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December 2010

8 INSURANCE TECHNOLOGY LEADERS WHO ARE CHANGING THE GAME:

INSURANCE & TECHNOLOGYS ELITE CIOS REPORT 2010
With growth back on the agenda, CIOs increasingly are being charged with driving technology strategies that prepare their firms for the future and with developing innovative solutions to improve the customer experience. Insurance & Technologys 2010 Elite 8 honorees are some of the most effective and innovative senior technology executives in the insurance industry. Developments that might frustrate or discourage some executives including the new emphasis on a personalized, interactive and real-time customer experience; the expansion of distribution channels; new security threats; and more complex regulation clearly are inspiring our Class of 2010. Whether they are engaged in testing new ways to support complex transactions, developing innovative yet reliable channels for driving growth, or simply getting more out of IT budget dollars, the executives profiled in this report represent a positive and encouraging trend in insurance IT management.

I&Ts 2010 Elite 8 insurance technology leaders are improving the customer experience and driving technology strategies that support growth all while keeping costs in check.

IN THIS REPORT
1 Part Preparation, 2 Parts Innovation: CIOs are driving growth strategies with innovative, real-time solutions. .....................................................2 The Executives: Kathy Owen, Unum ...........................................................4 Ron Boyd, Midwest Family Mutual.................................6 Jay Levine, BCBS of Minnesota .....................................8 Peter Atwater, Guardian Life.........................................10 Richard Connell, Selective Insurance.........................12 Mark Showers, RGA Reinsurance ...............................14 Kelly Hall, Kentucky Farm Bureau ...............................16 Greg Schwartz, USAA ....................................................18

ELITE 8 2010

1 Part

Preparation, 2 Parts Innovation

After two years wandering the desert of financial malaise, insurance carriers are looking to their CIOs to drive strategies that prepare them to grow in a consumer environment that increasingly demands innovative, real-time solutions.

I By Nathan Golia I
FTER NEARLY TWO YEARS, prognosticators are beginning to declare that the economic clouds that have covered the insurance business and just about every other industry vertical are clearing. Despite the fact that the country continues to struggle with persistent unemployment, most observers believe a tepid economic recovery is under way.
Most companies have a sense of having gotten through the worst of it, says Matthew Josefowicz, director of insurance at consultancy Novarica. [Companies] know where the bottom is its not going to get any worse and [are planning to] go out and steal share from people who are not as prepared. According to Josefowicz, various industry sectors face different realities as the dust settles. The P&C side, he says, is being hammered by price pressure and competition. Meanwhile, life companies face a public that is more averse to investing than ever before. Some life companies are seeing this as an opportunity to take share from older companies that cant adapt, Josefowicz notes. encouraging growth, asserts Jamie Yoder, managing director of the insurance practice at Diamond Management & Technology Consultants. Theres more of an emphasis on the CIO as the innovative driver. Carriers are looking for people who can get a lot out of IT efficiency and effectiveness and drive more growth of the business, he says, adding that insurers are looking for CIOs who understand consumers service expectations and preferences. Customers are using information and technology very differently, Yoder explains. There are differences in buying behavior and delivery, as well as how products and services are found. The CIO ... [has] to see across the organization and balance those things. Balancing the need to evolve carriers existing infrastructures to meet these new demands with the need to develop innovative solutions, however, can be difficult for CIOs, according to Yoder. Theyre

Catalyst for Change

In this recovering market, insurance carriers increasingly are looking to their CIOs to provide more strategic leadership and keep costs down while

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Dueling Roles
Is the CIOs job to wring efficiencies out of processes or to drive business innovation? Both, according to Jamie Yoder, managing director of Diamond Management & Technology Consultants insurance practice. At first glance, Diamonds third annual Digital IQ study (which surveyed 724 senior business and IT executives, including 47 from the insurance industry) might be troubling to senior IT executives. Seventy-five percent of survey respondents said they believe the CIOs primary role is to improve business processes or improve IT, rather than create new products and services, reach customers or improve customer service. The study also found that a significant portion of the IT budget 30 percent or more was not under the CIOs control at more than half of the surveyed companies. But that doesnt tell the whole story, insists Yoder, who points to another survey finding: More than half of the respondents said they look to their CIOs to be innovative thinkers who can apply creative solutions. Its not so much that companies arent looking to their CIO to manage some of the basic value of IT; they also expect them to be more of a futurist and a strategist, Yoder explains. The role can shift between being a strategist to being an operator, he adds. But people are looking for leadership right now to drive through the changes that are coming. N.G.

trying to build out of a very sizable legacy environment. If theyre having to spend so much time building the efficiency and getting the tech environments up to pace, theyll lose out on being a key agent in terms of driving the business design changes that are happening, he explains. You cant be seen as a barrier to the innovation; you have to be a catalyst, Yoder continues. How have you helped move it more quickly? One way effective CIOs are promoting innovation is by applying emerging channels to foster enterprise collaboration, according to Karen Pauli, research director for insurance at TowerGroup. By leveraging social media and mobility strategies, workers can quickly spread best practices across lines of business and office locations to improve all aspects of the enterprise, she indicates. When I worked for carriers, I led IT development projects by putting together a task force, and it was a three-week process just to get that together. You cant conduct business that way anymore, Pauli explains. Its got to be real time. When you have a great idea at 3 a.m. and you want to share it, you can put that out there to whatever communities youve developed, and by morning youve got people giving you ideas on how to deal with it.

Thats very uncomfortable for carriers, Pauli admits. Carriers have got to start employing analytics to assess whats happening out there in the consumer world so youre able to sift through multiple sites and areas of information and aggregate it so you can change your business processes, she continues. Its not just marketing; its about product and price.

