When John W. Hayden went off to the Massachusetts Institute of Technology for a president's symposium on technology in 1999, a professional epiphany wasn't on his personal radar screen.The president, chairman and CEO of American Modern Insurance Group Inc., Amelia, Ohio, already had a game plan on how to retool the specialty carrier's business strategy and its information technology strategy. It called for the technology strategy to run in parallel with the business strategy.
"At MIT I realized that I was wrong, really wrong about dual tracks for technology and business," admits Hayden. "I realized that the technology strategy needs to be completely intertwined with your business strategy. They shouldn't be two separate plans. They need to be one and the same."
There's more to Hayden's epiphany.
"Going into that conference, I was a supportive manager of technology and my management style was passive reluctance," explains Hayden. "They dragged me kicking and screaming into the next system upgrade. Now I demonstrate provocative advocacy. I keep poking technology and asking why can't we do this or that. I explain what we are trying to do in the marketplace and ask how we can technologically enable that process. It's a very different level of engagement."
CIO strategies
After the symposium, Hayden realized that he and his CIO needed to meld their business and information technology strategies together.
He also realized that information technology is not the CIO's responsibility. It is line management's responsibility; they need to take ownership of technology initiatives. The CIO's job is to manage IT and to provide technology leadership in service of the firm's strategic direction.
As such, the CIO should spend one-third of his time with IT staff, one-third with senior management and one-third with vendors and benchmarking.
Hayden also realized it wasn't his job to determine what technology AMIG, a wholly owned subsidiary of The Midland Co., would implement next.
"My job is to determine what ideas are worth pursuing, what ideas can everyone unite around, and what ideas do we have adequate resources to execute effectively," says the former North-western University offensive lineman.
There was one more major component to his life-changing event. He had the wrong CIO.
"We had hired a fellow to succeed our long-time CIO who was a couple of years away from retirement," explains Hayden. "He was from outside the property-casualty industry and he tended to look for shrink-wrapped technology solutions."
After the MIT epiphany, Hayden hired John Campbell in December 1999 to take the lead in the development of new Web-enabled technologies to increase the company's efficiency in product development, processing and distribution systems.
Today Campbell, who is senior vice president and CIO of AMIG, and John Hayden work in concert. Together they have created the broad structure for what many carriers struggle with-the effective alignment of business strategy with IT strategy.
No IT document
No matter how hard you would look, you won't find the typical 15-page, stand-alone information technology strategy document at AMIG.
"Our business strategy is our IT strategy. All of the IT initiatives or projects are business-owned initiatives. They are not IT initiatives," explains Campbell, a veteran of the property and casualty business.
"John and I support a governance process that drives business ownership of the initiatives, alignment with our business strategy and justification of all the initiatives," says Campbell.
The annual planning process-which runs from late August into November-is the beginning point for approval of a portfolio of IT initiatives for the coming year. The process is overseen by a 13-member executive leadership board that includes Hayden and Campbell and 11 other senior business leaders.
"We review every product and plan out action plans for the coming year," notes Campbell. "The director of our project office-a critical component in executing the alignment of the two strategies-accumulates the information and we begin a resource planning process to determine if we have enough IT and business resources.
"We are unique in this-we're not just doing IT resource planning. We are doing both," points out Campbell. In the end, a line is drawn on the list. Those projects that land above the line will get executed; those below the line may or may not get accomplished. The "line" can be human capital or external dollars spent.
"Hayden is very supportive of the process, and he's engaged in it," Campbell says. "I can sit down with him and explain where we have to the draw the line. He also has the power to change priorities," adds Campbell.
The roadmap
In the fall of 2000, Campbell and his IT team presented its technology-enabled business strategy plan to the leadership board.
"Their eyes glazed over and they couldn't grasp what Campbell was hitting them with," recalls Hayden, who read the group's collective body language. "At the end of the meeting, I told John that it was all great stuff, but nobody knew what he was talking about. We had to make this real to them."
Six weeks later, a team led by Campbell produced what is now known as the "roadmap," which is essentially an illustration depicting a complete five-year Web-enablement and legacy migration plan.
