IT = International Technology

Ted Devine, a principal with McKin-sey & Company in Chicago, agrees the most successful areas for global IT integration are largely related to back-office functions and are not customer-facing. Devine runs McKinseys North American operations and technology practice.

Were driving the globalization of our backroom, confirms Rich Agar, CIO at GE Employers Re Corp., in Overland Park, Kan. Front-end underwriting and pricing is being left to individual GE ERC profit and loss centers, known as P&Ls, because they are specific to a product line, he says, adding that underwriting and pricing will be different across the business segments, whether its insurance or reinsurance.

Were trying to drive common pricing policies, but in reality, its being done at a P&L and product level, which makes sense, Agar says. Nevertheless, he notes GE ERC is trying to drive global platforms at every opportunity.

John Hodge, global CIO for XL Capital Group, in Stamford, Conn., agrees that horizontal systems will be more easily integrated globally. Nevertheless, were trying to turn many of the vertical applications into horizontal applications.

For example, he says, its simple to keep Web-accessed data about one of XLs U.K. clients, but its much more challenging to use Web-enabled technology to show a clients global position. However, this is the goal, he adds, because XL is moving toward global account management.

He asserts its important for companies to follow the adage of thinking locally but acting globally. So the local operations will look after the local accounts but also will have a global account manager who will look after the clients and manage the relationships as global relationships.

William Siegle, CIO of ACE INA, in Philadelphia, the U.S. subsidiary of ACE Limited in Bermuda, acknowledges some custom applications for regional operations, such as customer interface, are harder to make global because they have to be customized for a specific country. Other limitations are related to specialty insurance products, which require unique systems. There are some products that are unique and dont lend themselves to common global operations, he says.

Despite the obstacles to customer-facing technology, Agar insists his company is heading in that directionas indicated by moves to develop data warehousing. The goal is to be able to provide self-service for the customer.

We have a lot of customers that call up ERC looking for policy information, endorsements, changes to contracts, or terms and conditions, he says. In the future, theyre going to be able to go to a Web site and see all the historical trending data for ERC for claims. Theyre going to be able to view the terms and conditions of those contracts online. All the current efforts in IT are part of the companys journey to that point, he says.

Our next step is to eliminate paper altogether, which will happen when our customers and our systems electronically interface, says Andrea Pearson, global claims leader at GE ERC. She suggests this will be achieved with those customers that have the appropriate technological capabilities.

Different Strokes

Every company has a different spin on how IT and Web-enabled systems can assist their operations. IT officials at ACE, GE ERC, and XL describe some of their companies activities.

ACESiegle believes his companys global IT program has been evolutionary due to the fact that ACE purchased CIGNAs property/casualty operations in 1999. Globalization wasnt new to us, he stresses, noting CIGNAs international businessnow ACE Internationalalready had experience in building global systems. The company operates in approximately 45 countries.

Its important for a global company to unify its systems, Siegle asserts, which at ACE have included not only premium administration but also company-wide financial reporting, a standard direct marketing system, and a common infrastructure.

For example, in the area of financial reporting, for the last year and a half, ACE has been converting its financial reporting to PeopleSoft, so that everything is on the same financial reporting platform, Siegle says. By mid-2003, everything will be uniform financially.

In addition to using similar PCs and software throughout the company to enable interoperability, ACE is building a global intranet, which is due to be released in the middle of this year. He says it will have the same ACE branding and format throughout all of the companys entities, which will facilitate the quick communication of messages to the companys 8,000 employees.

An initiative to develop the same policy administration system globally ties into the development of a data warehouse, which will be implemented within the ACE International entities (these entities are outside the U.S.) in early 2003. The project will be expanded to include the companys front-end business, according to Siegle. This is in the early stages, but the companys policy administration systems ultimately will have front-end Internet-based methods of collecting data for entry into the policy administration system.

GE ERCPearson says her companys digitization initiatives are all about using technology to access global talent, regardless of location. Our vision is to have our whole business process on a digital platform from the time we quote an account to the time we bind it, to the time we pay the claim. One of the companys principal initiatives has been in the claims area.

