Using the ROI logic insurers would never have bought PC computers for people or ever upgraded to the next version of windows. When was the last time you saw ROI on adding plants to the workplace? What was the ROI on moving to a bigger nicer office where everyone got their own desk?
Some expenses are simply a cost of doing business. Insurance companies must have a large sophisticated modern internal data system if they hope to stay in business long term.
My previous employer tried to justify overhauling and getting a new internal data system using the ROI methodology. The current system was a total mess, it was horrible, literally no one was left who knew how it\’s internals worked and its core system language Cobol is a dying language.
Of course they couldn\’t justify the change using the ROI methodology so they decided to slap (another) fancy facade onto the front of it and leave the back end system alone.
The correct methodology is to view your IT system as a capital asset like a building or a large piece of machinery. The company should then depreciate their IT system each year and have a sinking fund accumulating the replacement cost. When the system is fully devalued (10 years? 15?) they should replace it with the money in the account.
Many insurance companies have had the same basic internal system for 40 years. Imagine if Honda or Intel were making their products with the same machinery they were using in the 60s?
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Using the ROI logic insurers would never have bought PC computers for people or ever upgraded to the next version of windows. When was the last time you saw ROI on adding plants to the workplace? What was the ROI on moving to a bigger nicer office where everyone got their own desk?
Some expenses are simply a cost of doing business. Insurance companies must have a large sophisticated modern internal data system if they hope to stay in business long term.
My previous employer tried to justify overhauling and getting a new internal data system using the ROI methodology. The current system was a total mess, it was horrible, literally no one was left who knew how it\’s internals worked and its core system language Cobol is a dying language.
Of course they couldn\’t justify the change using the ROI methodology so they decided to slap (another) fancy facade onto the front of it and leave the back end system alone.
The correct methodology is to view your IT system as a capital asset like a building or a large piece of machinery. The company should then depreciate their IT system each year and have a sinking fund accumulating the replacement cost. When the system is fully devalued (10 years? 15?) they should replace it with the money in the account.
Many insurance companies have had the same basic internal system for 40 years. Imagine if Honda or Intel were making their products with the same machinery they were using in the 60s?