Quelle: CIO USA
The austere bell-and-clock tower in which MetLife makes its home inManhattan has been dwarfed by other skyscrapers since its completionin 1909, but it remains a monument in the Madison Square Park area. Itlooms as a symbol of the nation's second largest insurer, with $2.1trillion worth of insurance in force.
Last year, the MetLife companies served 9 million U.S. households, 4.1million customers abroad, and 64,000 companies and institutions. Ithas 46,154 employees, and last year it amassed $32.5 billion inoperating revenue. On the technology front, the company has five CIOs,one CTO and an executive vice president of technology who overseesthem all. During its 134-year history, CIO-100 honoree MetLife hasgrown not only in size but also in complexity, becoming so broad thatChuck Johnston, vice president of insurance information strategies atStamford, Conn.-based Meta Group, describes it as the "GE of theinsurance industry."
Much of MetLife's scale is the result of its aggressive acquisitionstrategy - it has bought everything from billion-dollar enterprises todistribution channels across all its lines of business. Because of itsrapid expansion, MetLife was saddled with a plethora of disparatesystems and processes - in addition to its own legacy systems, somealready decades old. In 1998, a new CEO, Robert H. Benmosche, came onboard looking to transform the company's reputation as a staidinsurance company to that of a nimble, full-service financial servicesfirm. To that end, he had MetLife look at its millions of customersfrom an enterprisewide perspective and start taking advantage of itsenormity to cut expenses. At the same time, MetLife executives decidedto take the company public, meaning it needed to respond topublic-reporting requirements dictated by the Securities and ExchangeCommission. All these changes meant one thing for MetLife's technologyteam - it was time to get integrated.
Daniel J. Cavanagh knew big changes were ahead when he took over asexecutive vice president in charge of operations and informationtechnology in March 1999. Appointed by Benmosche, he was given a $990million budget. "We knew we were going public in a year. And we knewwe were doing it very rapidly," Cavanagh says. "So no one was taken bysurprise."
The message from "the chairman," as most of the IT execs callBenmosche, was that the IT staffs supporting MetLife's business unitsneeded to rein in the subsidiaries so that the huge insurer couldstart reaping economies of scale. "When MetLife started testing itsvalue proposition with the Street, the big sentiment was that it'stime to harvest some of that scale you've got," says Tony Candito,senior vice president and CIO of MetLife's individual business unit."At that point, everything changed."
Cavanagh began by "integrating" his five business unit CIOs and hisCTO into an IT governance board. They meet monthly to discuss IT andintegration strategy and specific projects, both enterprisewide andwithin each business unit, and they've had more than enough to filltheir agenda.
Follow the Financials
The first integration task for MetLife was getting its financial housein order. That fell to Peggy Fechtmann, senior vice president, CIO ofcorporate systems and chief e-business officer. Even after the IPO inApril 2000, its financial processes and systems remained siloed.Different subsidiaries sent financial information to MetLife'scomptroller in Tampa, Fla., in different ways - by FedEx, mail ore-mail - making it largely a manual job to close the books each quarter."It's comical in hindsight, but it certainly wasn't comical then,"Fechtmann says.
Her first step toward standardizing and integrating financial systemswas to form a steering committee of IT executives and subsidiarybusiness partners to discuss the financial processes of MetLife andits subsidiaries. They knew they needed general ledger, accountspayable and asset management capabilities, and they planned to go withpackaged software. "We have a lot less people doing hard-core coding,and a lot more people doing package implementation," says Fechtmann."We're more systems integrators than anything." They looked at Oracle,PeopleSoft and SAP before choosing PeopleSoft. "There was anexhaustive analysis, but there was a slight bias toward PeopleSoftbecause Met had implemented PeopleSoft for HR in 1995," explainsFechtmann. MetLife committed $80 million over two years forPeopleSoft's Enterprise Profitability Management (EPM)package.
Next, Fechtmann created a rollout plan. First was the MetLife company,or Mother Met as Fechtmann calls it, which was converted in April.Several smaller subsidiaries moved over in May, and several midsizesubsidiaries, such as MetLife Securities, in June. MetLife Auto andHome is slated for the third quarter. After that come the largeracquisitions - New England Financial and General AmericanFinancial - in thefourth quarter, where there is sure to be a "fair amount of pain,"says Fechtmann.
Fechtmann and the committee allow no more than 5 percent customizationof code - a conservative choice based on a lesson learned the hard way.Five years earlier, one of her predecessors had implemented thePeopleSoft HR system with more than 40 percent customization. "Everyyear, there are patches and upgrades," says Fechtmann. She is"painfully de-customizing" the PeopleSoft platform (working withconsultants from KPMG Consulting and outsourcer Cognizant) to upgradeto version 8.3.
