Saturday, March 26, 2005

How infotech can help intermediaries strengthen their position

It's been a busy period lately... that's in part because I had tons of things to finish before taking a break. I plan to spend most of my next week improving my windsurfing / funboarding skills. One of the things I really like about windsurfing is the parallel to business life: using the environment, setting course and optimising my way of sailing to achieve better results.

When fundamental parameters of the business environment change and new ways of achieving results become reality, there is a need to adjust people, models, practices and organisations. This story is about IT and web technologies being used to strengthen the role of an intermediary rather than to disintermediate a business. Intermediaries can be extremely useful if they perform activities in which they add the most value.

A couple of days ago I spent an interesting half-day with one of my customers who is an insurance broker. His environment is changing  as some of the insurance companies he works with attempt to alter the balance in their relationship: they want to take over activities the broker used to execute simply because the organisational structure and tools currently in operation on the broker's side are not able to cope with demands for more rigorous management of the business. Clearly, the insurance companies have a point, but they also push the envelope a bit in the sense that they want to increase their control and reduce the intermediary's commissions. This challenge triggered my customer's decision to seriously review the core processes of his business and to set a strategic objective of becoming a value adding service node that owns customer trust and defines customer experience. The broker also needs to revamp their IT infrastructure and better exploit web technologies to be able to provide adequate reporting to the insurance companies and to better serve their customer base. The beauty of this project is that it could lead to the definition of the model insurance brokerage for the XXIst century in their geography. What I personally find exciting is how IT and web technologies can help an intermediary stay in the loop and be valuable again.

Disintermediation is not the only way to go with technology, contrary to what has been said over the past few years by consultants in dire need to prove the business case of their proposals by removing players from the chain leading from the production of a good or service to the customer.

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