Enterprise Architecture: Strategic Approach Needed Now More Than Ever

By Rob McCurley, Senior Insurance IT Leader & Enterprise Architect, X by 2

Quebec, QC (Dec. 3, 2018) – The practice of Enterprise Architecture (EA) has taken a pounding over the past several years. It has been criticized as too rigid and structured to cohabitate with Agile, and too conceptual and theoretical when all organizations really want is working software. Many consider it hopelessly outdated in this era of fail-fast. And, at different levels and for different reasons EA can plead guilty on all counts. However, that admission of guilt is often more about the actual practice of EA and the people who practice it than it is about what EA really means and the benefits it can still provide for the insurance industry. This article will argue that an effective EA practice is an essential ingredient for any insurer modernizing, innovating and otherwise trying to transform itself to stay relevant in an industry whose main strategic thrust seems to be to invest in and deploy InsurTech platforms and applications.

Perhaps the best and simplest way to think about EA and why it’s still relevant is to highlight what it does for an insurer: it creates a holistic roadmap guiding how technical capabilities should be deployed at an insurer to support the strategic goals and objectives of that insurer. EA is technology and process agnostic. It focuses on the achievement of desired business outcomes, often but not always through the deployment of relevant technologies. EA done well prevents insurers from running down technology and process rabbit holes that may or may not produce an effective system, and may or may not fit nicely into an insurer’s long-term business needs. That makes EA more relevant than ever today.

A quick review of the current state of the technology ecosystem at many insurers will illustrate why EA might still be important to insurers. Most insurers have many, if not all, of the following symptoms when lacking an effective EA practice:

  • standalone and disjointed projects;
  • problems with changing priorities and processes;
  • IT and business resources pushed and pulled onto different initiatives;
  • reactive rather than proactive approach to technology initiatives;
  • failure to look forward and position the company for success;
  • scrambling rather than planning;
  • same solutions implemented separately many times;
  • disparate and proprietary data stores;
  • and many, many more symptoms like these.

Throw in a lack of planning at the strategic business level, and a clear picture begins to emerge.

So how should insurers use EA to break out of the cycle of unmet technology expectations? Most certainly insurers that don’t have current and ongoing strategic business and IT strategic plans should start there. It’s less about any particular planning methodology approach than it is just about having a plan to work from as a guide. Any plan that starts with business priorities and maps them to the future technology state over the next three to five years will add tremendous value. The key is always that a clear vision exists that uses the plan as a roadmap to achieve a desired future state. If strategic planning doesn’t produce a guide like this, then it’s time to start over.

It is during this planning process that insurers typically find the gaps and the friction between their current state and their desired future state. This stage is precisely where a good EA practice has value. Rather than supplying a short-term reactive approach to the gaps between future state planning and current state reality, a sound EA roadmap helps an insurer to prioritize projects, resources, and budgets to take the straightest path possible to the future state. So if this sounds like a bunch of EA conceptual baloney it’s decidedly not – it’s just the same common sense approach the insurer would take to meet a long-term financial or productivity goal. Of course, having a plan doesn’t make it easy to achieve its goals; there is no silver bullet to the future state – despite the best marketing efforts employed by solution providers to convince insurers otherwise.

Instead, it’s the very “boring” process of organizational vision, consensus and execution over time, blended with the ability to recognize when things inevitably change. As current state and future goals evolve, an insurer must stop and reassess. It is typically a constant cycle of aligning strategic goals with capabilities and capacity while being realistic about what can be accomplished. Accounting for change is the most important part of what an effective EA practice does for the insurer. It creates an environment and ecosystem that starts with bite-sized initiatives that lay the foundation for strategic goal attainment. EA focuses on agility, flexibility, sustainability and responsiveness, recognizing that there will be those “turn-on-a-dime” moments in support of shifting operational business and market opportunities, but a good EA practice always brings an insurer back on the course of staying true to strategic goals.

The industry is an era of digital transformations, customer centricity and innovative approaches to traditional insurance services, products, and issues. In this climate of constant change, the need for a strategic EA approach is more vital than ever. Anybody who has been in the insurance industry – especially on the IT side – knows that technologies, methodologies, processes, and even people come and go as the expected lifespans of technologies and methodologies grow ever-shorter. What doesn’t change is the need for insurers to articulate a clear vision about their business and their markets today and in the future, and to create the plans for achieving it all. That’s why Enterprise Architecture is needed now more than ever.

About X by 2

Founded in 1998 and with offices in the US and Canada, X by 2 is a technology consultancy focused on the practice of application and data architecture in the insurance industry. Whether Property and Casualty, Life, or Health, X by 2’s Architects and Program Leaders understand the insurance business and have proven experience planning and delivering core insurance systems, strategic business applications, and enterprise integrations. For more info, please visit xby2.com.

Source: X by 2

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