A survey of the strategic role of information and communication technology among insurance companies in Kenya

Abstract

Capabilities and potential of technology are increasing more rapidly than ever before. Developments in IT have seen the enhancement of communication technology. The use of Internet, Enterprise Resource Planning (ERP) Solutions, Business Process Reengineering (BPR), and the common trend of outsourcing of IT services are among IT's applications in organizations' businesses. As information technology becomes more widespread, the opportunities to take advantage of a new competitive scope will only increase. The benefits of scope (and the achievement of linkages), however, can accrue only when the information technology spread throughout the organization can communicate. Information and Communications Technology therefore, has evolved in such a way that it is becoming the single most vehicle for organizations' attainment of competitive advantage. This therefore means that ICT plays a strategic role in organizations. The study was designed with the objective of determining the strategic role of information and communication technology among insurance companies in Kenya. The data that was analyzed was provided by Information Technology and Strategy managers of the respective insurance companies. Out of the forty-two insurance companies, all of which were served with the questionnaires, only twenty-eight responded by returning filled questionnaires. This formed 66.7% response rate, which the study considered suitable for analysis. The study used a semi structured questionnaire that was administered through mail to capture data from the respondents. To achieve the study objective, respondents were presented with statements describing the various areas in which information and communication technology could have a strategic role in their companies' business activities and were required to score on a 5-point likert scale the extent to which information and communication technology has played a strategic role in the respective organizations. The major findings of the study were that information and communication technology has had a strategic role among insurance companies in most of the areas. It was established that lCT play a significant role in the development of most insurance companies' business strategy. This was rated high with a mean score of 4. Other areas in which lCT was found to have a far-reaching impact are the transformation of the value chain; provision of better product/service information to the customers and creating linkages with suppliers and customers through lCT. These were also rated high with a mean score of 4. Other areas where leT was found to playa strategic role include restructuring of the companies, marketing of the companies' products, offer of services electronically, market research, tracking labour efficiency, and support to the companies' competitiveness among others. It was however noted that insurance companies have not utilized ICT to attain full strategic potential in most of the areas. Specifically, the companies lowly (mean score of 2.9 and below) rated areas such as lessening buyer bargaining powers by introducing switching costs, and creation of entry barriers to new entrants as areas in which they have not strategically positioned themselves in terms of ICT. Even in the other areas mentioned above where the companies have utilized ICT, the study noted that not all companies have strategically benefited from lCT. The study findings showed that a significant number of companies is yet to realize leT's strategic potential.