Pearson and Keith Myers, global operations process owner for claims induction, assert the claims process at GE ERC historically had been inefficient and paper-intensive, with claims taking a week or more simply to reach a claims handler. The GE ERC global claims induction system was initiated on a limited basis in the U.S. in 2000 and rolled out for the entire company in 2001 and early 2002. GE ERC has entirely digitized its claims processing system on a global basis.

A company description defines the claims induction system as a Web-based solution that leverages digital imaging technology and automated tools to convert claims documents into images and kick off workflow tasks without human intervention. Claims are received electronically, reviewed, and automatically linked to customers files, according to GE ERC.

Pearson believes this workflow tool has enabled the company to share electronic documents with as many people globally as need to see it. Web-based technology has enabled claims adjudicators to be located anywhere and still be part of a global team with access to the same document, she asserts.

Before the development of this tool, GE ERC had to hire claims people where the policies or files were located. We had to go hire people around the world where the paper was located. Now we can be geographically indifferent and access the best talent regardless of where theyre located, Pearson says.

We receive documents now by e-mail and fax, and we still receive a fair amount by mail, Myers says. If the documents come in as mail, theyre scanned and then routed to the claims handlers along with the e-mailed documents, he adds. That process takes about three to four hours as opposed to about a week under the old paper-based claims-handling system, he says.

Now that everything is on a digital system, GE ERC can track the progress of claims through the system. We can know if we mailed it yesterday, when it got sent in for scanning, and when was the first time the adjudicator looked at it. Now, were really able to talk process improvement and show benefit to the customer, Pearson says.

Myers and Pearson agree the system helps not only GE ERC from a productivity standpoint but also its customers. Although we get a lot of benefit, our customers ultimately will get the real benefit, because theyre getting access to better talent, better analytics, better knowledge, and ultimately better service, Pearson says.

Weve saved one of our brokers thousands of dollars in postage, Myers says, explaining that paper-based claims are now imaged electronically and then e-mailed to GE ERC. Still another benefit: Weve saved probably 20,000 square feet of office space by getting rid of paper claims files, he asserts.

XL Capital GroupHodge was appointed CIO at XL in 1999, when he began to develop a cohesive global IT strategy for the company. Up until 1999, there was no global or central IT function within XL; resulting from the significant acquisition activity of the company, we had to build it from scratch, he says.

Hodge explains one of his first jobs was to standardize a global governance model where XLs IT operates as one discipline throughout the world. Then he moved to develop an IT organizational structure connecting the 17 heads of IT and their staffs for the various units of the company. At the same time, XL also began to use standardized software in each location throughout its global offices, which enabled information to be sent seamlessly across borders.

XL put a lot of effort into its intranet activities, so we knew what we could share with each other, what skills were available in the organization, and how we could get hold of people, enabling work groups to work with each other across geographic and organizational borders within the legal constraints that exist for a company based in Bermuda with international operations, Hodge says.

The next step was to establish separate data warehouses for the companys insurance and reinsurance segments to consolidate information used to manage these businesses while meeting the regulatory requirements for data protection and privacy across the globe. The data warehouses allow XL to consolidate information from across the various operations into one system, he says, emphasizing the company still has the responsibility to keep detailed underwriting information separate for different geographic regions and the different business segments of insurance and reinsurance.

In other IT initiatives, XL focused on truly global applications that would cut across all organizations and segments. For instance, all XL operations across the world use a single financial system and a single human resources system.

IT Challenges

Accentures Bernaski thinks many of the challenges to implementation of global IT systems are not technological but, instead, related to the way companies are managed. The CIO cant be the only global integrator of a company, he says. There has to be a business strategy that targets the benefits of sharing things globally. As the global strategies are developed and refined, identifying opportunities to leverage technology globally are sometimes missed.

As a result, when companies are developing and refining their overall business strategies, he advises them to make sure the technology dimension is thought of as an enabler of those global strategies.

Devine agrees IT systems often fail to deliver value because the institutions did not really understand where they were going to get value from the technology. They implemented the technology around a process that wasnt optimal and find that all theyve got is the old process, the old people, and the technology, while costs have risen.

The most successful companies are able to leverage technology to drive a more efficient business model, Devine adds, while at the same time making it easier for customers to do business with them. The solution is process-oriented technology initiatives, he concludes, where hand in hand you are driving the operational improvement as you are driving more automation.