After the vendor, rollout and customization choices came the hardpart. Every Thursday, Fechtmann flew to Tampa to foster a closeworking relationship with her business partner, MetLife's comptroller,and representatives from Met's subsidiaries. "There would be painfulmeetings where we would do account mapping," Fechtmann, a formeraccountant, recalls with a grimace. "New England Financial'scomptroller would say, 'We have 500 general ledger accounts, and thisis how we normally post our stuff.' MetLife's comptroller would say,'Well, we do it this way."
The IT governance board came to the consensus that decisions such asthose would be made based on the greatest overall benefit, rather thansimply going the MetLife way. "We weren't going to say, 'Well, this isthe way we do it, and you have to comply," says Fechtmann. "So wewent account by account and figured out how we were going to do it.[We] really had to reengineer the business processes. [We] were reallytrying to define a new model of how to do business."
The process was tedious and troublesome. "You run into both businessprocess angst and, quite frankly, cultural angst," Fechtmann explains."Old habits die hard. People say, 'Well, this is the way we've alwaysdone it,' and change can be difficult." Add to that the impending lossof jobs in subsidiaries that had their own accounting departments(that work would soon be centralized within MetLife), and the tensiongrew. "It became much more a job of using your influencing skills toget everyone to figure out the best way to do things going forward,"she says. "The good thing was that we had a really great partnershipbetween IT and the business. I know that can sound like a cliché, butI mean it sincerely. That's how we got through it."
MetLife and most of its subsidiaries have made the transition to thePeopleSoft EPM system and have begun to trust the numbers itgenerates. The next step is encouraging business partners to use itfor financial analysis and business planning.
One View
Besides going public, other big changes at MetLife have influenced themove toward integration at the application level. Most important, "thechairman" wanted to shift MetLife's focus to the customer. "With bigcompanies like MetLife, you often don't get treated as a singlecustomer," says CIO Candito, "so we needed to create an enterprisewidesystem that would allow us to maintain a holistic customerrelationship, regardless of product sold, in order to increasecustomer loyalty and satisfaction."
In the past, if a customer moved, she would have to make multiplecalls to different customer service centers within MetLife -one for autoinsurance, another for her dental plan and another for investments.This type of situation is clearly frustrating for customers. Havingcustomer information stovepiped by product or business unit also makesit difficult, if not impossible, for MetLife's sales force tocross-sell or up-sell other MetLife products.
Creating a complete customer view is a challenge facing not onlyMetLife, but the entire insurance industry, according to Meta Group'sJohnston. "There's a lot of talk about the enterprise customer rightnow. It's an easy thing to talk about, but it's a hard thing to defineand difficult to implement."
The charge to create a centralized customer database came directlyfrom Benmosche (a former IT guy himself) and his executive committee.The planning and execution rests with Candito, who says about 80percent of his job involves application integration. He has beenmeeting with business customers and their CIOs to determinerequirements for what MetLife has christened the Client InformationFile (CIF). This database will eventually house data for 100 millioncustomers (MetLife's target for 2010) and become one of the largestand most complex of its kind. "The complexity comes not only from thepotential size of the database but also the number of different placesthis data will come from," explains Johnston. "I think it will be oneof the more complex information networks ever created."
Candito and his CIO counterparts mapped out anticipated returns fromthe CIF for each line of business and chose Toronto-based DWL as thevendor. DWL Customer acts as middleware between the source data (from30 different MetLife systems) and applications, creating a "gold copy"of customer information for expediency, cost and real-timeavailability. MetLife's legacy systems will communicate with eachother through an XML interface, and an IBM Shark storage system willstore the customer data file.
Candito then developed a data model using industry standards andcreated a central data administration group. Prior to implementation,MetLife worked with the vendor to determine data entities andattributes, and set performance and volume metrics for benchmarking."We got DWL to extend their model to be more supportive of what abroad-based financial service institution needs," says Candito. "Andbecause of the large scale of this, we knew we had to do a lot of dataanalysis up front."
This spring, MetLife rolled out a pilot of the customer informationfile for new customers only. By June, MetLife will have implementedcore components of the CIF, including the underlying software, datamodel and business rules for capturing client information at the frontend of a client acquisition process. In November 2002, the firstadministrative systems in MetLife's individual business unit will beconverted to the CIF, with rollout continuing throughout 2003. Canditowill begin the CIF conversion of MetLife's institutional businesssystems in 2003, then prioritize and convert Met's remaining businessunits.
As with the PeopleSoft conversion, application rollout will be theeasy part. Business process and cultural changes have been trickier.For example, Candito and his team are considering whether to set up acentralized client management group within MetLife to address customerservices currently handled at the business unit level. Business unitleaders are still antsy about the shift. "We got a small group of ourkey business customers together, and intellectually they agreed it wasthe right thing to do, but emotionally they were afraid to give upcontrol," Candito says. "It's a part of change."
