Having all parties within the company working toward one goalmay seem like a simple task to accomplish for insurance carriers,but of course if it were that easy, everyone already would havedone it. The reality is each department has its own ideas on howbest to run its business, but as companies have learned, siloedstrategies rarely succeed. Never is that more pronounced, though,than when technology enters the discussion. Technology has becomethe integral enabler for virtually every task performed, and withsuch power, complaints are certain to follow as new methods ofoperation meet up with the traditional workflow of insurance.

"Alignment is the Holy Grail for businesses," says BernardTubiana, principal with Deloitte Consulting. Even within theindividual lines of business, he explains, alignment is nearlyimpossible to achieve. "It's not just inter-business/IT alignmentbut also intra-business alignment," he says. "The plank IT walkshas multiple constituents. Even with a seat at the table, even ifIT were able to understand the business better, and even ifbusiness understood IT language better, you still would havedegrees of misalignment."

IT is making progress in achieving alignment with the businessside, according to David Holtzman, managing director,PricewaterhouseCoopers, who leads the consultant's insurancetechnology and operations practice. But he points out the issueremains one of the top targets for insurers seeking to realize thebenefits of technology. "There are a ton of projects being drivenby IT, and at the end of the day, they don't meet expectationsbecause business isn't driving the actual design andimplementation," he says.

Jeffrey Kamrowski, senior vice president of the businessservices unit for Selective Insurance, believes his company'sefforts toward alignment have been extremely successful. "It's whatI would qualify as a true partnership, with both parties having anequal stake in the results and outcomes and truly workingtogether," he says.

Amerisure Insurance has gone out of its way to include businessin all technology discussions and drop the mystique around IT,maintains Ed Cullari, director of Amerisure's project managementoffice. "We wanted to bring business into the fold because theprojects we do are business projects, not IT projects," saysCullari. "If it's just IT and you have no business requirements,what are you going to do? There are only so many times you cangrease the engines if you aren't doing any new projects orapplications." At the same time, if the business side wantssomething done, it has to adapt to the world of technology. "Youcan't go back to the old way," Cullari says. "We all remember thegood old days, but remembering them is all you can do becausethey're not coming back."

Governance Strategy

Too many carriers still are allowing IT departments to gatherthe specs for a project and build a solution with the hope thesolution will somehow work. But many organizations are moving awayfrom that strategy. The changes have come about because of newgovernance structures that have been put in place within manycompanies, Holtzman contends. It is important these governancegroups be represented by both business and IT leaders, he adds, toreview projects and major initiatives and ensure projects line upwith the company's strategy.

Amerisure has a technology investment decision board that isincluded in all technology decisions. Steering committees also areset up within the business community to prioritize the work–bothproject and nonproject decisions. From the technology side,Amerisure has instituted a portfolio management system calledeProject. The business and IT staffs are included, so when aproject team is put together, the members are from both the IT andthe business sides. "That inclusiveness goes right up the line,"says Cullari. "Our CIO or project sponsor could look at any pointin time at all the documents of the project. It's completetransparency."

Holtzman knows of one large multiline company that has put agovernance structure in place not only at the project level but atthe architecture level, too. This allows the carrier to make sureprojects line up with business strategies put forth. The reviewboard also makes sure technology plays well in the infrastructureso there aren't a lot of two-plus applications out there.

Businesses are looking at alignment of synergies across theorganization, Holtzman explains. They have turned to a governancestructure because when analyzing their project portfolio, theyfound there were projects that never met expectations. When thecompanies dissected these projects, the successful projects had abetter split of IT staff and business people working on them. Theinitiatives that failed usually were driven solely by IT.

There are multiple dimensions to the governance project atemployee benefits provider CIGNA as the company tries to monitorall the business areas. Steering committees were formed to managebooks of project segments such as individual projects,service-related areas, and network contracting, for example. CIGNAin addition has an architecture committee that is focused onensuring the different initiatives are linked tightly to what thecompany expects to do with strategy going forward. "You make sureyou are working on today's requirements, but you also are buildingfor the future," says Jeffrey Scobee, vice president of IT.

Steering the Course

Selective has both formal and informal processes in its projectmanagement discipline, according to Kamrowski. The formal part iscentered around an enterprise project management office, whichtakes a formal role in defining projects, approving projects, andmonitoring items of large scale. "It creates a consistent set ofrules, guidelines, procedures, and format so everyone involved inthe project knows the expectations–from the CEO all the way down tothe project manager," he says. "People have a true awareness ofwhat needs to be done."

Every initiative Selective undertakes has a business manager andan IT manager assigned to it at the same time, so no businessproject is run solely out of the IT area or the business area."There is joint accountability, which creates a very goodpartnership and a good commitment of resources working oninitiatives," says Kamrowski.

