Executive Summary

Cigna Corporation, of Philadelphia, spent eighteen months researching the options

for overhauling its IT systems before debuting the new architecture in January 2002.
(insurancetech.com) The goal was to shift this employee benefits giant from a structure
of being platform driven to one that is customer driven. This major undertaking was
largely completed with the launch of myCIGNA in July 2002, a personalized Web portal,
offered free to all its plan participants. While this entire conversion is now considered a
success, initially its introduction was a near-disaster, and one that cost Cigna millions of
dollars in lost customers.

Table of Contents
Introduction/Overview..1
High-level Description and Purpose of the Information System1
Strategies and Objectives Satisfied by the Technology.2
Users of the Information System3
Detailed Description of the Information System..4
Business Applications/Implications of the Information System.5
Information Processed by the Information System and Inputs/Outputs..6
Costs of the Information System7
Problems/Limitations of the Information System and its Implementation.7
Benefits of the Information System8
Conclusion..8

1.
Introduction and Overview
Cigna has been in the insurance business for 125 years. CIGNA Corporations
subsidiaries are leading providers of employee benefits in the United States. The
products offered fall in to the categories of health care coverage, group insurance for
life, accident and disability, retirement services and investment management. There is
also an international division. Revenues in fiscal 2002 totaled $19.3 billion, employing
thousands of people worldwide.
The IT department alone employs 3,000 people, and in 1999 the CIO, Andrea
Anania, began the daunting task of implementing a $1 billion overhaul of the entire IT
infrastructure. Many different systems were in place, some dating back to 1982, when
Cigna Corp. was created by the merging of the Insurance Company of North America
and Connecticut General. Critics suggested this overhaul was too late in coming, and in
the mid to late 90s, Cigna could have been spending its capital on infrastructure
improvements rather than on stock buybacks. With this late start, there was a sense of
urgency that would later prove to be Cignas downfall, at least in the short run. The
benefits in customer service that Cigna expected to reap from transformation not only
did not materialize but actually backfired, antagonizing members both new and old.
(CIO Magazine, March 15, 2003)

High-level Description/Purpose of Information System

The ultimate goal of the overhaul was to reduce costs and increase productivity

2.
throughout the entire organization. Management had recognized that if their business
was to grow and remain competitive, they had to streamline all of the current business
practices so the ultimate beneficiary would be their customers, who would see
improvements in every aspect of their communication with Cigna. The company was
currently being run on 15 legacy systems, and these would all be eliminated as the
entire IT function was moved to two new platforms. The goal was to have one integrated
system for enrollment, eligibility and claims processing, so that customers would get
one bill, medical claims could be processed faster and more efficiently, and customer
service reps would have a single unified view of members to accomplish that. (CIO
Magazine, March 15, 2003) Many different back-end systems had to be consolidated
into its two brand new integrated systems, one for Cignas healthcare customers and
the other for its other insurance customers.
Business Strategies and Objectives Being Satisfied
Cigna embarked on this reengineering path to achieve two competitive strategies.
Most importantly, they used innovation to make dramatic changes to the IT processes in
order to cut costs, improve efficiency within their organization and provide better
customer service. Additionally, by partnering with Yahoo! Enterprise Solutions, they
were able to launch a personalized benefits Web site called myCIGNA which
differentiated them from the competition by giving their customers more control over
their health and retirement plans on their own user-friendly, customized pages.
By improving every aspect of customer service, Cigna hoped to reap the business
benefits of market leadership, and increase in market share, while, at the same time,

