Steve Osborne explains how CIGNA Reinsurance streamlined corporate systems internationally to improve business efficiency and beat Y2K.
CIGNA Reinsurance offices in the United States and United Kingdom needed to rationalise diverse non-Y2K-compliant systems, and to gear up for the euro currency unit. CIGNA Re wanted improved data management and analysis capability for all staff. The solution had to better standardise operations as well as cost and labour-intensive systems maintenance activities.
Six steps to realization:
1. Establish clear set of priorities (80/20 rule)
2. Focus on business goals
3. Decide and maintain timeframe for project completion
4. Choose partners and systems with trustworthy track records
5. Ensure total co-operation of project partners
6. Encourage total buy-in at all levels of company.
CIGNA Re is a leader in developing sound yet non-traditional solutions to balancing risks, costs and financial security, yet when the company reviewed its operational business systems worldwide as part of its year 2000 preparations, it faced some tough facts about its existing information technology systems.As CIGNA Re financial controller and co-project manager John Lucker puts it: “We had a variety of systems that did not talk easily to each other. We wanted to get away from OS/2 as an operating system. And we needed to save time and money wasted keeping old systems working inefficiently.”
CIGNA Re decided to initiate a project to achieve system consolidation and data restructuring which incorporated Y2K and readiness for European monetary union.
The company's core goals were to improve financial controls and develop a comprehensive underwriting solution that would give a best fit to the business being written, and that would grow in line with business demands. CIGNA Re wanted a package that was supported by a scalable, secure, and robust platform that allowed them the flexibility to choose platforms and databases. Communication, sharing of knowledge and playing to people's strengths is the secret of improving business performance, so a the team approach would be central to the project.
From the beginning, CIGNA Re introduced a strict, highly-focused 80/20 strategy. The 80/20 rule or Pareto principle asserts that a minority of causes, inputs, or effort generate a majority of the results. For example, 80% of the sales in a company come from 20% of the customers.
“If there was any one key element which enabled this project to achieve the desired level of success, it was to focus on the problems as they arose and to prioritise their importance against our implementation and business goals,” says Mr Lucker. “We established a clear 80/20 rule and applied it to all problems that we encountered. This enabled us to focus our energy on achieving the 80% of the functionality that had the most impact to our business. What was encouraging from our point of view was that the adoption of the 80/20 approach by all parties went smoothly, and clearly aided the problem resolution process.”This rule was applied to almost every aspect of the project and it helped all parties focus on business goals and how best to achieve them. For example, explains Gary Israel, CIGNA Re co-project manager and business systems architect, it was decided that the adoption of a graphics user or GUI front-end for phase one was not a necessity and this reduced the risk of delays. “Instead, we concentrated on providing users with the key business functionality they required,” he says.
“We had to be tough on ourselves and tough on our suppliers while focusing at all times on achieving the goals we had set ourselves,” says Angus Sandeman, director of finance & administration for CIGNA Re International. “Without the total co-operation of all the key partners, we were not going to meet our targets. It is through a lot of hard work and combined effort that we managed to complete this implementation, from inception, in nine months - on time and on budget.”
The right team player
There was no shortage of advanced technology solutions providers keen to pitch for the plum role of reducing system maintenance overheads and rationalising the flow of information for a global company with non-US international revenues of approximately $450 million in 1998.
“Our intent was a single system for US and international business. The deadlines and budgets set were extremely aggressive so we wanted to use companies and software that delivered,” says Mr Lucker.
Mr Lucker, Mr Israel and CIGNA Re chief information officer Ray Ziegler looked at a wide range of vendors and solutions, including Rebus Insurance Systems' Fusion, an underwriting system which had been successfully used in CIGNA Re's London office for several years. Now designated as Fusion/D, this software package is a general lines insurance and reinsurance system that can be tailored to meet specific business needs. It is designed to meet the requirements of companies seeking a UNIX/NT solution and it offers customers flexibility in choice of platforms and databases. “Fusion seemed to be the most flexible and most able to genuinely accommodate a global business,” concurs Mr Ziegler. “Because it is a table-driven system, the basic package could be easily tailored to meet our specific requirements without the need for expensive customisation. Fusion/D has a theoretical scalability reaching into the thousands - and this is easily achievable without large amounts of extra investment.”
A key business driver was to have the first phase of this reorganisation in place during 1998. This phase was to consist of the consolidation of all underwriting operations onto the Fusion product and to integrate with System Union's SunAccount financials package supplied by Sapphire Systematics.“This was a very important part of our whole system integration project,” says Mr Lucker; “We wanted a proper double-entry general ledger system and the Systems Union package integrated nicely with the Rebus approach.”
The immediate task was, therefore, to upgrade to the latest release while also converting all existing data into a required format and deploy the system in both Connecticut and London. “Giving full access to the data was key to our business goals. Once the new system was in place, we then needed to concentrate all our efforts on establishing an effective data warehouse operation and train key users in real time data analysis capabilities,” explains Mr Lucker.
Co-operation with project partners for efficient data warehousing IBM's Universal Database running on a Windows/NT platform was chosen as the foundation for the data warehouse based on data provided by Fusion and SunAccounts. Business users accessed the warehouse using the data analysis tool from Brio Technology.
The rollout of the data warehouse coincided with the rollout of Fusion and SunAccounts as the new systems went live in each of the branches. With the implementation of the warehouse, users were able to significantly improve performance through data quality (for an in-depth case study, go to http://www.software.ibm.com/data/solutions/customer/viscigna/viscigna.htm).
Says Mr Ziegler: “Before we had real problems with consistency of information; each system had its quirks - there was an incompatible population of information. Now all data is stored in the same way, in the same place.”
Business benefits do not always require hi-tech solutions. Comments Mr Ziegler: “You do not always need to implement the fanciest communications procedure available. Our focus is always on the business functionality with the right technology underpinning it. Some firms got carried away with technology which would have meant spending further hundreds of thousands of dollars on telecommunications infrastructure to make it work.”
CIGNA Re has robust dial capabilities as well as a worldwide internal corporate network that enables company salespeople, underwriters, management and financial/accounting staff to access and update the centrally held database from different locations. These include the US corporate office in Connecticut and field offices in Pennsylvania, Maryland, Florida, Texas and Arizona, plus the European corporate offices in London and Paris and also the Monaco field office.Further business benefits accrue from what Mr Ziegler characterises as essentially outsourcing to Rebus; “Instead of multiple systems, we have one system; and, for example, it is possible for underwriters to add new products without the intervention of programmers.”
As regards IT support, outsourcing costs have been radically reduced and in-house staff are freed up for genuinely new development projects in the areas of information management, data warehousing, internet development and other new applications designed to keep CIGNA Re ahead of the competition and delivering better value to customers.
In fact, CIGNA Re played a key role in developing the package today referred to as Fusion/D, which has matured to the point where most new developments are steered by the needs of the user group, says Rebus' UK based manager for the project, Oliver Carden. This allows Rebus to stay in close contact with the people who can give feedback on key issues, such as levels of service, product development, software releases and training needs. “It became an excellent two-way process,” says Mr Carden. “Having worked with us in the past, CIGNA Re was open and frank about previous experience. By listening and responding accordingly, we were able to tailor an installation programme which ensured that the implementation was on time and within budget.”
Steve Osborne is marketing and communications director for Rebus.