By ROMY COMITER, senior manager in the London office of SMART Business Advisory and Consulting
All organizations face the challenge of turning information into business knowledge in order to empower its decision making. The further up you go in an organization, the sheer size of the data which must be assimilated and, the criticality of the information grows exponentially. The insurance industry is one of the most data-rich sectors. With a range of internal and external information needing to be understood from actuarial, to performance related drivers and broader industry metrics.
This information is required by C-level management to make real time strategic and tactical decisions. Most organizations have a process to identify the issues affecting their business, but this is often where they get stuck, never tracing the cause but always reacting to the symptoms. The capacity to interrogate the organization, top down, and quickly identify the core malaise is the tool an organization needs to manage its business and gain a competitive advantage.
Most organizations have a vast array of disparate information from which different reports are collated periodically for multiple end users and committees. These reports are often created individually using the same source information, involving a wide range of applications. This time consuming process often leads to erroneous and conflicting data, out of date information and inconsistent formats, rendering the output practically redundant as a means of measuring success against strategy and promoting a reactive approach to issue management.
For many organizations, it is not the lack of data available, but the lack of quality information. It is about integrating disparate information in an effective way so that the patterns, trends and warning signs can be easily identified and acted on.
Dashboards were developed to consolidate critical business information and provide senior management with a snap-shot view of performance metrics. In the early days, compiling dashboards was a manual process and the absence of any drill down feature generated more questions than it answered. The increasing amount of effort spent in producing further reports rather than meeting the original business objectives was counterproductive to the aim of empowering an organization's decision making.
In the next stage of evolution, technology was able to improve on the process and resulted in poor decisions being made quicker or huge investments which delivered little business benefit. This included:
Enhanced design tools--improving the quality of the presentation but not the quality of the content or data sources
Huge data warehousing projects which attempted to create a single repository for all organizational operational and performance data. However, limited drill down facility and non standardized data resulted in an inability to compare 'like for like' across the organization.
Urgent data standardization projects, at significant cost to the organization that struggled to realize their full potential as business paradigms shifted and acquisitions or mergers changed the imperatives.
A new solution was required--one which would ideally interrogate existing systems for information in real time and normalize their responses, providing technology that could make reporting instantaneous and allow managers to conduct drill down analysis into the raw data--and thus create a genuine decision-support tool.
As dashboards have supposedly become more sophisticated and easier to implement, they have increasingly becoming a tool for strategic, as well as tactical and operational, and this has compounded the issues.
For example, an insurance company with global operations and multiple legacy systems may not be able to accurately report its exposure to a hurricane or major catastrophe. The data consolidated into a dashboard may report misinformation--it may be at different points in time, not normalized to remove redundancies and exclude some key data points.
Effective dashboards facilitate a top-down approach to obtaining information, allowing those at the top of organizations to specify design, data sources and access. However they still rely on data extraction from the bottom up. There are therefore a number of careful considerations required before implementing a dashboard, starting with defining the data required.
The effectiveness, success and long term end-user adoption of a dashboard is dependent on the information it presents being relevant. The information they provide must be directly relevant to the responsibilities of the user. Success also depends on the information being actionable. Drill down functionality allows the user to explore the triggers and define actions that need to be taken on issues identified. Lastly, the effectiveness of a dashboard depends upon the information being believable. The user must be confident in the integrity of the data and the consistency with which it is collected.
Dashboards are based on clearly defined business requirements and deliver outputs which not only inform their audience but which drive action based on accurate, timely, well governed data. The technology is able to normalize the data it receives without an overhaul of the infrastructure. Furthermore, the disciplines implemented are becoming a standard regulatory requirement.
These benefits are best realized if the dashboard technology is implemented as a planned, business-driven investment, delivering an immediate competitive advantage.
DASHBOARDS IN ACTION
To effectively manage their business in the current economy, insurers are looking to merge their many data sources, both internal and external data, into one central point, and make it available to the relevant individuals. The need for seamless and streamlined underwriting is paramount, particularly across the different platforms and locations to ensure equivalent standards, higher margins and diversity. By accessing the wealth of data sources, an organization's underwriting judgment and process can be enriched, making the difference between a profitable or loss making year.
Whilst a great deal of data is currently available from multiple sources, access is limited by factors including time, technology and knowing where to look. The selecting of relevant data for each class of business allows underwriters to extract the knowledge that they need while ensuring they are not drowned in a flood of data. Without this, decisions are based on traditional sources, typically historic loss ratios and risk profiles, supplemented with industry knowledge and gut feel. Consequently, standards fall as decisions are at best sluggish and at worst inconsistent and uncompetitive. A properly implemented dashboard extends the information available to the underwriter, enhancing decision making and enabling more profitable underwriting.
Dashboards are also a powerful risk management tool. The ability to identify, manage and implement mitigation and controls are amongst the most critical factors affecting a business today. Dashboards can provide enterprise-wide diagnostic and visibility of governance and compliance requirements, issue, risk, dependency and action management for stakeholders and regulators.
A UK commercial insurance company, for example, recently built a business intelligence portal. This CEO dashboard served to automate reporting of all policy data and information by broker, region, product per month, consolidating all premium, claims and quotation metrics to deliver a complete view of business performance in real time via standardized dashboard reports and ad hoc queries.
At the heart of this solution is a business process designed to capture and validate the required information in multiple formats from disparate systems and sources as soon as it is available. To accomplish this robust workflow and data management techniques were employed.
The solution allows thresholds and business rules to be set up to send alerts to appropriate parties as required for exception based reporting of daily information. Reports incorporate comprehensive metrics from a single source of truth for distribution to the relevant parties at appropriate levels of detail. Data can also be viewed online via dashboards tailored to individual users, with drill down capability.
Organizations are constantly looking for ways to increase accessibility to knowledge but, solutions to date have required significant, long term investment with limited benefits, only realized in the long term.
Current dashboard technology offers a quicker response based on a business driven, top down approach. It provides the user with real time, standardized information, which is reliable, actionable and believable and which they can immediately interrogate further to identify the root cause on which a specific action plan can be based.
April 1, 2009
Copyright 2009© LRP Publications