In April 1999, one of Capital Blue Cross’s health-care insurance plans had been in the field for three years but hadn’t performed as well as expected. The ratio of premiums to claims payments wasn’t meeting historic norms. To revamp the product features or pricing to boost performance, the company needed to understand why it was underperforming. The stakeholders came to the discussion already knowing they needed better extraction and analysis of usage data to understand product shortcomings and recommend improvements.

After listening to input from the user teams, the stakeholders proposed three options. One was to persevere with the current manual method of pulling data from flat files via ad hoc reports and retyping it into spreadsheets.

The second option was to write a program to dynamically mine the needed data from Capital’s customer information control system (CICS). While the system was processing claims, for instance, the program would pull out up-to-the-minute data at a given point in time for users to analyze.

The third alternative was to develop a decision support system to allow users to make relational queries from a data mart containing a replication of the relevant claims and customer data. Each of these alternatives was evaluated on cost, benefits, risks, and intangibles.

Questions

1. What are three costs, benefits, risks, and intangibles associated with each project?

2. Based on your answer to question 1, which project would you choose?