CIOs’ Jobs Get More Complicated

In the spirit of the now-notorious Harvard Business Review article, a distinguished panel of CIOs was asked, "Does IT matter?" at Insurance & Technology's Executive Summit 2003, held in Tucson, Ariz., in November. The answer of Gary Scholten, senior VP and CIO of Principal Financial Group was, "It's all about alignment. Where there's good alignment, the business doesn't see IT as just a commodity-they see it as another arrow in their business quiver."

Scholten sat on a panel of I&T Elite 8 2003 and 2002 executives, along with Linda Fraley, VP and CIO, Lincoln National Life Insurance Co., and Bill Levine, executive VP and CIO, AXA Financial. Having taken the reins as CIO of Principal Financial only a year ago, Scholten recalled being surprised by the amount of resources needed to meet regulatory challenges. From a strictly internal point of view, Principal's IT chief had focused on growing revenue, with particular emphasis on cross-selling opportunities. "Our IT has been strong within business units, but not across them," Scholten related. "So we've taken a cross-unit approach [within] a distribution focus."

AXA's Bill Levine spoke of the carrier's continued emphasis on reducing costs while maintaining an impressive schedule of product delivery. "But the big thing for IT was reengineering," Levine added, saying the insurer was reengineering services delivery, separating maintenance and development tasks, as well as more clearly defining career tracks. "We've redefined jobs and job families and made clear to people how to go from job to job and level to level," Levine reported.

Fraley said her job has changed from the past, when "we used to spend much more time re-architecting and setting standards. Today I spend more time hiring people to do that, making sure we have the right people at the table and the right technology partners." Fraley finds herself spending "a great deal of time on the business side of the house, understanding strategic direction."

IT, Fraley argued, is one of the few areas that can make a cost impact quickly. "I look at technology to see how I can staff to reduce costs quickly without a lot of pain," she explained, "so I can tell the CFO, 'We can take out $X million as soon as we need to.'"

Process management is an important way to control costs on an ongoing basis, implied Levine. At AXA Financial, he related, "we have internal project managers who run projects and have established a good track record." AXA uses the Six Sigma discipline in a variety of areas, including IT, which has a "black belt" rating.

Levine also lamented what he sees as the unwelcome burden of excessive vendor contact. "It's the 'spam' syndrome," he remarked. "I try to delegate meetings to senior vice presidents, but it's a daunting job."

Properly vetting vendors is one of the biggest challenges Fraley admits having to face. "Many calls are from vendors just beyond the start-up phase. Does [the vendor offering] fit in with our standards? What is the vendor's financial viability?" she commented. "These are not questions I can deal with in one phone call."

Fraley and Scholten were among this year's Elite 8 honorees, recognized at the Executive Summit's annual Awards Dinner. Other honorees were Joseph Z. Gauches, executive VP, The Hartford Financial Services Group; Srinivas Koushik, VP and enterprise CTO, Nationwide; Ed Leveille, VP, systems and CIO, Provident Washington Insurance; Matt Prioch, CIO, Highmark Life & Casualty Group; David J. Saul, CIO, Zurich North America; and Greg Tranter, VP and CIO, Allmerica Financial.

Real-Time: Fantasy or Reality?

Another complex concept discussed at the Summit was that of real-time computing. So far, the notion of moving the insurance process to a real-time model has been mostly fantasy. However, Piyush Singh, vice president of information technology at RLI Insurance (Peoria, Ill.), told attendees that in order to become a real-time enterprise, IT executives need to look outside of the insurance space for inspiration and best practices, citing JetBlue, Wal-Mart, GE and Amazon.com as a few companies that have made real-time business a reality. "IT can help provide strategies and direction and offer new ideas on how to do business," he said in the session "Becoming A Real-Time Enterprise: Beyond the Hype," adding, "sometimes process leadership change needs to originate in IT."

In order to become a real-time business, an organization's technology needs to be combined with "mature management disciplines" and "progressive management thinking" to turn decisions that were traditionally made by instinct into a disciplined process that analyzes real-time data, Singh said. "A real-time enterprise competes by using up-to-date information to remove delays in managing and executing critical business processes," he added. In fact, making strategic business decisions in real time will soon be a need-to-have tool, not a nice-to-have capability. "Market dynamics are changing," Singh said. "The time to react to take advantage of market shifts is continually reducing."

But, warned Singh, it is essential for technology leaders to work closely with business management to drive change. "Most real-time systems will result in a cultural shift in the way people work, so it is important for the CIO to work with the executive team to push the issues and remove cultural barriers," he added. At RLI, the move to a real-time business did not happen overnight, and is still happening today, commented Singh. To date, IT has successfully created a single point of entry for all users, "making it easier for people to use, and easier to find what they need in the system." Also, RLI is quickly moving forward with the goal of creating a single source for all documents.

Also addressing the promise of real-time, was Michael Loffa, executive VP, Swiss Re Life & Health, who contended there are a number of myths surrounding the possibilities of turning insurance companies into real-time enterprises. In fact, he noted, there are a number of immediate opportunities-many of which have been realized at Swiss Re-in areas such as "automating the processing of new business, via e-signatures and online applications; and importing MIB and MVB data electronically. At Swiss Re, this allows us to immediately and automatically approve clean cases." Loffa added, "Complicated cases do take more time, but you can take advantage of these technologies to simplify processes."

Raised Service Expectation

One benefit of a real-time strategy is improved service. While technology is raising the bar on the service expectations of customers and producers, insurance company resources are hindered by investment markets that are not likely to boom any time soon, related Matthew Josefowicz, manager, Insurance Group, Celent Communications (Boston). During the session, "Winners and Losers: What are Tomorrow's Opportunities and Who Will Seize Them?" Josefowicz urged carriers to work towards maintaining their competitive advantage-despite these challenges-by focusing on their unique value propositions.

Most successful companies do one thing very well, Josefowicz noted. For instance, some focus on a single product, wrap themselves around the customer or own a protected market. Since it's extremely difficult to be all things to all people, carriers should focus on their unique strengths, he explained.

Josefowicz also stressed the importance of enforcing the imperatives of alignment, agility, accessibility and affordability. He highlighted the necessity of aligning a carrier's organizational structure with a company's strategy. Also, he advised CIOs to implement agile systems that are flexible enough to modify products, distribution channels and business processes. These systems must also be accessible by other systems and stakeholders outside of the company, said Josefowicz, who pointed out that reduced maintenance, integration and training costs should be a priority during the technology purchasing process.

Additionally, Josefowicz advised insurance technologists to adopt the practice of asking the "Classic 6" questions of who, what, when, where, how much and why, in order to avoid project failure. The who question, for example, designates clear business project sponsors and helps to avoid projects that are executed without strong business champions.

Executive Summit 2003 sponsors included AQS, BusinessEdge Solutions, CGI, Compuware, CSC, Deloitte Consulting, Fair Isaac Blaze Advisor, Infosys, Metaserver, NaviSys, Sapiens, Selectica, Sun Microsystems, Teradata a division of NCR, and Worksoft.

I&T's next Executive Summit will take place November 7-10, 2004, at La Quinta Resort in Palm Springs, Calif. For details about Executive Summit 2004 and other I&T events, visit www.insurancetech.com.

Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio