(Image credit: poupoune05/Pixabay.)
The world insurers operate in is one of constant change—timeframes compress, new information emerges, and decisions are subject to revision. Flexibility is not optional for organizations or their leaders, even when the liability tails associated with those decisions extend far into the future. What becomes clear over time is that many of the industry’s most persistent strategic questions do not resolve themselves. Instead, they force CIOs to swing between alternatives.
As organizations follow a logical path based on accumulated insights, they often push those decisions toward an extreme—sometimes to the point of unintended consequences. In other cases, the consequences are understood but accepted in pursuit of perceived benefits. Either way, the result is motion in the opposite direction.
Consider the long-running question of whether IT organizations should be centralized or decentralized. Centralization offers clear advantages: economies of scale, consistency, and efficient resource utilization. But taken too far, it erodes the nuanced understanding of the businesses being supported. Homogenization replaces specificity, and IT can end up delivering expensive solutions to problems the business does not actually have. The pendulum swings back.
Living with the Swing
One of our CIO Study Group members once remarked that the ideal outcome would be to identify the optimal resting point for the pendulum and simply stop it there. In practice, that is impossible. Organizations learn through movement—and often learn the most when something goes wrong.
The same dynamic applies to the question of whether to buy or build. Increasingly, the answer is “yes.” Systems of record are typically strong candidates for external solutions, while systems of engagement often benefit from internal development and control. But even that balance is not static.
Vendor ownership structures now factor more heavily into the equation. When mission-critical capabilities depend on vendors whose incentives or stability may shift—particularly in a landscape shaped by private equity—traditional approaches to vendor management may prove inadequate. Concepts that once governed enterprise license agreements with large, established providers do not always translate to today’s environment. The buy/build decision, in turn, becomes inseparable from an assessment of risk, control, and consequence.
Cloud strategy presents another example of the pendulum in motion. The initial move to cloud providers promised flexibility and resiliency. Cost was not necessarily the driver; adaptability was. But experience has introduced new considerations. High-profile outages have challenged assumptions about resilience, while run-rate costs have raised concerns about long-term economic control.
Embracing Greater Sourcing Flexibility
For insurers in particular, reliance on providers with near-monopolistic pricing power can produce very unhappy outcomes. Where competition is limited, the ability to manage costs through optionality diminishes. This reality is now contributing to workload repatriation efforts and a reassessment of architectural principles. The goal is not a return to the past, but the creation of greater flexibility across both near- and long-term horizons.
Across all of these domains—organizational structure, sourcing strategy, infrastructure—the pattern holds. Movement toward one extreme reveals its limits and drives a course correction.
As one of my mentors observed, the fastest path between two points is rarely a straight line. For CIOs, the better model may be that of a sailboat captain—tacking as conditions change to capture the most favorable wind at any given moment. Driving too far in one direction risks a loss of momentum. And in a business defined by long-term commitments and evolving risks, that kind of becalming is something insurers can ill afford.