Outside of that formal component, the managers are on the phonewith each other virtually every week. "Very informally, weencourage those managers to spend some time with each other on ascheduled fun event–a Friday afternoon golf outing or a combinedeffort to benefit a local charity–anything that creates a bondbetween those two managers," notes Kamrowski. "It gives them anopportunity to get to know each other."

Holtzman describes a governance committee as an executivesteering group that meets at least on a quarterly basis andinstitutes a process regarding what should be submitted relative toan initiative. The committee sets a dollar limit for what projectsit wants to look at. As the governance group gets more efficient,Holtzman believes the business and technology leaders betterunderstand the process and what has to be in place for a project tobe successful.

"The best governance structures meet on a regular basis, theyare keenly aware of the business strategy, and they have set up amatrix to measure and score the initiatives that have come intotheir governance group so they can make the best decisions," saysHoltzman. Governance committees have a longer-term focus, so theyare not just looking out to the next year, Holtzman adds."Governance is a key element if you have a good mix of business andIT at the table," he says. "[The committee] has a great set ofmeasurement and benefits realization criteria, and it starts tolook back at projects and lessons learned."

Governance is more commonly found with the larger companies,continues Holtzman. "If you have five or six lines of business, abillion-dollar-plus IT shop, and thousands of IT professionals, youneed things such as governance put in place," he says.

Tubiana agrees governance is effective for alignment. "Doing theright thing often leads to behaving the right way," he remarks."There is a lot of merit to governance and oversight. The way it isset up obviously is different for different companies. It's a placewhere you do have some say and directly align organizations, teams,and projects. It needs to be executed correctly–as much as requiredbut no more than necessary. Good planning matters a lot, andgovernance falls under planning."

The more CIGNA leverages this type of thought process and thetight linkage with the business, Scobee asserts, the more momentumthe company will begin to pick up. CIGNA has a group calledProjects, Process, and Requirements (PPR) that works closely withbusiness in defining the details of the requirements underneath thecapabilities. "[PPR members] do that in a holistic way, so they arelooking at all the different streams of the business process evenbefore technology is fully engaged," he says.

PPR views issues from a business modeling/business processperspective. "Not only is it helping the business teams toarticulate how a certain requirement will impact the entire processflow, but it also assures we don't have redundancy in terms ofprojects–one project group working on a piece of code one way andanother project group working on it in another way," Scobee pointsout. "We're finding tremendous synergy out of that. All of thesethings are continuing to gain momentum and showing positiveresults."

Avoiding Disconnect

There always will be some measure of dissatisfaction amongbusiness leaders because they want things faster, better, andcheaper, Tubiana indicates. "Right off the bat you are behind theeight ball," he says.

As third-party administrator National Benefits America hasgrown, alignment became one of the company's major challenges,according to operations manager Amy M. Duke. "It was like the tailwagging the dog," she says. "Our IT area thought it knew what wasbest for the company, and there was no decision-making going onfrom the management perspective and the operations area on aday-to-day basis. The IT area almost was like an island."

Duke brought with her an understanding of underwriting, premiumaudit, loss control, and claims when she joined the company asoperations manager about four years ago. "Having an understandingin each of these areas was a bridge to bring us together to putcommunication in place," she says. While the IT area once wasaccustomed to deciding what the technology plan would be, today itsees things with a fresh outlook. "Since we've made thattransition, we've put some long-term goals in place, been able toidentify where our need is for the business, and focus on what isgoing to help us as opposed to having someone from outside thebusiness area telling us," says Duke.

As the operations manager, Duke had an understanding of what wasneeded from a business perspective. She feels she and the IT peoplewere educating each other on basic things–such as statistical vs.financial reporting numbers. "It definitely was challenging, butyou learn and you grow," she says. "It's actually made usbetter."

Kamrowski believes companies have to be cautious not to buildrules that supersede relationships. "The biggest challenge ismaking sure you don't create a rule-based process that interfereswith the ability of two people to work together," he says.

CIGNA's IT strategy is focused on enabling businesscapabilities. The company has developed a road map based upon thecapabilities identified in the core business strategies, explainsScobee. CIGNA structured itself internally to maximize IT'scapabilities to deliver against those strategies. "That meansestablishing organizational units that are aligned closely to thekey business function or process," he says. "The suite ofapplications, the function, and the technology are aligned closelywith that direct business partner."

By and large, the alignment was welcomed, Scobee says. Therealways have been line-level business-IT relationships, but CIGNAwanted to bring a holistic viewpoint to the relationship. "You cancome up with 100 priorities in each individual [business] unit, butthey have to be balanced across the enterprise holistically todeliver against some of the capabilities," he advises.

CIGNA is aligned tightly in terms of strategy, with a focus onconsumerism, health advocacy, and informatics, Scobee comments."Looking at a member-centric view is not something this industryhas done in the past," says Scobee. "To do that, we have to havearms linked as we define what's necessary, meaningful, andvaluable; organize that from a technology perspective; and deliveragainst that as quickly as we can."