3.
reducing internal costs to improve the bottom line.
Three factors influenced the speed at which these new technologies were introduced
and, unfortunately, had an extremely negative effect on the initial success of the
overhaul. There was considerable pressure on the IT department to make this transition
more quickly than was prudent because Cigna, along with other big insurance firms,
was being sued by thousands of doctors nationwide, who accused the insurers of
delaying payments to them and improperly rejecting claims. (CIO Magazine, March 15,
2003) Also, in an increasingly competitive environment, the Cigna sales team, hoping to
win new accounts, had promised that the improved customer service interface would be
running by early 2002. Thirdly, after disappointing Wall Street with poor second quarter
results, management was anxious to implement the new systems and reap the cost
saving rewards they were promised, which would improve the bottom line and please
investors. Their goal was to lay off 3,100 people and then hire 1,100, reducing the
workforce by 2,000.
Users of the Information System
The users of the new systems can be divided into two groups, employees within
Cigna, and Cignas customers. Customer data that had once been used only in the
back-end now had to be cleaned and filtered so it could be used and understood
by the customer service reps. What had been seven business divisions now had to work
as one integrated unit, using common processes to produce consistent results
throughout the organization. This eliminated the duplication of effort, or wasting of

4.
resources, that had been so common in the past. Customer service reps took the newly
transformed customer data and used it to assist customers more efficiently by being
able to access a large amount of data with a few keystrokes. Customer histories could
be easily accessed while security and privacy remained a top priority. And with the mid2002 launch of myCIGNA, customers could not only review their own healthcare plans
and activities, but also check on their retirement programs and even invest online.
Detailed Description of the Information System
Cignas IT infrastructure is supported by IBMs AS400 computers. There are two main
platforms for claims processing, PowerMHS software from Computer Sciences
Corporation, and ProClaim software. Seibel software is used to handle the call center
functions. Data warehousing is done using Visual Warehouse from IBM, and Brio
Enterprise is used to access the warehouse and handle queries and reports.
(www.visionnet.com/pdf/viscigna2.pdf) Talent Relationship Management is handled by
software from BrassRing Systems. (workindex.com)
The myCIGNA portal was launched using software and hardware from Sun
Microsystems and the portal-building expertise of Yahoo! Enterprise Solutions.
E.piphany is a customer relationship management (CRM) software package used to
support the site and deliver customized and personalized information to the members.
Other software programs were integrated into this portal, including FMA
KnowledgeTrust Today, a customizable financial planning tool, which allows Cignas
customers to adapt the financial aspects of the site to their own requirements.
As of May 2003, Cigna runs 470 LANs nationwide, supporting 37,000 desktop

5.
computer users. (cigna.com)
Business Application/Implications of the Information System
Initially, in early 2002, the migration from the old system to the new one was a near
disaster. The entire switch took a matter of minutes and the glitches were so
significant that millions of dissatisfied customers walked away, causing the nations
fourth largest insurer to lose 6 percent of its healthcare members in 2002. (CIO
Magazine, March15, 2003) Clearly, a cost advantage that management hoped to gain
was lost to this tremendous fall in revenue. The problems were varied and complex
members lost coverage when their data failed to load into the new system, ID cards
were issued incorrectly, coverage could not be confirmed for weeks, prescriptions could
not be filled. To make things worse, in their zeal to cut costs, management had called
for significant layoffs in customer service so there were not enough people available in
the call centers to handle all the irate callers. Many that were there were new hires and
did not have enough experience with the technology to be effective.
Once Cigna recognized the mistake of switching to the new system too quickly, the
process was slowed down, and subsequent customer migrations went much more
smoothly. By January 2003, many more customers had been successfully transferred,
and officials declared the transformation process a success. Claims are being handled
more efficiently now, and customers need are being met. 20 primary and secondary
service centers were consolidated and there are now just nine regional centers. By the
end of 2002, a total of 3,100 employees had been laid off as part of the reorganization.

