Joining Guardian as a CIO with a blank slate for improvement, Dennis Callahan has reduced IT costs, formed a collaborative partnership with the business units, and established a consistent technology direction.Dennis Callahan was content as CIO for global financial services at American International Group (AIG) when he was approached almost two years ago by The Guardian Life Insurance Company of America to be its new CIO. He was lured into joining Guardian because of the sheer challenge of "filling in a blank slate," he says.
"After talking with CEO Joseph Sargent, I sensed there was an opportunity to really have a lot of impact here at Guardian," Callahan says. "I could have a 'create what you need to create' and 'do what you need to do' IT environment with no roadblocks."
New York City-based Guardian is the fourth-largest mutual life insurance company in the United States, with assets of more than $32 billion. Through its 2,700 independent financial representatives in 107 agencies, the company and its subsidiaries provide life and disability insurance, retirement services and investment products such as mutual funds, securities, variable life insurance and variable annuities. The company also offers employee benefits programs, such as life, health and dental insurance, as well as qualified pension plans.
Despite its size, Guardian became aggressive with technology late in the game and developed IT at a frenetic pace to catch up. In the middle to late 1990s, problems with high costs, misaligned relationships between IT and business units, and lack of a cohesive technology strategy forced a drastic change in IT leadership, management, and philosophy.
"Guardian realized that it had to take IT to a higher level by having the CIO be a full partner to the business heads and join senior leaders in setting a new, consistent technology direction," Callahan says.
With responsibility for more than 500 staff members and a budget of approximately $125 million, Callahan was charged with reducing IT spending. His major cost-cutting strategy centered on outsourcing IT functions to vendors in India and Farmington Hills, Mich.
With 70% of IT programming, maintenance enhancement, and software development now performed outside the company-and 30% in-house, Callahan has reduced IT expenses by 17.5% from 2000 levels. He expects 2003 expenses to be 21.5% lower than they were in 2000.
Even with so much work outsourced, Callahan insists Guardian has maintained control. "None of this is done in a vacuum," he says. "It's all done under Guardian's leadership and our partnership with our technical staff, so we are all actively engaged and accountable for everything we do at the working level as well as the management level."
Other cost-reducing measures include server and network consolidation and the development of a component-based enterprise architecture system. Strategic sourcing with vendors such as IBM Corp. and Microsoft Corp. also helps to "get the best deal possible on every possible spend," says Callahan. Strategic sourcing has reduced telecommunications costs and has maximized return on software investments, he says.
In another bold move, Callahan hired a chief financial officer and initiated a new review process on IT expenses greater than $100,000. "This very detailed business case review process has IT and the business units working together to define and support an ROI for project spending that significantly helps control our expenses," says Rick Omartianm, IT chief financial officer for Guardian.
These reports detail projected costs, development, benefits, and ROI over time, and must be approved by both IT and business leadership. The reports are then monitored through the project management office and reviewed regularly by Callahan for the life of the project.
Another major challenge Callahan faced as CIO was reorganizing IT structure and initiating more productive relationships with the business heads.
"The IT organization needed to be transformed into a much more customer-focused, execution-oriented unit than it had been in the past," says Callahan. "It also needed to establish mutually respectful relationships with the business leaders of profit centers."
Using a centralized organizational model, Guardian's IT department now works more closely with business leaders to set direction as well as deliver products and services. Working with profit center executives, Callahan establishes goals and creates the overall IT agenda for the year as part of the annual budgeting process. He then refines and reprioritizes activities throughout the year. The relationship has evolved into one in which IT collaborates with profit center leaders.
Relationships between business heads and the IT department have been further solidified by IT governances-standards and practices that have shortened delivery cycles and increased product quality. That process included creating a new technology office and a project management office that uses standard methodology.
"The IT governances Dennis instituted have significantly improved the quality and time frames of deliverables and the competencies of project management," says Shelley McInctyre, IT second vice president at Guardian. "These governances also have the added benefits of reducing costs and making IT not just a service to the business, but rather a partner to the business."
Having reached many of his initial goals in his first two years, Callahan's short-term goals for the future include upgrading call center technologies and processes, consolidating centers, and cross-training customer service representatives. Another planned strategic technology initiative involves straight-through processing, which will increase the productivity of field representatives and gain new efficiencies in operations.
This initiative combines the integration of sales support, such as contact management and sales force automation technology, with the automation and streamlining of the underwriting and policy application process, relying heavily on workflow and imaging technologies.
"We want to increase the productivity of our agents by giving them the tools they need for tighter integration to the back office and call centers, so everyone in the Guardian universe is working with the same information and the same databases," says Callahan.
Guardian's longer term strategic goals include growing revenue, increasing the size of the customer base, and accelerating cross selling and up selling to current customers.
To that end, data warehouse development, which is part of Guardian's three-year component-based enterprise architecture initiative, plays a key role in supporting customer marketing programs. The anticipated increase in customers will also require a re-architecture of the network to handle a substantially larger customer base in diverse physical locations.
Callahan is also interested in emerging network, compression, and video technology to facilitate greater collaboration and interaction between Guardian and agency staffs in dispersed locations. As these technologies develop further and become more cost-effective, Callahan hopes they will become a ubiquitous part of the business.
Web services technology
The basis for improving both back-office processes and communications is Web technology, according to Callahan. Web services enables a secure technology interface between the home office, field representatives and customers, as well as the development of innovative business tools for agents to initiate business and receive information from any location.
In addition, more third-party application products are being developed for the Web environment and any new packages that are acquired will likely have a browser interface.
"Agents have responded favorably (to new Web-based tools) because we try to be sure that everything we introduce provides a subset of the functionality that the agent is accustomed to," says Callahan. "They don't feel they must lose something to get something new."
IT has a dynamic, high-impact future at Guardian because upper management and profit center heads now genuinely view IT as a valuable business partner rather than merely a service area, says Callahan. The use of technology to benefit pricing, customer service and product portfolio diversification will serve as the strong foundation for Guardian's more aggressive business strategies to increase revenue growth in the future.
Tina D. Tapas is a freelance writer based in Prospect Hills, Ill.
Dennis S. Callahan
Education: Bachelor of Arts in Mathematics,
New York University, New York, N.Y.
2000 to present
Senior vice president and chief information officer,
The Guardian Life Insurance Company of America, New York.
1997 to 2000
Chief information officer, American International Group (AIG), New York.
1995 to 1997
Senior vice president, Fidelity's Asset Services Group, Boston.
1991 to 1995
Chief information officer, Wellington Management CO., Boston.
1971 to 1991
Vice president of global operations and technology,
Goldman, Sachs & Co., New York.
Register or login for access to this item and much more
All Digital Insurance content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access