Silver Lining at the Core

While insurance carriers finally are looking toward the future as they emerge from the recession, many vendors already were looking forward during the difficult times. An underreported consequence of the economic downturn, according to Craig Weber, SVP of the insurance practice at Celent, is that vendors were able to focus inward on research and development of new solutions. Tech providers have had the time to respond to concerns from CIOs, especially in terms of out-of-the-box functionality, Weber relates. As a result, CIOs now are more confident that they can update their core systems and are increasing spending in those areas. There was definitely, overall, a slight hesitation in the market to upgrade core systems, Weber says. We spent a couple years in a holding pattern, and that wasnt such a bad thing, actually. Now that insurers are back in the spending mode, the amount of choice out there is very good, and that bodes well for the success of these projects. But its not just about being armed with a budget increase and grabbing solutions off the shelf, Weber cautions. Effective CIOs need to blend vision with effective delivery, he notes, stressing that its not just about having a single, huge idea as long as you are very effective at implementing your small ideas. In a growth environment, especially after a major downturn, companies and employees are looking to their CIOs to demonstrate leadership above all else. When you walk into someplace where an Elite 8 CIO is doing their thing, theres a level of excitement and passion for effective use of technology, Weber acknowledges. Thats how you recognize a job well done. I Page 3

Next-Generation Collaboration
And by getting out ahead of the curve with collaboration technologies, Pauli adds, CIOs can prevent headaches down the road after all, generational turnover is only going to encourage more collaboration in this way, she says. If youre going to bring in workers under the age of 30, thats how they think, Pauli explains. Its better to set it up internally versus letting everybody create offline, unsanctioned communities which they will naturally do. The growing use of collaborative technologies in the enterprise represents a larger trend, according to Pauli: Good CIOs increasingly are taking their cues from the consumer world, which is influencing the insurance business in more ways than just marketing, she contends. December 2010

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ELITE 8 2010

Managing Through

Change
En route to becoming Unums Global CIO, Kathy Owen has overseen game-changing technology improvements through several M&As.

I By Anthony ODonnell I
EFLECTING ON A CAREER that began when she joined Unum (Chattanooga, Tenn.) predecessor Provident Companies in 1975 right out of college, Kathy Owen concludes that the best preparation for senior leadership has been the opportunity to manage large-scale change. If thats true, she was fortunate in her choice of employer.
During the course of Owens career, the company has gone through many mergers and acquisitions. M&A activity peaked in the 1990s, during which Provident acquired the group medical and dental business of Healthsource, only to sell it to CIGNA (Philadelphia) two years later; purchased independent subsidiary GENEX; and completed the acquisition of Paul Revere Life Insurance Co. in Worcester, Mass. Then, in 1999, Provident Companies merged with Portland, Maine-based Unum to form Unum Provident. After the companys rebranding as Unum Group (more than $10 billion in 2009 revenue) in 2007, Owen was named CIO of U.S. operations. She became CIO of the carriers newly minted Global Business Technology (GBT) organization in August 2010, making Owen IT head not only of Unum U.S. but of the carriers enterprise operations, including Colonial Life and Unum U.K. Owen says her early days as a programmer at Provident were characterized by incredulity that someone would pay her for having so much fun. Of course, that appeal wears off and something has to really draw you in, she admits. For Owen that hook was a large field automation project that, when it was undertaken in the early 1980s, was one of the first of its kind. It was new technology and gave me a chance to see first-hand how technology could transform a particular business operation, she relates. It was an opportunity to be directly engaged at the point of sale and to understand what went into bringing business in-house. A few years later Owen faced the challenge of taking responsibility for a legacy policy administration replacement initiative. That taught me ... how important it is to have alignment with all the stakeholders and how actively change has to be planned and managed, she says. It was a defining moment for me. Owen also points to her M&A experience as shaping her managerial acumen. With a stroke of a pen, you have lost all your organizational presence; you ... have to requalify yourself, she says. Information is scarce, ambiguity is abundant and there are extremely high expectations. Such times show the importance of personal resilience and decisive leadership. Owen gleans another big lesson from the dot-com era, during which demand for IT professionals was high. We had had very low attrition rates, and they increased exponentially, Owen recalls. That taught me that you can never take anything for granted, and it reinforced 2010 Insurance & Technology, Reproduction Prohibited Page 4

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that technology leaders have to make an investment in workforce strategies to ensure that we have the right level of employee engagement.

Strength in Diversity
Communication and collaboration characterize Owens approach to leadership and engaging IT professionals. She is a proponent of teamwork that emphasizes strength in diversity of talent and opinion. You have to know your own limitations and tap into others abilities to compensate for weakness in any area, she counsels. Its also exciting ... where team members can see and make use of each others strengths. That kind of teamwork came together on a grand scale with the development of Simply Unum, the companys integrated product and service platform, which launched in August 2007. It was an example of uniting large numbers of people around one very specific goal and blending new technology with existing technology to accomplish something wed never done before, Owen says. This was the initiative where I saw all of the component parts come together in the most successful way. The success of Simply Unum has led to its expanded use across the enterprise, Owen reports. We have continued to build on the platform and added other products, including an enhanced disability offering that will enable more flexible funding mechanisms for employers, she says. Next for Simply Unum is what Owen calls the significant extension of the platform to the U.K. market. In this respect, Unums new GBT is aligned with the companys growth trajectory. Its a logical evolution, and one very much aligned with corporate objectives to leverage the intellectual capital and technology capabilities as best

You have to know your own limitations and tap into others abilities to compensate for weakness in any area.
we can to help the entire corporation, Owen explains. The GBT provides a tight organizational context for uniting aspects of Unums enterprise technology capabilities, according to Owen. It brought together all of the business functions that supported delivery and gave us a great deal more business knowledge, she says. It has helped us think about how best to deliver what we need to from a more global perspective. Unum has isolated all of its production and maintenance activities within one group, resulting in a 50 percent increase in system availability in summer 2010, Owen reports. A decline in production issues in turn led to an increase in productivity of more than 10 percent. Owen says the IT organization now operates on a ratio of 60/40 development to maintenance. The resulting reduction of spend on maintenance allows us to reinvest into capability development, she notes. That reinvestment is reflected in work undertaken at Unums Carlow, Ireland, development facility, which was established in February 2008. We opened up that facility as a contingency to workforce challenges we see down the road, Owen explains, adding that Unum plans to grow the facility, which now has 60 employees, over the next five years. The Carlow development center also has a leading role in Unums new Innovation Center. Formally launched in 2010, the Innovation Center serves as a catalyst for transformational opportunities, helping link business planning and development to IT strategies, according to Owen. Its another way were providing a path for innovation that aligns with where the business is trying to go, she says. I Page 5

KATHY OWEN
Unum SVP and Global CIO
Size Of iT ORgAnizATiOn: 1,500 full-time
equivalents.

iT BuDgeT: Approximately $300 million. CAReeR: Owen Joined Unum predecessor

Provident Companies in 1975 as a programmer. She has held numerous leadership positions in the organization, including SVP of IT Business Applications, and became SVP and CIO in 2007. Owen also was named head of Unums Global Business Technology organization in August 2010. eDuCATiOn: B.S. in Biology from Tennessee Tech University. HOBBieS/PASTimeS: Travel, reading, crossword puzzles, home improvement and knitting.

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Elite 8 2010

Where the

Buck Stops
Midwest Family Mutual CEO Ron Boyd has grabbed the reins of the P&C carriers IT strategy, creating a future-focused, innovative organization with a heavy cloud presence.

