Grading Tech Industry Cultures

Tuesday Oct 2nd 2007 by Steve Andriole
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An industry observer looks at sectors ranging from finance to retail to healthcare, grading them based on their attitude toward technology.

When I was at CIGNA (the giant healthcare company you may love or hate, depending on whether or not you’ve seen Michael Moore’s Sicko) I experienced a mutant corporate culture: it had a senior management team with its own biases and predispositions, and a set of policies and procedures that were the result of a massive merger between the Insurance Company of America (INA) and Connecticut General (CG). But the corporate culture was also the product of the insurance industry: insurance executives saw the world pretty much the same way – they think about technology as a cost center, definitely not a strategic weapon with which to clobber the competition.

Industry cultures define a lot about how companies in different industries acquire, deploy and support technology.

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The insurance industry is a late-adopter of technology. If the truth be told, most insurance executives really don’t like technology very much. They see technology as a giant pain in the ass, something they cannot get along without (though wish they could), and something that costs way, way too much money.

The major insurance players were all late to the Internet and are still late, leaving lots of insurance sales to Internet companies like eHealth and Health Benefits Direct, not to mention all of the “quote companies” like Insweb, Netquote and Iquote, which take money from the insurances companies every time they channel a policy on their behalf. They cling to legacy claims processing systems that have long since crossed the cost/benefit line and are reluctant to make investments in business intelligence and service-oriented architecture. They even still wrestle with build-versus-buy decisions, as though operational technology never commoditized and outsourcing was still just an experiment. Overall industry grade? C.

The casino industry sees technology as a way to mine data to riches – on the backs of gamblers who lose on Monday, but not Tuesday, and who really like to check into casinos from the back door, among other quirks that together “profile” the high rollers (those who lose lots of money). Their investments in CRM are paying off: they are extracting more money from the high losers than ever before. Overall industry grade: B+ for effectiveness (but a D for social responsibility).

The financial services industry is committed to technology on all levels. It’s safe to say that they are operational and strategically committed to technology as a lever in their efforts to snare customers (or, as they say, “clients”) from cradle to grave. Some banks spend lavishly on technology and some only aggressively. Executives like Jamie Dimon (JP Morgan Chase; Bank One) and Jack Brennan (Vanguard) strongly believe in technology and spend huge amounts of money on new financial products, new service offerings and especially on the retail end of the business. Vanguard’s use of the Web is nothing short of game-changing. Overall industry grade: B+.

Next page: The retail industy; Plus: grading your own sector

The retail industry loves technology – especially the big guys. Wal-Mart, Fedex and UPS, among others, all spend a ton on operational and strategic technology. They have pioneered data warehousing, supply chain management, mobile tracking and a whole host of cost saving and revenue generating projects. Thank these companies every time you track your online packages via the Web. Grade: A- (they would have gotten an A but they’ve had a lot of hiccups in the RFID space).

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Industry cultures tell us a lot about technology adoption, the way technology is acquired and sourced, and the expectations that managers and executives have about the contribution technology can make to cost management and revenue generation. What grade would your industry get? Do you know? (I am always amazed at how little we know about our direct and indirect competition.)

Take a look around outside of your building. See what your vertical is doing with technology. Profile it and your company’s approach to technology. Give it a grade within the vertical and generally. The answer key should have something to do with using technology to manage costs, technology for strategic advantage, flexible sourcing strategies and the creative use of performance, customer and supplier data. Final question: are you happy with your vertical? Are you well matched with your industry?

I absolutely hated the insurance industry’s view of technology and ultimately got tired of trying to convince senior management that the Internet was for real and, yeah, we really do need to move to a standardized release of Windows. I realize that these are tough questions, so maybe it’s just better to improve your company’s standing in the vertical where it lives.

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