6.
The, in January 2003, as IT efficiencies began to emerge, an additional 3,900 jobs were
cut as Cigna streamlined its sales and medical management force.
With the launch of myCIGNA, the 14 million health and retirement plan members
were given the opportunity to manage both their healthcare and their financial matters in
an entirely new way. Instead of using the telephone to get questions answered by a
customer service rep, often a slow and frustrating experience, customers could now log
on to their own customized portal and access a wide variety of information about
themselves. Cignas members can check their own claims status, find a dental provider,
fill a prescription, monitor their retirement fund and get a stock quote, all from the
privacy of their home. By giving members increased control over their own healthcare
and financial affairs, their employers, Cignas customers, can be confident they are
offering their employees a state-of-the-art benefits program, while being relieved of
some of the plan administration tasks themselves. Customer satisfaction with Cigna has
risen from 58% in early 2003 to 83% by March 2003. (CIO, March 15, 2003) All these
factors, of course, give Cigna a strategic advantage in the insurance business.
Information Processed by the Information System
All the data processed at Cigna is handled by one integrated system. This allows all
the enrollment, eligibility and claims processing to be integrated so customers get one
bill, claims can be processed faster and customer service reps can be more informed
when they are talking to members. To execute the transformation, Cigna relied heavily
on the expertise of consultants from Cap Gemini Ernst & Young (CGEY), but the quality

7.
of their input later proved to be questionable. The volume of data that is processed is
enormous and insufficient testing was done prior to the switchover. Now, there are 20
experienced in-house application developers who oversee the system and fine-tune it
as needed.
The myCIGNA portal is an invaluable tool for members. By inputting their personal
information, and setting their own preferences, they can display individualized account
information that is constantly updated for them at Cigna. For example, a sophisticated
investor does not have to plough through basic investment advice to get to the specific
information they need. A member can comparison shop for prescription drugs or
compare hospitals in their area. All this is done using a secure and private
connection, these issues being a top priority for Cigna. (InformationWeek.com)
Costs of the Information System
The original, published budget for the entire reengineering project was $1 billion. The
project has well exceeded that amount but Cigna officials have refused to say by how
much. In 2002, the company spent $33 million on severance benefits alone, and
another $32 was budgeted to build the new regional centers. (CIO, March 15, 2003)
Problems/Limitations of the Information System
While the IS at Cigna now appears to be functioning well, the initial implementation
was fraught with problems. In the Lessons Learned article in CIO, March 15, 2003,
several key mistakes made by Cigna during the migration are outlined. More testing,
closer monitoring by in-house managers and more thorough data cleaning would all

8.
have helped the project run more smoothly. There should have been more feedback
from the end users, and better training for the customer service reps. Again, a
management team more focused on the ultimate success of the project and less
focused on immediate financial gain would probably have realized a far different
outcome in the short run. Business decisions were made based on projections, rather
than waiting to see actual results.
Benefits of the System
As stated earlier, now that the system is fully implemented, and the early difficulties
have been overcome, Cignas strategic plan appears to be successfully underway. The
latest earnings announcement on May 2, 2003, surprised financial analysts and
earnings per share topped the figures for one year ago. (CBSMarketwatch.com) With
this new technology firmly in place, one of the key initiatives at Cigna now is to develop
wireless technologies so more members can have access to the data they need while
using this new, rapidly growing technology. (InformationWeek.com)
Conclusion
Early this year, Cigma commissioned a survey to learn more about how Americans
view the internet as a tool for researching health issues. Interestingly, while nearly 75%
of those polled want to use the Internet to find health-care information, only 28%
actually go online before a visit to the doctor. This discrepancy arises because
respondents said, Theres still too much data to sort through, they are unsure about
what they do find, or they want to discuss it with someone in-person or over the phone.

9.
(prnewswire.com) In a response to these and other findings, Patrick Welch, president of
Cigna Healthcare said Our challenge as an industry is to better engage, educate and
empower our members with the information and tools they need to understand their
health concerns, treatment options, quality of care and costs. (prenewswire.com) It
would seem that with the state-of-the-art IT system in place at Cigna, and the user
friendly myCIGNA site available for members, that Cigna has invested in just the right
tools to rise to this challenge.

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Frances E. Summerhill
Cigna Corporations Reengineering Project
Managing Technology for Business Strategies
BA 479
June 3, 2003