Accelerating Profit Growth Through Innovation - FST Media

Accelerating Profit Growth Through Innovation
(Left to right): Ananth Basavaraju, Director, Insurance, ANZ, TCS; Paul Detheridge, Executive General Manager, Enterprise Customer
Development, Suncorp; Steve Coles, Chief Information & Business Improvement Officer, Allianz; Matthew Palmer, Head of Strategy
& Innovation, Insurance, UK & Europe, TCS; Murray Howe, Executive Manager, Group Digital Strategy & Innovation, Suncorp; Neil
Whiteing, Group Chief Information Officer, IAG; Deborah Hadwen, Country Manager, ANZ, TCS; Sanjeev Gupta, Head of Technology
& Projects, Wesfarmers General Insurance; Andrew Boldeman, Chief Executive Officer, Group Life, TOWER; Eric Reisenwitz, Chief
Marketing & Distribution Officer, MetLife; James Ingham, Head of Information Technology, Group Investment Division, QBE; John
Myler, General Manager, Direct & Life Insurance, Allianz.
FST Media and Tata Consultancy Services (TCS)
hosted an exclusive roundtable luncheon. Guests
included a select group of CEOs, Group CIOs,
Executive General Managers and Divisional Heads
to discuss the salient global challenges facing
the insurance and wealth management industry
today. Following is an extract of the discussion.
MATTHEW PALMER, TCS: Cost management of
the IT organisation has improved over the last
15 years due to major industry-wide investments
in rationalisation activities, but the legacy
environment is still a pressure point in terms of
speed to market, and we’re seeing insurers think
more dramatically about how they solve this
simplification issue.
The additional complication for insurers is that
they are trying to simplify and transform their
business while maintaining stable operational
services. It is difficult to ‘change the tyre
on the car while it’s still running’. However
business and IT executives are doing their
utmost to manage this complex situation.
As well as IT simplification, business and IT
executives are seriously thinking about process
simplification. Insurers have dramatically
Financial Services Technology Media
where the market meets

Accelerating Profit Growth through Innovation
“Due to this situation
some important
customer journeys
remain a barrier to
customer experience
and cost management
objectives.”
– Matthew Palmer, TCS
“Some of these
organisations could
have dramatically
improved their
processes through
things like Business
Process Management
(BPM) or other
technologies. So it is
‘horses for courses’
there are lots of
variables to consider.”
– Steve Coles, Allianz
improved services and processes via line of
business improvement projects, but with
constrained resources and budgets they have been
unable to completely optimise some fundamental
processes. Due to this situation some important
customer journeys remain a barrier to customer
experience and cost management objectives.
Cloud is a potential enabler of IT optimisation
and effectiveness objectives. However its
suitability is dividing IT executives and as
such, it is yet to gain acceptance as a mainstream
technology solution amongst insurers. Some say,
“We want to sample what cloud is about because
we believe it can help with operational efficiency.”
Therefore one area of interest is around
using cloud services to provide development
and testing environments in order to help
with business change and configuration
management commitments. The other area
of interest in cloud services is around data
management and business intelligence – where
data cleansing, data processing and data
enrichment is enhanced by cloud services.
Due to this situation some important customer
journeys remain a barrier to customer experience
and cost management objectives. Rightfully so.
The challenge for IT executives is how to
manage costs and we believe cloud services
will continue to offer value to insurers in
meeting this key objective.
Regulators are looking at the insurance
industry and saying it needs greater transparency
regarding the risks the businesses are facing
and the capital reserves it holds to offset these
risks. Australian insurers recently challenged
the local regulator and succeeded in achieving a
less onerous approach to capital management,
but the whole risk management area will
remain a hot topic for the next few years.
Data privacy is another key issue, especially
with the proliferation of multiple channels
including the emerging mobile and social media
channels. Considering how we maintain data
privacy whilst also connecting with customers
over new channels like social media
and mobile, it will continue to be an IT
objective for the foreseeable future.
Additionally, insurers are also noting
they can enhance their brand by maximising
their marketing intelligence, including
intelligence from social networking environments.
Technologies are available that can automate
these tasks and we’re seeing people increasingly
interested in using electronic listening tools
to decipher inferences from positive and
negative market commentary. Data privacy
remains a key concern for insurers operating in
this arena.
Predictive analytics will also be a differentiating
capability for business teams for the next
few operating periods. The whole product
configuration process is under review in this
geography as well as in other countries.
How do you increase speed to market of your
product and pricing changes? How do you
achieve future looking product and pricing views,
rather than the deterministic and historical
views that we’ve worked with? Predictive analytics
will be increasingly significant in product and
pricing areas as well as other functional areas.
The customer experience around integrated
channels is the last point I will cover. How can
we improve customer retention in terms
of integrated channels that improves the
customer experience? Australia has a good
set of retention numbers but retention rates
are under threat in other parts of the world.
This will remain a critical battleground for
insurers and people are talking about how
multi-channel integration will help them
achieve their customer experience objectives.
ANANTH BASAVARAJU, TCS: In addition,
we observe the need for bringing the cost
optimisation to manage the closed book
policies in the Australian life insurance
market. Businesses are keen to explore
new avenues in this space.
ANDREW BOLDEMAN, TOWER: The position
is probably different here from other markets.
There is a proliferation of closed book outsourcing
in the UK especially, but we have not seen
it so much in Australia. None-the-less many
organisations are still facing the issue of legacy
products; sometimes different series on one
system, or one product on multiple systems,
particularly if there has been an acquisition.
MATTHEW PALMER, TCS: Business and
IT executives are increasingly considering
Business Process Outsourcing (BPO) and
closed book outsourcing. At TCS we have an
operating unit specialising in BPO and we have
helped clients to rationalise and improve the
quality of their processes and data through
the BPO approach. The industry appears to
be increasingly open to BPO for closed book
of business to achieve their objectives.
ANDREW BOLDEMAN, TOWER: Scale is very
important across these markets. With the
proliferation of technologies and things that
people can invest in, you need scale to invest
in different channels simultaneously. We look
at return on investment and value. We’re in a