Seat at the Table

Alignment requires executive buy-in, Cullari states. "Withoutthat, you are kidding yourself," he says. "You can talk about ITand business alignment, but if you don't have it from the top, itdoesn't work." Cullari has seen projects move more smoothly thanksto having a more cohesive team. "It's not 'us against them,'" hesays. The alignment is not yet complete at Amerisure, but hebelieves both sides are starting to open up.

IT is included in early discussions so it can assist in thegroundwork. In the past, the business side waited until it knewwhat it wanted and then told IT. Now, IT is brought in sooner toassist in those conversations. "It doesn't happen overnight,"admits Cullari.

There is value to having IT at the table, Tubiana concurs,especially with insurance and financial services organizations,where there are more IT organizations in support of the business."If you think just of operating costs, IT is a huge component, so[IT] must have a seat at the table, but it can't dictate," hesays.

What it often boils down to is whether the CIO has the CEO'strust, notes Tubiana. "Is the CIO able to implement things on timeand on budget and help enable the business to be more productiveand more competitive in the marketplace?" he asks. "Depending onyour starting point, the relationship will vary, as well. If youare an organization that is notorious for not being able to doprojects on time, and coupled with that you have business analystswho don't give good business requirements, you've got a verydifferent starting point than when you have a well-oiled, well-runmachine."

Companies also find success with business analysts who have aliaison role back to IT, according to Holtzman. These analysts cantranslate business into technology and serve as a conduit betweenthe two groups. "When [analysts] live in the business units, theyunderstand the day-to-day operations and what [business] is tryingto handle," he says. "As a company goes through an implementation,the analysts are able to help the IT professionals find a workflowor a business rule and understand the implications of what [IT]does from the technology perspective. The business analysts withinthe business, we've found, have helped a lot of projects to besuccessful."

Centralized vs. Decentralized

Tubiana relates Deloitte was involved in a merger where therewere two different styles of IT organizations. With one company,the IT department was aligned with the business peers; the secondcompany had a more traditional IT organization–more centralized."The former had business analysts in the IT organization, and thelatter had business analysts in the business organization," hesays. "When we compared and contrasted in anticipation of themerger, we found the first one had much better alignment."

Tubiana compares the centralized vs. decentralized IT structuresto New York City schools. "When you have everything centralized,the outcry is you have to empower the local schools because theyare closest to the students and have to make the decisions," hesays. "Then everything goes decentralized, and people complainthere are no standards across the system; that's not right for thekids or the teachers. It ebbs and flows in cycles. At the heart ofthat is it is very difficult to find the right mix betweencentralized and decentralized."

Pacific Life Insurance uses a decentralized IT structure for itsbusiness units. "HR has a dedicated IT department, and we're itspriority," says Melanie Wagner, the carrier's director of payroll."We don't have to compete with other priorities within the company,which gives us a very quick turnaround."

Since her department and this particular unit of IT both reportto HR, they share the same reporting relationship. "That's part ofwhat makes it successful," says Wagner. "[IT] really knows what ourbusiness needs are because we partner with it."

When business decisions need to be made, IT is brought into theloop in the planning stages, reports Chuck Kentfield, seniorsoftware engineer for the HR systems at Pacific Life. This allowsIT to help influence the decision-making process so a solution willbe developed using the carrier's existing tools to meet theobjective of the business decision.

In the planning stages of any HR project–before a vendor isselected–business is meeting with and getting recommendations fromIT. "We're always partnering with IT," says Wagner. "The developersgive us recommendations on how the system can handle our businessneeds, working with vendors such as Lawson to make thathappen."

Some small or mid-tier companies have governance, but Holtzmanpoints out those companies usually are more intertwined. "The ITgroups are smaller, there are not as many big projects, and usuallybusiness and IT work a little better together because it's more ofa community focus," he says. "When IT gets big, it builds its ownfiefdoms."

Large IT departments often are decentralized by line ofbusiness, which Holtzman indicates creates disconnect. For thosecompanies, governance creates standards so there is a consistentunderlying project management methodology and an enterprisearchitecture, which set the core for all IT people.

Stay Tuned In

Selective believes integration is a culture of continualimprovement, according to Kamrowski. "If we become comfortable weknow it will become dormant, so we always are looking at ways toimprove the process and challenge each other," he says.

The pressure is huge to make IT more aligned, observes Tubiana."Clearly, from a CIO perspective, setting standards for technologyis critical," he says. "Even if you have a decent TCO model,somebody has to set the standards so you don't have disparatearchitectures and technology, which really would raise yourTCO."

Some business people view governance as something that drives upcost and complexity because everything has to go through a funnel,Holtzman notes. However, he believes it actually creates efficiencybecause everyone in the organization knows what the requirementsare and what must be brought in front of the governance committee."The governance committees are making fewer mistakes, so therearen't any $50 million runaway projects out there," he says. "Inessence, it is creating efficiency."