ORG 726 Week 7 Technology Integration Benefits and Challenges Example

Connecting Claims, Pricing and Policy Systems: The Benefits and Costs of Integration at a Mutual Insurer

[Student Name]

University of Phoenix

ORG/726: The Impact of Technology on Organizations

Week 7 Assignment

[Instructor Name]

[Date]

Prairie Shield Mutual, its systems, people and figures are composites written for a model paper.

Over three years, Prairie Shield Mutual, the invented Iowa mutual examined throughout this course, added a cloud claims platform and a farm pricing tool to a policy administration system first built in 1997. The three systems exchange data only through nightly batch files and manual lookups. Leaders have proposed a $24 million, three-year program to integrate them through a shared data platform and to replace the policy system's member records with a single member profile. The board has asked for an assessment. This paper evaluates the program's benefits and challenges using research on how technology creates value.

The Cost of Fragmentation

Fragmentation imposes costs throughout the company. Adjusters must open the policy system to check coverage details, adding about 12 minutes per complex claim, roughly 9,000 adjuster hours a year. The pricing tool cannot learn from claims outcomes, because claims data reach the actuaries only quarterly and in a different format; Week 5 showed that model updates depend on such feedback. Members who call with a claim are asked for information they gave their agent, and service representatives cannot see claim status without asking a claims colleague. Data on the same member differ across systems: an audit of 2,000 records found address or coverage mismatches in 11 percent.

How Technology Creates Value

Melville et al. (2004) reviewed research on information technology and organizational performance and proposed an integrative model in which IT resources, combined with complementary organizational resources such as work practices and structure, affect business processes, which in turn affect organizational performance, all shaped by the competitive environment and by trading partners. Value arises at the process level and depends on complementarity. Brynjolfsson and Hitt (2000) reviewed evidence on computers and productivity and argued that much of the value of computers comes from enabling complementary organizational investments, such as new business processes, decentralized decision making and new skills, which take time and are often larger than the technology investment itself.

These arguments imply that integration's benefits at Prairie Shield will depend on what changes alongside the systems: whether adjusters' work is redesigned to use member profiles, whether actuaries change model update cycles, whether service representatives are trained and authorized to resolve claims questions.

Expected Benefits

Adjuster time: integrated coverage views would save most of the 9,000 hours, worth about $500,000 a year, if adjusters' workloads are rebalanced to use the time.

Pricing accuracy: monthly claims feedback to the pricing tool could improve loss ratios on farm policies; actuaries estimate a 1-point improvement, worth about $2 million a year, if model update processes change to use it.

Member experience: a single member profile would let service representatives answer claims questions directly, cutting transfers by an estimated 40 percent, if their roles and authority change.

Data quality: one member record would end mismatches, reducing errors in billing and coverage.

Usage-based insurance: the shared platform is a precondition for the program discussed in Week 4.

Every benefit on the list ends with an if, and every if is an organizational change, not a technical one.

Challenges and Costs

Technical challenges are substantial. The 1997 policy system stores data in formats that do not map cleanly to a member profile; data cleansing alone is estimated at $3 million and nine months. Interfaces must be built and tested for each system, and the policy system's vendor charges for access. Integration also creates new security exposure, since member data will flow among more systems.

Organizational challenges may be larger. Robey et al. (2002) studied enterprise system implementations at 13 firms and found that organizations had to overcome knowledge barriers, both in configuring the systems and in assimilating new ways of working, and that implementation involved dialectical tensions between old and new practices that had to be worked through rather than avoided. At Prairie Shield, service representatives would need new authority and training to handle claims questions, and claims managers may resist sharing claim details with service staff. Actuaries would need to change from quarterly to monthly model reviews, adding workload. Agents may worry that a single member profile gives the company a direct relationship that bypasses them, as Week 4 noted.

Lessons From the Course

Earlier weeks offer warnings. Week 1 showed that the same platform produced different structures in two offices because structural choices were left unmade. Week 2 showed that optimizing technology while neglecting work design raised turnover. Week 3 showed that unanswered concerns turned individual doubt into group resistance. Week 6 showed that integration magnifies ethical questions about data use. Integration is the largest technology program yet, and these risks scale with it.

Integrate All at Once or in Stages?

Leaders considered two approaches. A single cutover would connect all three systems at once, shortening the program by about eight months and avoiding temporary interfaces worth about $2 million. A staged approach would integrate one link at a time, letting each stage's organizational changes take hold before the next. Research on the dialectics of change favors stages: each new practice must be learned while people still do their jobs, and several at once would overload adjusters, actuaries and service staff together. The staged approach also lets the company stop or adjust if early stages fail to deliver.

Assessment

The program's technical case is sound: fragmentation is costly and integration is a precondition for future products. But most of the measurable benefit, perhaps 80 percent of the estimated $2.5 million a year in savings and gains, depends on complementary changes in roles, processes and decision rights that the current plan does not budget or schedule. The plan allocates $24 million to technology and nothing specific to process redesign, training or change management. Research on complementary investments suggests that is the program's main risk.

Recommendations

Budget complementary investment: add about $5 million for process redesign, training and change management, owned by business leaders rather than IT.

Sequence by value: integrate claims and policy coverage views first, where benefits are clear and resistance low; then the pricing feedback loop; then the member profile for service staff.

Redesign roles alongside each stage: rebalance adjuster workloads, revise actuarial review cycles and expand service representatives' authority before each stage goes live.

Involve users: adjusters, actuaries, service staff and agents on each stage's design team, consistent with Week 2's sociotechnical findings.

Govern data: apply the consent and use commitments from Week 6 to the shared platform.

Measures

Technical milestones, such as data quality rates and interface completion, will be tracked alongside business outcomes: adjuster time per complex claim, farm loss ratios, call transfers and member satisfaction. Each stage must show business results before the next is funded.

Conclusion

Integrating Prairie Shield's systems could save time, improve pricing and give members a better experience, but research on IT business value shows that these benefits depend on complementary organizational changes. The current plan funds the technology and assumes the rest. Budgeting and sequencing process, role and governance changes alongside each stage would turn a technology project into the organizational change that produces value.

References

Brynjolfsson, E., & Hitt, L. M. (2000). Beyond computation: Information technology, organizational transformation and business performance. Journal of Economic Perspectives, 14(4), 23-48. https://doi.org/10.1257/jep.14.4.23

Melville, N., Kraemer, K., & Gurbaxani, V. (2004). Information technology and organizational performance: An integrative model of IT business value. MIS Quarterly, 28(2), 283-322. https://doi.org/10.2307/25148636

Robey, D., Ross, J. W., & Boudreau, M.-C. (2002). Learning to implement enterprise systems: An exploratory study of the dialectics of change. Journal of Management Information Systems, 19(1), 17-46. https://doi.org/10.1080/07421222.2002.11045713