Does Your Agency Need an IT Manager?

Glenn Horton is hard-pressed to remember when his agency, Horton Insurance Group in Orlando Park, Ill., didn’t have an information technology person on staff. He does recall that until the first one was hired, the agency’s bookkeeper managed the computers. Today this 400-employee agency has not one, but eight people with a job description of IT support or management.

At Payan, Alberts & Thompson, Ltd., a 10-person agency in Palos Heights, Ill., there is no full-time IT manager. The agency outsources all IT responsibilities to a local firm that it contracts on an annual basis. “We don’t have enough to do to need a full-time IT person,” says Craig Payan, president. “We’re comfortable with a third-party tech service to help us, and we’re of the size that it makes sense for us to outsource.”

When should an agency hire an IT manager? When is it sufficient to assign the job to an existing employee who already handles other tasks, and when should you hire a professional? What will you gain by having an IT manager, and what will you lose without one? The answers can be hard to quantify—but if you haven’t asked the questions, you’re putting off a decision that could catapult your agency toward new growth, efficiency and profits. By pondering the following questions, you can shed light on the solution that fits your agency best.

1. How much downtime does your system experience per month?

Carol Chamberlain remembers when one of her agency’s carriers contracted a computer virus and called to tell the agency not to accept any of its e-mails. “I called our Internet provider and told them we couldn’t accept any more e-mail at all,” Chamberlain says, “and my partners went ballistic.”

But Chamberlain, a principal at Assurance, Ltd. agency in Las Vegas, stuck to her guns. “I told them that until they could come up with a better solution, we weren’t accepting any e-mails,” she says. “If we lost our data, we would have been out of business.”

Until then, Chamberlain, who classifies herself as “an insurance person, not an IT person,” had managed the agency’s IT function herself because she had worked with computers for much of her career. “But my solution for fixing things was to shut the system down and bring it back up,” she says with a laugh, “and our internal system had grown beyond my capabilities.”

Almost immediately, the agency brought in an IT professional to consult. Sean Cunningham made multiple recommendations, including installing a firewall, that allowed the agency to again accept e-mails and to perform other IT-related tasks. Within a few months, Assurance, Ltd. had hired Cunningham as its IT manager, fulltime.

“Since Sean’s arrival, I can’t remember the last time we had to get off the system,” Chamberlain says. “If we’ve had two hours of downtime in the whole office over the past 12 months, I’d be surprised.”

2. What is your agency’s growth plan?

If you plan to maintain a seven-person agency indefinitely, you may never need an IT manager. But, stipulates Sharon Cunningham, president of BMG Consulting in Hartford, Conn., every agency needs someone who knows the agency management system. “The reason you bought your system in the first place was to gain efficiencies that come from using automation well,” she says. BMG routinely asks agents to furnish reports on new business and lost business, “and many agents can’t provide them, because no one knows how to get reports from their systems.”

If you don’t know how to generate reports, you cannot know how well your business is doing. If you’re unsure of your agency’s health, you cannot make informed decisions about expenditures or investments. “Someone has to be your system expert,” Cunningham says. “Someone has to take the time to learn the system’s functionality, how to benefit from it and train others to use it.”

3. Do you have enough work to keep an IT manager busy?

At first, you may not think so, and perhaps you’re right. Paul Alberts, a partner at Payan, Alberts & Thompson, Ltd., oversees his agency’s IT needs. Because the firm houses its client files remotely on its agency management system server, it has less hardware than agencies that keep their files on their own systems. Still, the agency upgrades hardware when necessary and is presently replacing its CRTs with flat-panel monitors and dual screens. The agency budgeted $10,000 for its 2006 technology needs, which includes the cost of an outside contractor.

Chamberlain wasn’t sure she could keep an IT manager busy, but she soon learned otherwise. Soon after Sean Cunningham began to consult, agency principals asked him to research electronic imaging systems. Chamberlain told her fellow principals that if the agency wanted to become paperless and add other electronic capabilities, they needed to hire Cunningham fulltime.

They agreed, and Cunningham became the IT manager. But he didn’t limit his work to the computer system. He took on maintenance of the telephone system, the data portion of the disaster recovery plan and the annual replacement of a portion of the agency’s hardware. He even assumed responsibility for the building’s heating and air-conditioning system. “Now I spend my time dealing with insurance matters and with our 32 employees,” Chamberlain says. “If I have problems with the computer, I tell Sean it’s broken, and he fixes it.”

4. Can your agency afford it?

When agents at Insource, Inc. in Miami discussed hiring a full-time IT person about 10 years ago, Chris Ball remembers that the economic implication was the largest concern. Until then, the agency’s office manager had handled technology needs and enjoyed it. But the firm had recently converted from one agency management system to another, and Ball says this event emphasized the need for someone who possessed more than a casual knowledge of agency automation. “We had 35 to 40 people at the time, and we knew we needed someone who could take the mantle and go forward, dealing with outside vendors for cabling, doing all the connectors, setting up computers and tying them to network,” says Ball, operations officer and partner.