Another challenge is keeping the project aligned with business goalsas people come and go within MetLife over time. "Our businesses canchange a lot over the period of a year, but it's going to take morethan one year to build a customer information file," says MarkHammersmith, senior vice president and CIO of institutional business,whose 33 million customers will eventually live in the CIF.
Architectural Integration
MetLife Senior Vice President and CTO Steve Sheinheit says integratingapplications and data related to the CIF and PeopleSoft projects isthe most difficult integration work under way at MetLife. Despite hisattempts to downplay his role, much of the integration work begins orends with Sheinheit. He's responsible for the entireinfrastructure - from the desktops to the mainframes - and oversees a budgetof $300 million and a staff of 1,100 in seven locations. "When I came,in some ways, the hard work had been done. The buy-in was there. Theunderstanding of the value was there," says Sheinheit. "I just came inand did a lot of execution."
Early on, Sheinheit established an enterprise architecture program andgovernance council with representatives from each of MetLife'sbusiness units. "We had to start by bringing together representativesfrom the business and technology groups to figure out how we weregoing to establish a whole greater than the sum of its parts for thiscompany," he says.
A set of seven information technology principles to guide IT decisionmaking was among the first things the enterprise architecture councildeveloped. "It was the set of values on which we wanted to operatewith regards to technology within the firm," says Sheinheit. "Theyseemed like obvious ideals, but they weren't always followed. So wefelt it was important to communicate them, create an understanding ofwhat each one means, and explain the rationale for and implications ofeach principle."
The team also created a technology standards document that it updatesfrequently via the corporate intranet. It also published a road mapfor technology projects, detailing how MetLife would integrate acrossthe five CIOs, the application development groups, the CTO and hisinfrastructure group, and ensure that necessary checkpoints andcontrols are established. "My sense is that not too many companieshave been that successful in getting to the point that we're at withthis," says Sheinheit. "In companies where technology is moredecentralized, you'll find even less of this kind of discipline, withdifferent ways of doing things going on in different parts of thebusiness." At MetLife just a few years ago, you would have found justthat.
Sheinheit's team further reduced costs and improved efficiencies byintegrating the data centers for acquisitions New England Financialand General American Financial into MetLife's common data center onMemorial Day weekend of 2001. "It was a major effort and a milestoneof our integration efforts," says Sheinheit. "It's resulted in a 40percent reduction in costs and an increase in service for the businessbecause they're now working in a more mature, scalableenvironment."
Sheinheit will continue to oversee most of these integrationinitiatives indefinitely. "When I look at our infrastructure today,I'd say we're probably 80 percent integrated, but that's a movingtarget. If I look at it next week, I don't know if I'll be at 70percent or 90 percent," he says. "Maybe the answer is that we'llalways be around 80 percent integrated. There will always be thingswe'll continue to look at."
Work in Progress
Like the Metropolitan Life Tower, under renovation and enshrouded inscaffolding, the company will continue its integration efforts as partof the business reorganization. Business unit CIOs are consolidatingand retiring legacy systems as part of Project LESS, a three-yearlegacy system simplification project with a two-year payback. The goalis to consolidate like systems onto common platforms to eliminateredundant business processes and reduce ongoing maintenance costs. AnInternet self-service initiative, fueled by a $200 million investment,is also under way.
There are numerous smaller integration projects within each businessunit as well. Tony Colyandro, Met's vice president and CIO ofbroker/dealers and investments, and his staff are combining front-,middle- and back-office functions of all four broker/dealers. They areseeking economies of scale and looking for the best solutions withineach of the brokers' existing systems.
Hammersmith has invested $120 million over several years to createself-service portals called MyBenefits.com and MetDental that willconnect legacy systems for institutional clients. Richard Small, vicepresident and CIO of MetLife Auto and Home, has invested $40 millionto integrate the personal lines of business (worth $1.1 billion inpremiums) acquired from St. Paul Cos. in 1999. These pro- jects inspecific business units and across the enterprise will continue forsome time.
"We still have a lot of work to be done. We have a lot of legacysystems that still need to be supported that we mask with middleware,"Sheinheit says. "Today, we're doing a lot of front-ending things,creating a veneer that makes it look as if everything's integrated.But over time, we're going to get all of the pieces actuallyintegrated."
Meta Group's Johnston says we won't see a truly integrated MetLife, orany other insurance company, until at least 2006 or 2007. Still,MetLife's long-term investment in integration is exemplary, he says."MetLife put a stake in the ground and made the decision that they'regoing to have to do this or be ineffective," he says. "That shows agreat degree of moral courage on their part to invest in somethingwhere they may not necessarily see a real return on their investmentin 12 or 18 months."
For Cavanagh, the enduring nature of MetLife's integration efforts isboth logical and welcome. "Integration is an ongoing challenge becausewe're always going to be adding new business, and people are going tokeep coming up with new ideas in our existing business," he says."We're going to find more and more things that belong together."