The graphic contains all the documents that Campbell presented during the board meeting complete with project milestones. It measures six feet long and three feet high and is mounted on a 10-foot by 25-foot hallway wall where all can see it.
"We created a roadmap that was real and visible to the organization. John's team had the milestones along the way, what functionality would be delivered and when, and what IT platform they would be using," says Hayden.
"We met at the wall, and John explained what the roadmap meant," Hayden continues.
"All of a sudden, the business side started saying things like, 'You mean I won't be able to communicate with my customers until milestone 16? We can't wait that long.' All of a sudden, the milestones were reshuffled.
"You could see the business units take ownership of the information technology initiatives, right then and there, because they had the visual," says Hayden. "It wasn't until we created that visual that the user community (business side) took complete ownership."
Hayden consciously made Campbell a full member of the executive leadership board.
"John's relationships with other members of that board are very strong. He's a student of business and technology and not just a technologist or a scientist, but an effective communicator and educator," observes Hayden.
By being a member of the leadership board, Campbell says he has an "opportunity to participate at the highest levels of business strategy development and planning. It creates a much better alignment of any technology initiatives I have underway with the business strategy."
The CEO and the CIO usually meet once a month, and exchange the usual e-mails and voice mails. They also exchange business and technology articles from magazines they read. During in-person meetings, Campbell categorizes 10 to 15 items on his agenda into three categories: informational, up for discussion, or there's a need for agreement from Hayden.
Sense of trust
"There is a great sense of trust, and John is a very demanding and challenging CEO," acknowledges Campbell. "For someone like me, that really works well. I've had good bosses at other places, but they weren't engaged to the degree that John is engaged. His leadership of technology change here is what makes all of this work."
Campbell also says Hayden has taught him "that I don't have to do it alone. He's very much a supporter of calling on all of your resources and getting the commitment from everyone involved, because these aren't easy projects and they are not inexpensive."
For his part, Hayden says Campbell may not be the strongest technologist. "But he knows how to select and build a technology team," points out the CEO. "He knows how to interface with the user community (business side) and he knows how to deal externally with the technology industry."
So where's the evidence that this approach to managing the business and information technology works? On the business side, American Modern is moving very quickly to replace its legacy system and to become Web-enabled.
"We've had a minimum number of false starts," points out Hayden. "I don't know if we are delivering IT faster or cheaper than anybody else. But I have seen lots of companies that have had to report write-offs as the result of failed technology initiatives. We aren't taking any such write-offs," Hayden says as he knocks on wood for luck.
Since 2000, AMIG has made giant strides to modernize its use of information technology and has delivered new functionality to the carrier's business processes at minimum every six months. "We have (also) aligned the technology with the business at all levels in the organization-from the leadership board to people working the phones," says Campbell.
Other examples of success:
* modernLINK, American Modern Insurance Group's Web-enabled initiative, is aimed at automating billing, processing, and customer service. While the umbrella initiative is still less than 50% complete, the projects already delivered are generating significant immediate benefits.
* Replacement of the insurer's legacy applications with new business applications will take place within the next 18 to 24 months.
* Development of a new data warehouse is already up and running and providing benefits.
* American Mod-ern's business partners can now make policy inquiries and have access to forms and rate manuals over the Web.
* The company has established at least four new products with Web-enabled rating, quoting and submitting capability.
"We have 17,000 accounts on our modernLINK Internet site for producers, and we started with nothing," explains Campbell.
Built along the way
"We had no technical infrastructure, no hardware, no systems software. We hadn't even selected a development environment. We didn't have people with skills to develop Java. We built all of this along the way," he adds.
The carrier's efforts to replace its legacy system are just starting up. The first piece will be systems for policy administration, billing and document printing. The first line of business is expected to be up and running in 18 to 24 months.
"My challenge is to tell John to get more-not less-sleep," acknowledges Hayden. "As a boss, it's wonderful to be able to look at someone and say 'Relax, don't worry so much about it. As opposed to having to say 'giddy-up.'"
Brian S. Moskal is a business and financial writer based in Chicago.