Today, Insource, Inc. has more than 60 employees, including one full-time IT manager and a second person who spends part of the day dealing with day-to-day system problems. The agency scans all customer files into its agency management system and maintains its own Web site and several servers.

“We have firewalls in place, but it’s a full-time job just monitoring network challenges, such as viruses and hacking threats,” Ball says. “There’s always something that needs attention.”

You’ve heard it before: Can you afford to hire an IT manager, or can you afford not to?

Sharon Cunningham says that by the time an agency reaches $10 million in revenues, it usually has one to two people in IT roles. Agencies at this revenue level often have multiple locations, numerous types of software and everyone on the same type of workstation, “so IT needs become much more complex,” she explains.

What’s more, information compiled by Marsh, Berry and Co., Inc., shows that by the time the average agency reaches $2 million in annual revenues, it already has one employee who spends more than half of his or her time on automation. The revenue point at which the average agency has one fulltime IT professional? According to Marsh, Berry’s findings, that point is around $4.5 million.

5. How much should you pay?

Horton Insurance Group pays the newest IT assistant around $30,000. The IT manager, who oversees a staff of a half-dozen and manages the telephone system as well as all computers and the agency management system, earns more than $100,000. But Horton says many agencies pay their first IT manager a salary comparable to that of a commercial customer service representative.

As time goes on, agencies may adjust the salary to reflect the manager’s growing value. “If you find someone who’s really good, you’re going to want to hold onto him or her,” Cunningham says. If your agency does not have the means to pay more, consider sharing your IT manager with a friendly competitor. Additional work could stimulate new ideas and allow your manager to increase earnings without leaving your agency. But read on before you form any assumptions about pay.

6. What will you get?

The best news is that, once you have an IT manager, revenue per employee will probably rise, and you can use a portion of the additional revenue to pay for IT management. At Assurance, Ltd., revenue per employee has increased from roughly $150,000 to more than $187,000 in the 2.5 years since hiring an IT manager. New efficiencies also eliminated the need to add service employees as growth occurred.

“Having an IT manager has really paid off,” Chamberlain says. “It’s true that you have to spend money to make money; otherwise you won’t stay up to date or give your people the best tools to do the job. If you play cheap on one end, you’re going to pay for it on the other.”

An IT manager worth his or her salt should be able to extract new efficiencies from your agency management system. He or she should be able to design and generate reports of all types from your system, including workload tracking as well as revenues, expenditures, new business and lost business. This person should also be able to:

• Advise you on needs outside the system, such as firewalls, virus protection, networks and integration of other programs. • Create and maintain the agency’s Web site.

• Recommend and schedule equipment replacement and software upgrades.

• Research and find the best prices and products to meet your needs.

• Keep agency principals up to date on technology developments that, if implemented, could benefit the firm.

• Set up remote access to systems so that employees can work off-site. And, if your IT manager is versatile, he or she may be able to manage telephone and other equipment needs unrelated to agency management systems.

Cunningham sums up the cost/value ratio of an IT manager this way: “If this person can help you reach more prospects, market to your customers better, help you plan for the future by keeping you informed of automation changes, take an inventory of the software and hardware you have and determine when equipment needs to be replaced and help you budget for it, your agency has a good chance of increasing revenue per employee—because everyone will be working more effectively.”

Potential Pitfalls

It’s reasonable for an agency to retain outside IT help for a period of time after hiring an in-house IT manager. But at some point, you should be able to rely on your in-house professional for the expertise. This is not to say that you should expect IT people to run cable or perform other actions classified as construction. However, if you’re still falling back on an outside source for tasks and knowledge you expected an in-house person to provide, you may need to replace your IT manager.

If you’re still hesitant to hire an IT manager, even though indicators suggest that you should, at least explore hiring an outside source who’ll remove the burden from you and your employees. But be sure the selected individual or firm can meet all of your needs. Says Chris Ball, “If you’re not doing it in-house, you’d better have someone pretty qualified to do it outside.”

Here’s the stickler: If you don’t have an IT manager in-house, and you don’t have a good one outside, you may never know what you’re missing. But someone else will know and benefit—and that someone will be your competition.

Susan L. Hodges (hodgeswrites@aol.com) is an IA contributing writer.

Benchmark Your IT Muscle

IIABA’s 2004 Best Practices Study quantifies agencies’ use of IT professionals and total IT budgets according to agency size. How does your agency stack up?

Agency Revenue Average IT Employees IT Payroll Expenses IT-Related Expenses

—from IIABA’s 2004 Best Practices Study

Keep ’Em Happy

Eventual job boredom is an issue to consider before hiring an IT manager. Once he or she masters your agency management system, makes any necessary upgrades and replacements and reviews your electronic security setup, the work may be done for a while. Key to retaining an IT manager, along with the work of overseeing day-to-day operations, is your agency’s commitment to technology investment.

• Are you open to changes that may not be required, but will improve agency operations?

• Will you encourage your IT manager to keep you abreast of all developing procedures and processes that could add more efficiency?

• Will you include your IT manager in all agency meetings in which he or she could provide valuable input as well as stay current on agency developments?

The more you include IT staff in agency issues, the more opportunities they’ll have to contribute information and ideas about improving workflow and other issues.