I By Nathan Golia I
S CEO OF REGIONAL P&C insurer Midwest Family Mutual, Ron Boyd takes a hands-on approach to developing the companys technology strategy. According to Boyd, this demands adept management of the companys resources, which in turn requires a view of the broader insurance and technology markets.
We have to wear a lot of hats, Boyd says. Im a good [technology] user and a good listener. I know what can work and what cant work in an organization, and were large enough risk takers that were willing to try stuff. In fact, Boyd, a longtime client of Montreal-based CGI, recently led Plymouth, Minn.based Midwest Family Mutual ($80 million in 2009 revenue) through the implementation of the IT services firms Edge product, a web-based policy and claims suite, as a beta client. Noting that the carrier went live on Edge in December 2009, Boyd stresses that the new system has vastly enhanced the carriers relationship with its agents. Were strictly an independent agency company; we dont do any marketing directly to customers, he explains, acknowledging that the companys agents probably didnt have a high opinion of Midwest Family Mutuals website before the Edge implementation. For example, the insurer could not endorse new business online, according to Boyd. The key to the technology that we have right now is that our agents and our employees are on the same system, he adds. Theres no different view. Given the economic crisis that raged during the time Midwest Im a good [technology] user and a Family was conducting the implementation, Boyd says, he is par- good listener. I know what can work and ticularly proud to have rolled out what cant work in an organization. the new system, and he expects the company to reap rewards from the deployment soon. We knew we needed to do this its for the long term, he comments. If we hadnt gone through this downturn in the past two years, Im convinced wed be up $7 million or $8 million more in premium rather than flat or no growth. But Boyd shares credit for the decision to pursue the new platform. He says he often consults with department heads, including those for underwriting, marketing and accounting, for decisions both related and not related to technology. Technology decisions are handed over to an IT director, who works with a staff of six, for implementation. Im a buy-versus-build-type guy, Boyd notes. Were not large enough that we can develop the software we bought from CGI off the shelf. [Buying] provides much more value on a much faster timetable than we could develop on our own. (continued on next page) 2010 Insurance & Technology, Reproduction Prohibited Page 6

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Midwest Family had previously leveraged the CGI relationship from an earlier implementation to deploy the vendors INSideOUT policy and claims system in 2001, using Ft. Lauderdale, Fla.-based Citrix Systems to access the platform remotely, Boyd relates. (The new CGI platform eliminates the need to log in via Citrix, he notes.) The goal of the initial INSideOUT deployment was to move the carrier to a more cloudbased environment, with less staff located at a smaller headquarters. The move earned Midwest Family accolades and Boyd a slot as one of Insurance & Technologys Tech-Savvy CEOs in 2008 and continues to pay dividends, both in terms of environmental friendliness and employee productivity. We see our office as located more in the cloud rather than in Plymouth, Boyd says. There are some pluses of collaboration that you get in that office environment, and you can miss that. But you have to be intentional about using the tools that are out there, like

GoToMeeting [Citrix], VOIP and instant messaging. Robust collaboration enabled by technology, therefore, is a hallmark of Midwest Family, adds Boyd, who notes that Edge features instant messaging capabilities. In addition, Boyd says, social networking tools have helped the company keep its agents up to date on new product developments. Were doing much more with our agents so they know what the hot deals are, where the product development is coming from, where the next opportunity is from a sales perspective, he says. But with the ultimate customer, were not doing enough of that, and thats probably where were heading next. In the meantime, as Midwest Family moves further into the cloud with the web-based Edge system, Boyd again is reevaluating the firms physical facilities strategy. When the company moved its headquarters from its original 20,000-square-foot office in Minnetonka to the current 4,000-square-foot facility in Plymouth, it decided to make Plymouth its location for backup servers, Boyd relates. The carriers primary servers continued to be located at web hosting services provider US Internets Minnetonka facility. But if a catastrophe were to affect the area, both Minnetonka (which is well backed up, according to Boyd) and Plymouth, due to their proximity to one another, are likely to be affected, he concedes. As a result, Were thinking seriously about moving our Plymouth location to other US Internet sites in Kansas City, Des Moines or Milwaukee, Boyd reports. Were always looking at ways to improve our disaster recovery strategy, though were quite happy with what we have now.

Technology Is as Technology Does

Boyd has been in the insurance business for more than 25 years, and he is well aware of how the market changes with technological advances. He notes with pride that hes been able to guide Midwest Family through three different CGI implementations that make the company more efficient and lean. Our expense ratio as a company is down in the 25 range, he says. That rivals a lot of the largest insurance carriers in the nation. We stay close to our customer, and technologys been a big piece of that action. True to that tradition of technology innovation, and like many property and casualty insurers, Boyd sees the potential in mobile to help Midwest Family acquire new customers and retain existing ones with improved speed to market. Weve had discussions about how we could implement mobile with our employees in the field, he explains. Speed sells insurance, and not much is done across the kitchen table these days, Boyd continues. [Consumers] can go to the Internet and buy [insurance]. Making sales at the other opportune times is something were always looking at. I Page 7

RON BOYD
Midwest Family Mutual CEO
Size of iT oRGANizATioN: 6 employees. iT BUDGeT: $2.5 million. CAReeR: Boyd is a long-time veteran of the insurance industry. He joined Midwest Family Mutual as COO in 1991 and was made CEO in 2000. Previously, he served as president of Norwest Insurance Minnesota (Minneapolis) from 1988 to 1991, and as VP of Continental Western Insurance in Des Moines, Iowa, from 1974 to 1988. eDUCATioN: B.S. from Drake University (Des Moines) with a dual major in insurance and management. HoBBieS/PASTimeS: Boyd has been an instrument-rated pilot since 1994. I fly some business and some pleasure, he notes.

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Elite 8 2010

Up to the

Challenge
Hired to be a partner to the business, SVP and CIO Jay Levine is modernizing BCBS of Minnesotas IT organization and transforming the carrier into a customer-focused enterprise.

