Update: SBG Policy Administration System Implementation
A year ago, Tech Decisions reported on Security Benefit Group (SBG), the Topeka, Kans.-based financial services company specializing in annuities, mutual funds, and retirement plans, and its implementation of Home Office, the administration system by NaviSys (see TD, March 2001). Dave Keith, senior vice president and CIO of the IT department for SBG, says the companys ultimate goal when it began this project was to find a solution that would increase speed to market for its annuity products. We also wanted to reduce the number of systems interfaces in annuity administration, he says. At the time, we had quite a few different interfacesdifferent systems where we maintained the existing annuity business. Coupled with that, we wanted to make sure we could add new business to a system without having to add head count.
So what does the report card indicate today? SBG has realized a 40 percent decrease in IT operating costs, a 30 percent decrease in service costs per policy, and a 35 percent decrease in IT staff. And while some solutions garner excellent short-term benefits, SBG has been able to maintain these savings for the two years it has used the product.
Vennette Davis believes SBGs ability to move quickly to market has been the biggest advantage of the NaviSys product. Davis was senior vice president of customer management at the time of the implementation and is currently senior vice president of people development and brand identity for SBG. In the business environment today, there is increased competition and the life cycle of products is shorter, she says. As you come out with a new product, the amount of time you can expect to have first-mover advantage is shrinking. You cant spend 12 months developing a product. Youve got to have your product development cycle between two and six months.
By speeding up the product development cycle, SBG has been able to move quickly with customized and innovative products, according to Davis. We have the ability to customize a base product and do some unique things, either for a specific market or a specific relationship, she says. Home Office has allowed SBG to move into the registered investment adviser channel. Weve brought in new distribution partners and revenue sources, she says. One of the things we think is unique about SBG is our ability to drive customization, which really means choice for the customer.
SBG runs Home Office on an Oracle database and uses Sun Solaris as its operating environment. We were not a UNIX environment (prior to Home Office), so we had to train our people in areas of database support, UNIX administration, and the Sun Solaris operating system, Keith says, also indicating SBG hasnt experienced any of the many possible aches and pains that can be associated with a new implementation.
The switch has had still other benefits for SBG. Batch cycles that previously took six to eight hours are now run in an hour. By moving away from the traditional mainframe environment, SBG no longer needs a 24/7 operations staff. If theres a problem at night, someone gets paged, says Keith.
While Davis and Keith decline to discuss expenses, Davis indicates SBG has been able to measure ROI in three areas. One would be product development and the ability to customize products, she says. I think we are achieving the results we are expecting there. She says SBG had a record $2.1 billion in total sales last year and retail sales were up 60 percent. Thats in an economy where most people are struggling, she says.
The second measuring stick is service to the customer, and Davis thinks the full benefits of the system have yet to be realized in that area. She says this area includes timeliness of response to customer questions, the ability to standardize processing, and shorter training periods. These things comprise ease of use and ultimately mean delivering better service to our customer, she says.
The third area involves controlling costs. If we improve our costs, it means we have more money to invest in the services we deliver, she says. And that will improve our competitive position in the marketing area.
So how does the Home Office system work into SBGs future plans? We selected the Home Office system because of the open architecture, technical platform, and NaviSys commitment to enhance the toolset to leverage newer technologies and techniques as they become available, says Keith. We continue to upgrade the system on a periodic basis as it is dictated by changes in the business environment and to improve on the operating processes for annuity policy administration. He adds that with the systems product setup capabilities and the business-driven rules and processes, updating the system on a frequent basis is not required.
Keith feels SBGs experience with the system has shown the company it made the right investment. The systems flexibility and ease of use have enabled us to maintain a high level of focus on the execution of customer service and less on maintaining the application components, he says. When you have a system that is stable, easy to use, and can deliver effective results, it becomes a win-win for both the business operating environment and the IT organization.
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