The Triad Insurance Company of Indianapolis, Indiana experienced a meteoric rise since its inception in 2005. It has grown from a mom-and-pop operation to a sizeable enterprise: the number of employees has grown from two to 584 in under five years. This rapid growth has brought significant success for TICI, but it has also brought some troublesome problems. In particular, internal information management has suffered due to increased complexity and rising expectations. Some specific problems are:
- Insurance policies used to be generated using desktop software. Now, policies are so varied that various versions of forms are warehoused in databanks and selected automatically based upon variables such as the type of claim being generated, the geographical area of the United States that the customer lives in, et cetera.
- Triad's original owners used to keep their own financial books.
- Customer claims were handled over the phone.
- The national headquarters wants more comparative data from the regional offices.
Each of four regional offices has its own Information Technology staff and manager that reports to the regional manager. TICI's IT director (at the same organizational level as the directors of human resources and customer relationship management divisions) manages a separate IT operation at the headquarters and reports to the Chief of Operations (COO).
Last month, the Chief Financial Officer (CFO) complained that not enough reliable and consistent information is being received from regional offices. Moreover, both he and the information management division chief believed that the organization has grown so complex that it now needs a Chief Information Officer (CIO) at the same level of organization as the COO. The regional IT staffs would then report to the new CIO, not to regional managers. But the Chief Executive Officer (CEO) is not sure that a company-wide reorganization is in order. He thinks Triad should outsource the information systems f
unction entirely to a third-party provider located in India.
What type of IT organizational structure would you recommend for this firm? Why?
- Be sure to address organizational purpose and structural design elements through appropriate technology, structure, and process.
- Analyze the challenges facing management in adapting to the changes imposed by growth and technology.
- Identify any assumptions you make prior to beginning your response.
The Triad Insurance Company of Indianapolis has grown and its information systems have become complex. We first assume that Triad Insurance Company of Indianapolis will not go in for outsourcing. There are several reasons for this assumption. The CEO should understand that outsourcing the information systems function can mean higher loss of managerial control: Direct threat to confidentiality and security, and hidden costs. Further, outsourcing can lead to publicity that Triad Insurance Company of Indianapolis is outsourcing its functions. Moreover, there might be quality problems and the collapse of the company to whom the function is outsourced can lead to further problems. So we assume that Triad Insurance Company of Indianapolis will not outsource its information technology function.
The organizational structure I will recommend for the IT function will be a matrix organization where the regional staff of the IT function would report to the regional managers as well as to the Chief Information Officer at the head office. This reorganization is not related to other functional areas but will give a pointer to the other functions because of its success and achievement. All the regional IT managers will report to the CIO but at the same time they are assigned to the regional offices of Triad Insurance Company of Indianapolis and will also report to the regional managers. The reason why this form of organization has been selected is that it allows IT workers to share information more readily across regions, and it also ...
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