I By Katherine Burger I
HE PHRASE May you live in interesting times is intended as a curse, but thats not how Jay Levine sees it. As SVP and CIO of Blue Cross and Blue Shield of Minnesota, the states largest health insurer with 2.7 million members, Levine is thriving in what are probably the most interesting times the health insurance industry ever has experienced. And to help the Eagan, Minn.-based company take advantage of the changes wrought by healthcare reform, he is leading a complete transformation of BCBS of Minnesotas IT organization that affects everything from its core systems to its sourcing models to its culture.
Its a fairly intense job, Levine concedes. Any time youre in a market so thoroughly undergoing change, its a great place to be if you love change and I do. Its a very exciting time, in spite of, or because of, the challenges. When Blue Cross and Blue Shield of Minnesota ($2.8 billion in assets as of Dec. 31, 2009) CEO Patrick Geraghty hired Levine in November 2008, however, it was obvious to both executives that the company would need to evolve dramatically in order to respond to the looming changes in the healthcare business, and the IT organization was where much of Stay connected to the business. that change would have to occur. Historically, CIO jobs were back-office It is absolutely essential not to bury jobs. The vision for this job was to be much yourself in the back room. more of a strategic partner, recalls Levine, who previously oversaw compliance and analytic solutions for financial services firms as EVP of product development/CTO of Wolters Kluwer (Minneapolis). I was hired [by Geraghty] with the expectation that I would be a full member of the executive team setting the strategy for the company, making sure our technology strategy was part and parcel of how we deliver services and products to our customers. This mandate meant not only addressing ongoing demands to reduce the costs of health insurance administration and IT operations, but also transforming BCBS of Minnesota into a more responsive, customer-focused organization. The result has been a multimillion-dollar legacy transformation effort to make us more nimble and to bring us closer to a more real-time B2C [business-to-consumer] environment from what historically was a B2B, large group, batch environment, Levine reports.We really want to make sure any investments in IT focus on the member and provider experience. Our goal is to make all transactions frictionless and really get to a world-class e-commerce environment. According to Levine, his organization is focused on two main areas: customer-facing systems, or portals; and transactional systems, including claims. BCBS of Minnesota partnered with Atlantabased Connecture on its portal modernization initiative, which started in 2009 with the carriers broker/distribution and individual channels and is now about 50 percent complete. Weve had great uptake on the consumer side, Levine says. Between 25 and 30 percent of individual transactions

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are done through the portal. On the provider side, he adds, the carrier is moving off of a set of proprietary portals. It has taken an equity stake in Availity (Jacksonville, Fla.), which along with doing our clearinghouse transactions also provides portal services to our provider community, Levine reports. He expects both portal initiatives to be completed in 2011, while the transactions/claims modernization program is likely to run until 2014. That project includes an infrastructure upgrade to enable compliance with the HIPAA Version 5010 EDI mandate for electronic healthcare transactions that the government will impose

JAY LEVINE
Blue Cross and Blue Shield of Minnesota Senior Vice President and CIO
Size of iT STaff: Approximately 500 people. Career: Prior to joining BCBS of Minnesota in November
2008, Levine was EVP of product development and CTO for Wolters Kluwer Financial Services (Minneapolis). He also served as VP of software development for the Thomson Corp. eduCaTion: B.S. in Computer and Information Sciences from the University of Maryland; Masters of Science in Information Systems from George Mason University; M.S. in Management of Technology from the University of Minnesota. HoBBieS/PaSTimeS: Levine says he is a stereophile fanatic. He particularly enjoys listening to jazz vocalists. Levine also owns and rides a small stable of motorcycles.

in 2012. But, according to Levine, The most important piece is migration off our proprietary claim system, which has been in-house about 25 years, to a set of managed application providers. NASCO (Atlanta), a Blue-owned utility, will take on BCBS of Minnesotas commercial book of business, and King of Prussia, Pa.based TMG Health, a BPO-managed application provider, will handle the companys government book of business (Medicare, Medicaid and related programs). That was a build-versus-buy decision, Levine relates. The way to get the best service and to meet the continuing [government] mandates was to partner with someone who does this on a scale basis for a living. BCBS of Minnesota will continue to handle claims adjudication and processing, but, The systems themselves are maintained [and] managed by a third party. Under Levines watch BCBS of Minnesota also has embarked on some limited outsourcing of variable development and maintenance activities related to the legacy modernization. The companys two strategic partners, he says, are IBM Global Services (Armonk, N.Y.) and Cognizant (Teaneck, N.J.). The IT organization, which primarily is a Java/IBM shop, will continue to run and support anything that touches our members or distinguishes us, Levine emphasizes. This includes analytics and informatics, financial management, customer service, and call center and health management. According to Levine, the company primarily partners with Cary, N.C.-based SAS as its analytics tool provider and with Teradata (Dayton, Ohio) for the data warehouse infrastructure.

Eye on the Ball

Two years into his efforts to modernize IT and transform the technology leadership and culture at BCBS of Minnesota, Levine is clear about what it takes to successfully execute these kinds of initiatives. These are massive programs, ... into the hundreds of millions of dollars. These are game-changing efforts, he points out. You cant take your eye off the ball. I am deeply involved at a detailed level. At the same time, Levine advises, Stay patient. Big change like this takes a long time. Another requirement, according to Levine, is to stay connected to the business. It is absolutely essential not to bury yourself in the back room. Accordingly, Im really trying to get my [IT] leadership ... to become more business managers with a technology background and a little less pure technology delivery and operations people. They really needed to step up their collaboration with their business partners, he says. But, With collaboration comes transparency, Levine adds. And this requires another cultural change, he notes: [giving] people ... the sense of security that its OK to be completely transparent so that we can get the best collaboration with our business partners possible. I December 2010 2010 Insurance & Technology, Reproduction Prohibited Page 9

Elite 8 2010

The

Analytical
Approach
As CIO of Group Insurance at Guardian Life, Pete atwater leads by example in fostering an environment where smart innovation is rewarded.

I By Nathan Golia I
ETE ATWATER, CIO Group Insurance for New York-based Guardian Life Insurance ($7.7 billion in 2009 revenue), initially arrived at the University of Tulsa, from where he graduated with a B.S. and M.B.A. in information systems, as a psychology major. So its not surprising that he understands the value of human capital in driving successful IT departments.
The project workload is typically the priority, and its typically very intense. Taking time out of that is not always a first instinct, Atwater says. Its always a challenge for CIOs and other business leaders to spend enough time to develop their direct reports and ensure that those direct reports develop the people below them as well. The ability to put people in the right jobs and ensure that the teams are engaged and have a good sense of their interaction with the business is important. True to his ideals, Atwater has a reputation among the 200 employees in Guardians IT department for being a strong, fair leader. A major part of this, he insists, is putting team members in a position to sucGuardian Life ceed. When Guardian was looking for ways CIO Group Insurance to manage its IT expenses, for example, Atwater challenged his staff to come up Size of iT orGaNizaTioN: 200 employees. with solutions. As a result, one of the most iT BudGeT: $25 million. effective solutions came not from the top Career: Atwater joined Guardian in June 2007 down, but from the bottom up, he says. as the CIO for Group Insurance after a 15-year stint One of our developers looked at the at GE. Immediately prior to joining Guardian, Atwater way some mainframe systems were workserved as CIO of the employee benefits group at ing, and by making some changes to just a Genworth, which was part of GE until 2006-2007. couple of high-transaction modules in our eduCaTioN: B.S. and M.B.A. in Information [custom-built, proprietary] claims system, Systems from the University of Tulsa. created some significant headroom in our HoBBieS/PaSTimeS: An outdoor enthusiast, mainframe that allowed us to defer adding Atwater enjoys golf, fly fishing and running but capacity and upgrading it, Atwater more often than not, his are dog-day afternoons: explains. That was a really nice win. My wife has a soft spot for Labs that need to be That initiative also demonstrates how adopted, he says. Im trying to hold the line at four. attuned Atwater is to the other three areas

