners. These are all developments which we in LPC are working on for future systems.
We cannot rest on our laurels. We have a distinct business advantage in London today, but only the judicious use of IT will enable us to keep this competitive edge in the future.
Mike Hannan is chief executive officer of the London Processing Centre.