When Northwestern Mutual Insurance made the decision to ally its corporate planning group with its information systems department back in March 2000, the life insurance and financial services company turned to Deborah Beck and promoted her to the position of executive vice president. The goal was to make sure we were doing as much as we could to align our strategy with our technology, says Beck. She joined Milwaukee-based Northwestern in 1975 as an attorney and has held a number of positions on the business side, but none on the technology side. Northwestern reported $9.8 billion in premium revenue in 2001 with $690 billion worth of life insurance in force.

Among the new initiatives this quiet company is implementing to turn up the volume are Web sites for its field force of 7,800 representatives and agencies that are linked to the Northwestern Mutual Financial Network site. These sites allow clients to interact directly with their representative and learn more about financial issues. In addition, the insurer is leveraging a Siebel system so that agents will have customizable client databases at their fingertips, with the same information being shared with the home office, client service center, etc.

Beck feels it is important business-people know the technology they are using, and technology people should be aware of what makes an insurance carrier operate. Here, she shares insights on strategically partnering business and technology, and more.

Tech Decisions: How have you been ableto involve the upper management of Northwestern in the technology side?

Deborah Beck: The time was right to do this, and to my pleasant surprise, I found there was a great deal of interest both on the part of technology professionals and on the business side to do more with technology together as a partnership. Many of the issues IT professionals are dealing with require active participation from the business side. In the past, these issues were more separate. Now, theyre very much intertwined. People on the business side see everything theyre trying to do with regard to business strategy involves technology of some sort. People on the IT side see there has to be active participation on the business side to accomplish things.

Tech Decisions: How does Northwestern view technologyas a tool or as a business driver?

Beck: Its always been a tool, but its become more of a strategic tool to provide what were trying to do with our customers and our field force. Virtually everything we do these days involves technologywhen were trying to provide service to our customers, when were trying to develop new customers, when were trying to make our field force more productive, when were trying to maintain our low cost position. All of these things involve technology. Technology projects have become more expensive, so you have to see maintaining technology expenses as part of the strategy of the company to keep costs low and provide an efficient product for your customer.

Tech Decisions: What is Northwesterns strategy toward improving efficienciesdevelop tools in-house or look outside to vendors?

Beck: We do some of both. Historically, weve done most of our work in-house, but in the last few years weve moved to more outsourcing. It depends on whether we feel we have a core competency on the technology side, what were trying to accomplish, and whether we can do it more efficiently if we outsource it. Thats a good example of where you need the participation of the business side. If you are outsourcing, you want to get an off-the-shelf solution, and that sometimes requires the business side to change its work process to match the solution, rather than buying something and modifying it or feeling you have to build it yourself to match the workflow the business side has established.

Tech Decisions: In what areas does North-western outsource?

Beck: We started outsourcing some of our Y2K work to a company in India, and weve continued to use it for some of our application development work. We also outsource our Web hosting. Those would be the biggest things.

Tech Decisions: What are some of the new technology tools you have seen that impress you?

Beck: When you see things early on it all looks good, frankly. One of the things we try to do here is pilot programs for new technologies, so we are trying things on a small scale to see what works. Its a way we try to balance being innovative with a low cost company. Were very interested in how wireless might help make our field force more productive, so weve done some experimenting with that. We use a targeted approach to try out new technologies in a smaller scale and either expand it or [determine] the technology is not quite ready yet. Were still absorbing opportunities provided by the Internet and wireless.

Tech Decisions: How do you react when you hear analysts say insurance is lagging behind other financial services fields when it comes to technology?

Beck: I think Northwestern Mutual has had many examples of being quite innovative with technology. We were one of the first companies to have a corporate Web site way back in 1995. We were, in fact, the first company to buy an IBM mainframe back in 1957. Thats ancient history, of course. I can think of many examples, so I dont think thats an accurate description of where we are. The insurance industry deals with products that have a very long time horizon. Our average claim on a life insurance policy comes after the policy has been in force for 38 years. Thats a long time to support a product you are putting in the market. We have to develop systems we can maintain for a long period of time. We have an array of products we want to be able to interact with each other, so we tend to have quite complex systems. There are some reasons we are cautious about technology, but I dont agree were not innovative in our use of technology.

Tech Decisions: How has the insurance industry impressed you with its innovation?

Beck: A lot of what happens is based on the mission of the company and what you are trying to accomplish. Were closely tied with our field force and see value in having the customer deal with a financial representative who can give expert guidance in a value-added relationship. When you compare what we do with technology and what somebody else does, you have to look at the whole package. For example, Fidelity has a tremendous Web site. Thats also its total distribution system. We have 7,500 financial representatives who help customers with their financial and insurance plans. We want to provide technology that balances service directly to the customer and services that help make the financial representatives more productive.

Tech Decisions: Is there anything that Northwestern Mutual is working on now that has you excited?

Beck: Were quite excited about the work were doing with our investment products and the technology that will support them. That has been a growth area for us since we purchased the Frank Russell Company a few years ago. It helps balance our product line, so were able to provide a total financial security package to our customer. Were currently evaluating some technology, so I cant say weve landed on one, but were looking at enhancing the computer-assisted planning tool we use and the asset allocation tools. Were probably going to come up with a mixture of in-house and outsourced solutions.

Tech Decisions: You come from the operations side. How has that worked with your IT staff?

Beck: A lot of aligning technology with business strategy is about prioritization. What we try to do is have a very thoughtful process of prioritization. The IT people see the value ofhaving more businesspeople actively interested in technology. We started a technology-mentoring program where we matched up technical professionals with our senior executives. They do some one-on-one training, and once a month we get together for a bag lunch session where we talk about technology issues. The IT professionals are excited about this opportunity to talk about what they do, what issues they are facing, what the new technologies are, and to show how our architecture is designed. The people on the business side are thirsting for this knowledge so they can make better decisions about the technology that supports their business strategy.

Tech Decisions: Have you found the technology staff is more interested in the business side, or the business side is more interested in the technology?

Beck: People at all levels of the organization understand they need to know the other side. Before, people on the business side delegated the technology issues to someone on their staff to work with our information systems department. Now, they see the need to understand these things themselves. Similarly, our CIO always understood the business strategy, but now people at all levels of the information services department understand they need to know the business strategy so they can talk to the client in broader terms than just specifically what their project is intended to accomplish.

Special Reports /

Strategic Alignment: Technology and Business Alliance

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