PETER ATWATER

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One of the CIOs jobs is to work to create that view of IT as an enabler.

of challenge, beyond human resources, that he says he has found in all of the IT organizations that hes been a part of: strategy, level of IT spend and the perception of the department. Making sure your objectives as CIO are aligned with the business objectives of the company sounds trite, Atwater comments, but its always challenging, particularly in complex businesses. He adds, You need to be agile, flexible and available to support business needs. A lot of the IT work we do supports product development. ... The ability to get products to market quickly is a key driver for us. By keeping the IT department approachable and aligned with the business objectives of the wider organization, Atwater notes, he hopes to prevent too much shadow IT work from being done. Todays non-IT employees have a higher level of technical acumen than in the past, and it can be tempting and easy for these employees to create workarounds that increase business risk in the short term, even if in the long term they can be developed into a workable solution, he asserts. In most insurance companies theres a mixed perception of IT, he says. One of the CIOs jobs is to work to create that view of IT as an enabler, one that creates competitive advantage, whether its through that call into the help desk or engagement on a business problem.

At the same time, he adds, he is leading an initiative to improve the renewal infrastructure and standardize the process across regions so that information about a renewing plan is more accessible to underwriters. Were just wrapping up a major period of investment in our platforms to enable a better customer experience, Atwater says. Online enrollment is a real focus for us. We look at it as a win-win-win for the employee, employer and ourselves. Among the benefits, according to Atwater, online enrollment reduces the amount of paper in the carriers system. It also enables the company to better communicate its value proposition and helps increase participation rates, he adds. Smaller companies like it because they might have little or no human resources department, and larger companies expect that their insurance partners will have the capability, Atwater says, explaining that receiving enrollment data electronically allows the company to pre-populate some fields, reduces cycle times and increases accuracy. Guardian also launched a website for employers and brokers, About Employee Benefits, this year. The site includes proprietary research reports, legislative updates, case studies, interactive tools, videos and tips on simplifying the enrollment process for employees. An extension of that site for consumers, the Life and Disability Insurance Explorer, aims to help employees determine their coverage needs in a post-healthcare reform world. Weve put a lot of effort into the content we put in front of the employees to make sure its understandable and clear, and we think we have a very good online enrollment offering, Atwater says.

Balancing Act
Many organizations have focused on return on investment recently, and Guardian is no different. Atwater says he focuses on ensuring that, over time, IT expenses will grow more slowly than business revenues. He prefers a patient approach to adopting new systems and works to balance a desire to innovate and modernize with an eye toward cost control. Im not a fan of platform replacement, he says. I would prefer to build around and ultimately migrate. The big conversion projects are often hard to justify from an ROI perspective. As such, Atwater is taking a cautious path to moving applications to the cloud. He reports that Guardian is using software-as-a-service platforms for HR ticketing and purchasing. But true to his analytic nature, Atwater still is taking a wait-and-see approach. Cloud is a great lever to be able to pull to be able to get that flexibility, speed to market and expense savings, he acknowledges. But its unrealistic to think that major portions of a large companys IT infrastructure will be migrated to a cloud in a short timeframe. I Page 11

A Win-Win-Win
Guardian has rolled out a number of online tools over the past year designed to make its offerings clearer and more easily available to its group life clients employees. Online self-enrollment was kicked off in August 2009 as part of the companys Guardian Anywhere portal. Though originally only renewals could be processed online, recently the capability was extended to new customers as well, Atwater reports. December 2010

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Meaningful

Impact
Over the past decade Senior EVP Richard Connell has driven the modernization of Selective Insurance Company of Americas systems, from infrastructure and core systems to agent-facing technology and underwriting capabilities.

I By Anthony ODonnell I
EFORE JOINING BRANCHVILLE, N.J.-based Selective Insurance Company of America in 2000, Richard Connell had held multiple senior technology positions at Aetna (Hartford), where his titles included VP of information systems and divisional CIO; and Liberty Mutual (Boston), where he last served as chief technology officer. Connell says he took interest in the rural Northern New Jersey-based P&C insurer in part because of its strong management team. But, he adds, he was especially attracted by the opportunity to achieve discernible, meaningful results.
The IT problems had both scale and complexity, and the size of the company was such that there were resources to actually solve those problems and yet it wasnt so big that you couldnt see the direct impact, Connell explains. It was a good balance, as opposed to a very small company or a very large company, like the two Id worked in for most of my career. Currently Selectives (more than $1.4 billion in 2009 net written premium) senior EVP and chief administrative officer and still responsible for IT Connell was brought in initially as SVP and CIO to review Selectives systems and chart a course for transformation. In the intervening decade, he relates, his technology team has Always figure out what technology is met every objective it has set and has rebuilt the companys IT capa- right for your business problem at the bilities within a functional hierartime, rather than the other way around. chy, ranging from infrastructure, core applications and agent-facing technology to information management and analytics for decision-support. Connell believes that the successes his technology organization has contributed are due largely to tight alignment to business strategy. My job was to influence business strategy to a certain degree, but more to understand it and then look to see how technology could impact the success of that strategy by working with the business areas implementing it, he says. I looked at it as a partnership role. The other critical factor, Connell insists, is a great team. The key to success is to get great people and build a great organization. You then set a direction and let them go at it, he says. All of our accomplishments are because we have a great organization that we built over time, Connell continues. There were some great people already here; we brought

