How Lloyd's of London moves IT into the business

The IT department at Lloyd's of London has worked with the business to provide technology capabilities to support business requirements. Cliff Saran finds out how it works.

"Business technology" is the big theme at this year's Forrester IT Forum. Rather than focus on business's IT alignment, IT needs to match its capabilities to what the business requires. During the first day's presentations at the IT Forum, Lloyd's gave examples of how it has achieved what Forrester describes as business technology.

Since IT is so intertwined with business, both business and IT people need to consider both the business and technology implications of any business activity, said Alex Cullen, a research director at Forrester Research.

"Initially IT was a very poor partner to the business," said Peter Hambling. CIO at Lloyd's of London, speaking at the Forrester IT Forum in Portugal. "Our customers, our people and our markets makes Lloyd's IT unique. Three years ago we moved to business technology."

By focusing on business capabilities, IT at Lloyd's has become a big driver at Lloyd's, helping the company to support new regulations, adapt to the ever-changing security landscape, and provide applications that support how the business works. One of these applications is an interactive risk map, which pulls together world events, showing the risks that Lloyds is exposed to at any given moment in time.

Solvency II

Among the biggest business technology capabilities that IT has developed is Solvency II. Hambling, said, "Our board is accountable for the whole [Solvency II] framework."

Solvency II is scheduled to start by 2012, but insurers have to be ready by October 2010, and it touches everything that we do at Lloyd's," Hambling, said, "All the market models have to cascade up to the Lloyd's model. There is a big incentive to get this right."

It required building a resilient IT infrastructure and learning new IT skills, he said.. "We built two purpose-bult resilient data centres. We required HPC [high performance computing] and had to learn how to do high-performance nodes."

Hambling claimed regulators use Lloyd's as an example of how to put together an enterprise framework for Solvency II.

As a result of building Lloyd's Solvency II capability, Hambling said he was called to the top table eight months ago and "was asked if my programme manager for Solvency II could be moved out of IT." Hambling said some of his IT graduates with high performance computing (HPC) skills have been seconded out to the business units.

Going into China

Lloyd's is the first insure to enter the Chinese market. Hambling said one of the challenge of Chinese licence is that Lloyd's has a very small period of time to set up. "The clock started ticking on 19 May and the programme manager for the new Chinese office is one of my reports. This is a great illustration of how far IT has come at Lloyd's," he said.

Security capabilities

Security is another example of using the business technology paradigm at Lloyd's. Marcus Alldrick, CISO at Lloyd's, said, "Three years ago we had a major problem. We had very IT-centric legacy practices. We were not protecting our business's biggest asset - our reputation."

He dumped the name "security" and adopted the name "protection". Working with Hambling, Alldrick came up a with a security vision and a key strategic aim to provide assurance that business risks would be covered, and at the right price. "It was all about being proactive to work with the business to protect the business," he said.

Polices were agreed at board level and set in stone. The underlying standards provide flexibility, which are linked to controls, security architecture and security operations. Alldrick said, "We have a consistent approach to risk. Decision-making on risks lies with the business, not with IT."

"[The security strategy] was all about assurances to make sure senior business management were informed and knew that the protection was adequate. We are increasing the value, while reducing the risk."

Thanks to the approach he has taken on security Alldrick said it is possible to support a diverse group of staff at Lloyd's.

"We have a whole mixture of people; 800 experts. Generation Y is proving quite a challenge." He said the Y Generation is the generation of entitlement. "They are entitled to connect their iPhones to our networks and connect to Facebook." Lloyd's allows Facebook access, because it is a business enabler.

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