Investing in TUFS
The case refers to a company called Northern Insurance and their huge investment on TUFS (Technical Underwriting Financial System). That system was the largest investment ever made on IT by Northern Insurance and it was supposed to assist the company by “streamlining the underwriting process and providing strategic e-business capabilities”. Yet, after a couple months, TUFS became the cost-center of the company, spending almost $4 million, and therefore the CIO, Martin Drysdale’s job was on the line. He had a meeting with the CFO, Melissa Freeman, to discuss the reasons why the system was not providing the benefits it was supposed to and whether to keep investing on it. Discussion Questions:
1. TUFS was a great idea that would help the company a lot. It was supposed to help streamlining the underwriting process and therefore with cost savings. However, the technicians did not get any participation from the underwriters. Also, the departments were not in the same page in the creation of the system, and the result was a lot of money had to be spent on fixing underwriting errors that kept appearing over and over again. Additionally the senior underwriting managers still insisted on old reports instead of just looking it online, one of the benefits of TUFS. And lastly, there was a lack of business involvement in decisions, which contributed to the disappointment of the system. In conclusion, most of the resource of the company was spent on addressing underwriting issues that could have been prevented from the beginning if the underwriters and technicians had worked together (or did not lack in communication). 2. The IT people from the TUFS and the underwriter managers must get together and change the system so the whole situation with fixing one mistake and finding many others is prevented. Also, the system needs to be created (or changed) in such a way that it is easy and comfortable for the underwriters to use. To help with the transition to using the TUFS, a training program for the underwriting department would be perfect. Furthermore, the company needs to prioritize all the projects and apply deadlines to them so they have a clear list of what and by when to do it. 3. The benefits can be measured by comparing the amount of time spent using the old system and the new one (including training). And also, the company could have some kind of cost savings scorecard, and again compare the old system with the new one.