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according to Connell. By early 2006 IT had completed a similar rebuild of the insurers personal lines and surety business policy admin systems. We built the front ends and all of the web-based logic and integration with agency systems, Connell elaborates. The rating engines themselves were commercially available applications that were already in place. Following the web-enablement of its policy administration systems for agents, in 2006 Selective launched its xSELerate agency integration platform for agents for distribution partners that prefer to work through their own agency management systems, Connell relates. XSELerate accepts data from agency management systems, then streams real-time quotes back, handling any consequent transactions, he explains. some great people in, matched our objectives to the business strategy, implemented best practices that fit our size and type of organization, and then expected results to follow and that is, in fact, what happened. Among the initiatives driven by Connell in his first few years at Selective were infrastructure and corporate systems improvements. In 2001 Selective implemented Microsoft Exchange to replace a legacy e-mail platform, and by the end of 2003 the carrier had implemented Microsoft B2B infrastructure and replaced its HR, general ledger and other corporate applications. The main focus of Connells team during the first half of the 2000s, however, was the creation of systems to better support the carriers exclusively independent agent distribution force. Our strategy was around building great relationships with agents and using technology to make it easy for them to do business with us, Connell recalls. It was about agent servicing, policy administration and billing, as well as integrating our policy administration technology with our distributors agency management systems. Selective hit its first major milestone in 2004 with the in-house-developed rebuild of its policy administration system for commercial lines which represents about 85 percent of the carriers business,

An Intelligent Enterprise
While Selectives agent-related initiatives were nearing maturity, Connells organization began working on the Knowledge Management Initiative, which sought to develop an analytics-rich reporting and decision-management environment, he says. The initial phase of the project included the build-out of new data warehouses for the carriers commercial, personal and surety business, along with web-based reporting capabilities. A second phase focused on the implementation of predictive models to support book-ofbusiness analytics. Concluded on time and on budget in 2008, the initiative has given Selective the ability to refine the profitability of its underwriting by analyzing the performance of risks over time, Connell asserts. These advanced capabilities exemplify Connells cautiously aggressive technology philosophy. Ive always looked at being a fast-adopter rather than leading-edge, he relates. The other maxim he lives by is: Always figure out what technology is right for your business problem at the time, rather than the other way around. The successful CIO, Connell adds, takes three things into account: First, you need to understand the business; second, you need to understand where technology is and how it can be applied to business; and third, you need to determine what constitutes best practices for the particular situation that youre in. The IT organization now is sun-setting legacy business intelligence systems superseded by the Knowledge Management Initiative a process that will be completed in 2011. This reduces our cost structure and fosters smoother operation for the business, Connell says. With the Knowledge Management Initiative behind it, Connells organization now is turning its attention to end-customer servicing. Were starting to build selfservice capabilities so that we can go to the end customer in the name of the agent, he relates. The idea is not to bypass the agent but to reach the customer on the agents behalf through co-branded portals. I Page 13

RICHARD F. CONNELL
Selective Insurance Group Senior EVP & Chief Administrative Officer
CAReeR: Connell joined Selective in 2000 as CIO.
Previously, he served as Liberty Mutuals VP and chief technology officer, beginning in 1996. Earlier he was CIO of Seguros Monterrey Aetna in Mexico City and VP of IT for Aetna Life and Casualty. eDuCAtiOn: B.S. in Business Administration from Central Connecticut State University. HOBBies/PAstimes: Family time, running, biking, skiing and photography.

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A Big-Company

Vision
RGA SVP and CIO Mark Showers brings a large-company perspective to rapidly growing RGA Reinsurance.

I By Anthony ODonnell I
ARK SHOWERS, SVP and CIO of RGA Reinsurance, acknowledges the stark differences between his current job and his last, as CIO of agribusiness giant Monsanto. The match between Showers experience and the Chesterfield, Mo.-based reinsurers needs, however, was enough to bring him out of retirement in 2009.
Once you strip off the manufacturing/logistics/supply chain piece, [Monsanto] is a knowledgeworker, technology innovation-driven company, Showers comments. Throughout my career Ive been associated with R&D in manufacturing; in this case, the innovators are actuaries and underwriters rather than scientists, but there are many analogies and similarities. At Monsanto, Showers presided over a much larger technology organization with approximately 1,500 full-time equivalents and a budget of more than $100 million, as opposed to the approximately 200 FTEs and a budget not exceeding 1 percent of the companys annual revenue that he currently oversees at RGA (approximately $7.1 billion in 2009 revenue). But even in this regard, Showers notes, his experience is a plus. RGAs roots go back to 1973, with the founding of General Americans life reinsurance division. In 2000 MetLife acquired General American Life Insurance Co., along with its majority ownership position in RGA. In the decade since then, RGA has evolved from a single-line, exclusively North American company with $55 million in life reinsurance in force to a Fortune 500, multiline company with operations in 23 countries and $2.3 trillion in life reinsurance in force. The compaThe excitement, to me, is bringing ny split off from MetLife in September 2008. IT together and creating more of a In several respects, RGAs growth has outpaced its technology capabilities, global, cohesive unit. Showers notes, and his agenda reflects the companys need to transition from smallcompany to large-company capabilities. The challenge is to reduce complexity globally while retaining the freedom enjoyed by RGAs far-flung operational centers, according to Showers. The decentralized model is what facilitates the entrepreneurial spirit, he says. The excitement, to me, is bringing IT together and creating more of a global, cohesive unit. Though RGA has a relatively small employee footprint, its proliferation of branch offices introduces a great deal of complexity, Showers explains. Things that worked when this was a $500 million, $1 billion or $3 billion company dont necessarily work for $7 billion company, he admits. Certain processes tend to kink, and technology is one of the keys to unkink those processes and make them sustainable. New infrastructure was fundamental to keeping data and information flowing through the enterprise, Showers says. Accordingly, he has undertaken major infrastructure improvements, including implementing a third-party data center model that obviates the need for hardware in branch offices through reliance on colocation facilities in London, Sydney, Tokyo, Toronto and St. Louis. RGA also is in the throes of replacing its semi-private wide-area network (WAN), which was deployed early in the companys global expansion, with a multiprotocol label-switching (MPLS) approach. We signed 2010 Insurance & Technology, Reproduction Prohibited Page 14

December 2010

a major deal in May with AT&T, Showers relates. In terms of simplifying our environment, each branch office will go from seven devices to three. The MPLS network also will deliver a quality-of-service dimension unavailable in the current WAN, as well as the ability to prioritize traffic, according to Showers. Showers team also is introducing a WAN optimiza-

tion solution from Riverbed Technology (San Francisco) to make it easy for personnel to access large amounts of data quickly, now that their data stores may not be in the same facility. The devices speed delivery of data and also incorporate artificial intelligence to learn to anticipate what files will be needed, Showers reports. Actuaries use very big spreadsheets, and it makes it far less onerous to have those readily available in a secured environment such as a data center, he explains.

