Filed Under:Carrier Innovations, Information Security

2012 Insurance IT All-Stars: Rick Roy, CUNA Mutual

After a stint in operations, CUNA Mutual CIO gets to finish what he started.

After two decades working on the vendor side, the opportunity to run an IT shop for himself was a big part of the attraction Rick Roy found in joining CUNA Mutual Group nine years ago. Roy, the carrier’s senior vice president and CIO, is running IT again after a three-year stint as director of operations and he’s happy to be back.

“The company was looking to elevate IT to more of a shared service as it has grown,” he says. “It’s an interesting time [to be in IT] with all the mobility and consumerization going on in the technology world. It’s also been fascinating being back in the CIO seat.”

CUNA Mutual Group serves credit unions and its members. The carrier has a B-to-B side with products and services provided to credit unions, according to Roy, and a consumer side with products provided directly to the members of credit unions.

(Read more about all our 2012 Insurance IT All-Stars: Peter Moreau, Thad DeBerry, Rich Pederson, and Bryan Fowler.)

With so many products and business lines to offer, Roy maintains the top challenge he faces is maintaining a critical eye on what’s scalable and what isn’t.

“It’s not that everything has to have huge scale, but there are a lot of things that aren’t going to get to a scale and you have to ask yourself if you are OK with that,” he says. “It’s a continuous process because we manage complexity that is larger than our company size would lead one to believe.”

 Keeping costs in check is part of the challenge, but so is getting his arms around the number of products CUNA Mutual offers.

“It’s difficult to become an expert in all of them, but the premium for me is having a strong senior staff,” Roy says. “Their ability to develop a deeper expertise is important. There’s just no way from the CIO seat that you are going to learn all those different businesses with any level of depth. It affects how you think about organization, structure, and leadership roles.”

The financial crisis of 2008 was challenging for the banking industry and credit unions were also impacted in much the same way the community banking business was hurt, according to Roy.

“The core mission for credit unions is to make good loans to members of the credit union,” says Roy. “When the economy stumbles as hard as it did in 2009, the lending volume dries up. That’s a huge source of their income and a big part of their value proposition.”

Fortunately, CUNA Mutual Group is a well-capitalized company and the struggles its core market faced didn’t cause major damage.

“We’re a mutual at a time where it’s nice to have a mutual structure so you can keep your long-term mission in mind,” says Roy. “Nonetheless, we were not immune. We have a large investment portfolio like all insurance companies do and we had some challenges. We’ve bounced back and some of that is the power of having a diversified product portfolio.”

CUNA Mutual was forced to reduce IT spending in 2009.

“How do you do that in an intelligent way and balance that with the fact the technology world was changing dramatically,” he says. “We stepped back to do a hard assessment of where we could take our costs without creating bigger, longer-term issues for ourselves and by the same token create some investment money because the world was changing and we couldn’t stand still or the user community would blow right past us.”

Roy believes the set of choices CIOs have today is exciting as well as challenging. How the carrier supports some of the cloud-based solutions that enable internal customers to get a new solution faster is among those challenges.

“Cloud-based solutions present new and different ways for us to get solutions and business value quicker,” he says. “Over 30 years now, I’ve watched IT add tremendous value to business but it also can become a drag to business. If it is too slow a solution or the quality isn’t there, the negative impact on the business trying to execute strategy is enormous. You have to get it right.”

Figuring out what solutions can work is hard—but rewarding—work.

“I think trying to piece together where we are headed over the next five years is where it gets interesting,” says Roy. “How do you view your application portfolio? Does 50 percent of more of it go into the cloud? It could be higher for some organizations. It also has big implications for talent. What do you need in house? How do you cultivate that through the system?”

Finding IT talent is a worry Roy shares with many technology leaders.

“There’s almost a perfect storm in terms of finding IT talent that’s hitting the U.S. right now,” he says. “You have a lot of the Baby Boomers starting to think about retirement. On the other hand, we don’t have enough new graduates in IT coming up through the U.S. educational system. The third part of the storm is you have immense change going on in technology. That isn’t new—the field is always changing—but game changers like consumerization, cloud options, and certainly the way we all run data centers today is quite different from what many of us used to do.”

For mid-tier insurers such as CUNA Mutual, the vendor landscape and consolidation in the vendor world is problematic and Roy believes it will continue in that direction.

“When you don’t have enormous scale in terms of buying power, it makes negotiating contracts very tricky,” he says. “We have a large vendor ecosystem that we use to deliver IT. We watch those dynamics very closely. I came from that world, but as the guy that signs those contracts, I’m mindful of where you have leverage and where you don’t. In the past five or six years there has been substantial consolidation. That’s nice for the vendor cash flow, but not necessarily a strong value proposition for the buyer.”

An inside look . . .

After graduation from the University of Wisconsin – Milwaukee, Rick Roy spent the first 20 years of his career building, selling, and deploying software and processing solutions for companies serving the banking industry.

Eight years ago, Roy made the switch to a corporate IT role with CUNA Mutual Group as the carrier sought to add business focus to its IT operation. Roy has served two stints as CIO for CUNA Mutual, sandwiched around a three-year stint running the carrier’s operations.

“About three-and-a-half years ago they asked me to come back to the CIO seat,” he says. “I was able to come back and get some things right that I hadn’t gotten right the first time. That’s a rare opportunity.”

CUNA Mutual serves the credit union industry and its members.

“We have a broad product portfolio, but we’re very focused on a certain market,” says Roy.

Roy oversees about 500 employees—most of them in the insurer’s home office in Madison, Wisc.—and another 300 or so contractors on any given day.

“Between here and our offshore partners we have about 800 people doing something with IT every day,” he says.


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