MARK SHOWERS
RGA Reinsurance Co. SVP and CIO
Size Of iT OrgAnizATiOn: Approximately 200 fulltime equivalents.

Managing on a Global Scale

To foster the success of major initiatives such as these, Showers has renovated RGAs technology leadership team, with an emphasis on prior global experience, he says. He also has introduced a new project management office (PMO). The PMO is made of hands-on project managers and a portfolio project management office with an emphasis on artifacts, frameworks, training the organization to be part of well-structured projects, and also a risk assessment piece, Showers relates. The new team demonstrated its acumen in its handling of the technology integration of INGs former group reinsurance business, which RGA acquired in January 2010; the integration concluded according to plan in mid-August. They were outsourced to IBM Global Services, so we had to do a full infrastructure build-out, Showers recounts. The initiative had an amazing number of parts, so it showed just how much value the PMO could add. RGA enjoys a healthy reduction in ongoing costs associated with the group compared to when it was still a part of ING, according to Showers. The benefits of other initiatives such as a financial reporting initiative based on Oracle technology, undertaken in partnership with PwC (New York) are harder to quantify. Were embarking on a major initiative to redesign and re-implement our general ledger, accounts payable and associated capabilities, such as master data management, in response to both our global success and the need to prepare for reporting requirements of IFRS, Solvency II and other changes, Showers elaborates. Earlier this year Showers organization completed an implementation of Microsoft CRM for its international and Canada divisions on time and on budget. It was a move to a single global customer database a combination of software, infrastructure and great engagement between the business and IT, says Showers. Its hard to quantify its impact, but it is certainly a heavily used tool. Showers emphasizes the importance of a largecompany model of project management to the success of IT initiatives at todays RGA. In a smaller-company model, you tend to be unstructured in many things, he comments. But when you get the complexity of a global company, all of a sudden you start leaking oil fast on that unstructured stuff. I Page 15

iT BuDgeT: Roughly 1 percent of annual revenue

(approximately $7.1 billion in 2009 revenue). CAreer: Showers most recently was CIO at agricultural biotechnology company Monsanto (St. Louis), where he spent 25 years in various roles until he retired in early 2008. He began his career as a chemist at St. Louis-based Carboline Co. Showers came out of retirement in June 2009 to join RGA. eDuCATiOn: B.A. in Mathematics and Chemistry from Southern Illinois University Edwardsville; Masters in Physical Chemistry and M.B.A. from Washington University (St. Louis). PerSOnAl TeChnOlOgy uSe: Outside of work Im a bit of an Apple bigot, Showers says, adding, I dont go over the edge on this stuff, but I make good use of it.

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Embracing
Modernization
Kentucky Farm Bureau VP and CIO Kelly Hall has implemented agile, web-based systems that augment the carriers reputation for excellent customer service.

I By Nathan Golia I
HERES BEEN A LOT of change at Kentucky Farm Bureau Mutual Insurance Co. ($1.6 billion in 2008 assets) under the stewardship of VP and CIO Kelly Hall. She has guided the Louisville, Ky.-based carrier through policy administration and claims system transformation efforts, and developed a new e-business program. Throughout it all, Hall says, shes made it a priority to ensure that the company is prepared, down the road, for the next transformation.
We use the word agility every day, Hall relates. Weve introduced SOA, which allows us to repurpose code. And were working on an operational data store so that we dont have multiple puddles of data all over the place. Those technologies will serve us well going forward. If at some point we have to go through another transformation or select a different system, well have the foundation and the architecture in place to do that more readily than its taken the past few years. A driving force behind the successful implementation of these new systems has been a corporate commitment to IT innovation, according to Hall. This is ... aligned from the I wanted to set the tone that board level on down, she notes. All the vice presidents as well as the CEO are engaged on, our focus is going to be on at minimum, a weekly basis with all these inisupporting the business. tiatives. ... Theres a willingness to reinvest and acknowledgement that it is necessary to do so. Hall reports that she came to Kentucky Farm Bureau with a mandate to modernize. Shes been at the company for three and a half years, a full year of which was spent rolling out the new policy administration system San Mateo, Calif.-based Guidewires ClaimCenter. (It was launched with a pilot agency in July 2009, and all 170 agencies were live by July 2010.) The company was primarily a mainframe shop, but the new policy and claims systems are web-enabled, Hall notes, adding that the change required her to retrain her staff so that they are in a position to supply needed support during the transition. Weve been very focused on establishing training programs and helping our folks migrate from the older technologies to the newer technologies. Specifically, for example, migrating from a COBOL programmer to a Java programmer not just supporting [IBM] DB2, but being able to support [Microsoft] SQL Server, she says. In addition, Ive worked 2010 Insurance & Technology, Reproduction Prohibited Page 16

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KELLY HALL
KENTUCKY FARM BUREAU VP AND CIO

Size of iT orGaNizaTioN: 145 employees. iT BudGeT: $35 million. Career: The majority of Halls 25-year IT career
has been in healthcare, both on the insurance side and the provider side. The first several years of her career were spent at Humana and American Commercial Barge Lines. Immediately before joining KFB in March 2007 as VP of IT, she was corporate director of IT at Baptist Healthcare System. eduCaTioN: Master of Arts in Computer Resources Management and an M.A. in Human Resources Development from Webster University (1989); Bachelor of Arts in Communications from the University of Louisville (1986). HoBBieS/PaSTimeS: Hall is a fan of Kentuckys local sports scene: I enjoy thoroughbred horse racing and cheering on the University of Louisville football and basketball teams, she says, adding that she also enjoys playing pool.

with others to help me evolve the department so we have new disciplines, such as enterprise architecture and e-business skills and quality assurance and testing. Those are areas we didnt really have expertise in when I came in. Hall says her management strategies took root after she perceived shortcomings at other organizations where shes worked. Whether its a Java programmer or a SQL database support staff person they need their technical focus. But I want them to have involvement and understand why theyre there and why they fit, she explains. So many times Ive seen IT organizations lose perspective on why theyre there. At the end of the day IT is a support organization its not its own entity. Coming in here, I wanted to set the tone that our focus is going to be on supporting the business.

A New Legacy
As part of the strategic shift in the architecture at Kentucky Farm Bureau, Hall also has taken a proactive approach to legacy retirement. I have an obligation to be assertive with the retirement of the legacy systems, she says. When youre supporting multiple highways over a long term, you cant be efficient. Your speed to market is diminished. Kentucky Farm Bureau saw immediate benefits to the new strategy when Kentucky was buffeted by backto-back weather events. In fall 2008, Hurricane Ike came inland and caused major damage, she recalls. A few months later, a devastating ice storm crippled the state. But because the new claims system was up and running, the insurer was able to process the massive volume of claims resulting from the disasters, Hall reports. Everyone in the organization (including Hall) was recruited to take claims information over the phone. The company sent out mobile generators to make sure that even just one laptop could access the new system, Hall notes. A majority of our offices were live on the new claims system, she says. We had the ability to have December 2010

different offices handle claims for different areas of the state; you used to be locked into your region. Its allowed for ubiquitous service no matter where youre located. The carriers new web-based architecture has improved more than just core systems, Hall stresses. She credits the desire to migrate core systems with improving the companys offerings to its agents as well. Hall has led the development and implementation of new corporate, agency and agent websites. This included the implementation of a new content management system (built internally on Emeryville, Calif.-based Lyriss Hot Banana platform) to manage all external-facing websites, a quote generator tool and authoring capabilities. When I came into the organization we had kind of a shell of a website it was really just brochureware, Hall explains. Our 170 agencies wanted a portal through which they could service the customers. As a result of our modernization on the claims and policy side, weve built in parallel a foundation of e-business, and it has laid the groundwork for other online services. A major driver of the effort to modernize its customer- and agent-facing systems is Kentucky Farm Bureaus desire to advance its reputation for excellent service. Hall says she and her colleagues understand that consumer technology has fundamentally altered the expectation of service, and they are looking to technology to further position the company as a leader and innovator in customer service. Our agents really are the conduit to the customer they have community relationships. Technology combined with that reputation creates even higher expectations, she says. Our delivery system has been designed to be very customer-focused. I Page 17

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Building

Experience
USAA SVP and CIO Greg Schwartz stresses process excellence in service of a superior member experience.

I By Anthony ODonnell I
SAA CIO GREG SCHWARTZ believes that at no time during his 28-year career has working in IT been more fun than it is today. New mobile technologies are breaking down barriers, he says. Devices such as iPads and tablet computers are enabling us to provide rich multimedia experiences we couldnt have dreamed of a couple of years ago.
The fun is only enhanced by USAAs (United Services Automobile Association) branchless financial services model. Conceived to accommodate its military customer base, the operating model might have seemed a competitive disadvantage to more conventional companies. But the necessity of USAAs far-flung and highly mobile customers has been the mother of invention at the San Antonio, Texas-based diversified financial services company, according to Schwartz, who asserts that coping with those unique challenges has helped make USAA (more than $17 billion in net worth) a leader in customer services both from a systems integration standpoint and in terms of remote and mobile capabilities. We have a membership that is comfortable with our model already, Schwartz comments. They trust our brand, and they know that were working very hard to improve the member experience for them, so they eat up the new functionality as we put it out there. Among the companys latest insurance services offerings are its Auto Circle and Home Circle mobile applications. The free Auto Circle app gives USAAs The biggest contribution we make members the ability to find, finance and insure a new vehicle as leaders is to implement processes on an iPhone. Users get prenegothat will last long after we leave. tiated, guaranteed low prices through more than 3,000 dealers and are offered options for insurance coverage and financing, Schwartz explains. Home Circle offers analogous services related to financing, renting and insuring a home. USAAs IT organization also deployed recently advanced geographic information system (GIS) capabilities for underwriting, allowing more precise risk assessment and potentially better pricing than traditional approaches using ZIP codes that may bundle low and high risks into the same category, Schwartz reports. Additionally, within the past 18 months, USAA delivered what it calls a Quick Quote Widget pop-up screen that alerts both member service reps and self-service users to quotes on other risks for which the customer may need coverage. Within five months of launch, the application had delivered 268,000 quotes that resulted in 40,000 additional endorsements or policies, according to USAA. (continued on next page) 2010 Insurance & Technology, Reproduction Prohibited Page 18

December 2010

GREG SCHWARTZ
USAA SVP and CIO
CAreer: Schwartz has spent his entire career at
USAA since joining the company in 1983.

eDUCAtiOn: Bachelor of Business Administration

in Management Information Systems from Texas State University San Marcos; M.B.A. in Finance from St. Marys University (San Antonio). HOBBieS/PAStimeS: Boating, skiing and golf.

And over the past two years, Schwartz adds, USAAs IT organization has automated a variety of formerly manual claims processes, including issuing payments for approved auto estimates and medical bills; generating correspondence for claimants; notifying members of the availability of new information on claims; notifying service reps when they need to perform critical tasks; performing workload balancing and skill matching to assign tasks to appropriate member service reps; and storing and filing claims documents in electronic content management systems.

Customers for Life

Schwartz admits that he is excited by how cool the firms mobile technology is perceived to be. But he emphasizes that USAAs development is focused on the real problems of members, who are prone to relocation. Its fun, but at the end of the day we really care about how our members use our technology and whether we have really simplified their lives, he says. And to the extent that you create that compelling member experience, customers become customers for life. One of the keys to ensuring that compelling experience is USAAs concept of one company. In terms of systems, this means that there are no divisions among the industry sectors in which USAA operates. I have a person underneath me who is responsible for development for USAA, and in that shop we work on development for all the different lines of business, Schwartz explains. In each of those shops there are subject matter experts and architects knowledgeable about P&C, for example, but there isnt a person who is a P&C CIO. As a result, rather than having a proliferation of systems, the company has a single back-end system with services exposed to multiple front ends. Im using the same application systems to support all these different mobile devices, all the different reuses across USAA in the different lines of business, Schwartz emphasizes. I dont have two or three of everything I have one of everything, for the most part. ... Many December 2010

people say, Buy before build; we start with reuse, we buy second and then, if we absolutely have to, we build. Schwartz makes what he calls the obligatory statement that USAA doesnt do technology for technologys sake. He insists that, as innovative as USAA strives to be, only a small proportion of the budget goes to technology lacking a direct connection to business enablement. I have what we call an applied research lab because we focus on technology that can be applied to the business, he says. Schwartz explains that USAAs wealth of innovation is compatible with its parsimonious management of IT resources because of strict process discipline. We have worked very hard to engineer our processes over the last decade, he notes. The biggest contribution we make as leaders is to implement processes that will last long after we leave here. USAAs IT organization monitors its initiatives closely through standardized metrics such as quality, time to market, project on schedule, project within cost and customer satisfaction, Schwartz reports. We have developed rigorous scorecards and have been tracking history religiously for the last 10 years, he says. That tracking enables accurate measurement of IT performance, which in turn enables the organization to set goals for improvement, Schwartz insists. Im a big advocate of a process-disciplined organization with empowered leaders with whom I collaborate rather than micromanage, he says. I

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