Accelerating Profit Growth through Innovation
business where price is important, so being able
to deliver quality service at an appropriate
price is critical.
STEVE COLES, ALLIANZ: I have seen organisations
that have outsourced or offshored and they’ve
spent many years moving a clumsy process and
it remains pretty much the same clumsy process
with a lower cost. Some of these organisations
could have dramatically improved their processes
through things like Business Process Management
(BPM) or other technologies. So it is ‘horses for
courses’ and there are lots of variables to consider.
MATTHEW PALMER, TCS: It’s about making
intelligent decisions. There are certain functions
that you will want to keep in-house. There are
important aspects of a value chain in terms
of ‘getting it right’ and if you’ve got a clumsy
process you want to reengineer the process
to get it right. Hence the increasing focus on
business process optimisation by business and IT
executive teams. Business Process Outsourcing
is about making decisions where you can extract
value from certain areas of your business.
MURRAY HOWE, SUNCORP: I come from a
marketing background and I see two juxtaposing
forces. From a customer perspective I see
increasing complexity – the rise of social, online,
media fragmentation – bringing increased cost
to engage and acquire. The business however is
looking for greater simplicity of operations and
lowering cost. What does that mean for TCS,
and how are other people dealing with it?
Matthew Palmer, TCS: The ideal approach
is to drive down the costs, not just from a cost
arbitrage point of view, but also from a sustainable
transformation of the business processes point
of view. Within our project work for clients we
always strive to improve the technology and
also re-engineer and automate processes. It is
desirable to achieve IT and business process
optimisation together in order to reduce the
pressure on costs and operational objectives.
You mentioned new channels, new media, but
you’ve also got to build in regulatory initiatives.
You’ve got to drive the costs down whilst
creatively thinking about new functionality
and not blowing your budget. This is where
Software-as-a-Service (SaaS) will come into play
because a service approach can help manage
your costs of delivering new functionality.
In the future we believe organisations will
consider business and IT simplification using
SaaS, in an effective way that’s palatable
to the risk profile of the organisation.
JAMES INGHAM, QBE: Many global players
have seen regulatory risks across different
environments. Do you find organisations in
different countries approaching cloud computing
with concern about regulatory environments
and the effect based on where they’re located?
MATTHEW PALMER, TCS: It’s a test-and-learn
approach at the moment and if regulatory
requirements are involved there is real
nervousness. If there are opportunities where
the data can be masked to protect data privacy
within the guidelines set out by the regulator,
then people are beginning to dip their toes
in the water as far as cloud is concerned.
JAMES INGHAM, QBE: Even before
they’ve seen the regulatory test cases?
MATTHEW PALMER, TCS: People are testing it
themselves. They will develop the environment
approach first before they take critical business
and IT operations into a cloud environment.
JAMES INGHAM, QBE: Are they waiting
for a level of regulatory approval that
indicates it’s been tested in the courts so
they’re not exposed? Our external audit has
very thin frameworks to say if one is
on the straight and narrow. They’re
waiting for that proofing side.
MATTHEW PALMER, TCS: There is a great level
of attention that is involved with any data that
can identify customers; it’s an area of strict
control and conservatism. People are trying
to build their knowledge around how to do
this effectively in the short and long term.
SANJEEV GUPTA, WESFARMERS GENERAL
INSURANCE: It’s more than just conservatism.
The Australian Prudential Regulation Authority
(APRA) has regulations and concerns around
customer data being overseas. Until APRA changes
its mind, things aren’t going to move much.
NEIL WHITEING, IAG: At IAG we’re assuming
the regulations aren’t going to change any time
soon. We’ll always lag what’s going on from a
business process or IT perspective. We’re heading
down the path of simplification, exposing the
services. Within that there are additional
customer data services around tokenisation
so I don’t always need to send name, address,
telephone number and so on. For us cloud
is about workloads and where we send
those workloads. We’re not outsourcing,
in fact I know where my data centre is.
“Many global players
have seen regulatory
risks across different
environments.”
– James Ingham, QBE
“From a customer
perspective I see
increasing complexity...
the business however
is looking for greater
simplicity of operations
and lowering cost.”
– Murray Howe, Suncorp

Accelerating Profit Growth through Innovation
“We believe we will
have to tokenise; we
believe we will have
to scrub data. We’re
starting to develop
those capabilities rather
than waiting for APRA
to catch up with us.”
– Neil Whiteing, IAG
“There is a truism: The
most customer-focused
process you can
design will often be
the most efficient.”
– John Myler, Allianz
Once we start to virtualise our Intel
environments, I’m out of the hardware business.
What do I care where one virtual environment
is versus another? We’ll start with workloads
that don’t matter. The complexity comes in
because it’s not encapsulated within a controlled
environment. We’re going to layer on complexity
around authentication, authorisation and
data management.
Once people learn to manage and get
comfortable with it, then cloud becomes more
real. That’s why people go for a virtual private
cloud, because they don’t know how to deal
with the authentication/authorisation issue
and how to attest to APRA that customer data
isn’t in the Philippines or wherever. What’s the
difference between a virtual private cloud and
a highly virtualised environment in my own
data centre? Not a lot, from an economic model
perspective. We believe we will have to tokenise;
we believe we will have to scrub data. We’re
starting to develop those capabilities rather
than waiting for APRA to catch up with us.
SANJEEV GUPTA, WESFARMERS
GENERAL INSURANCE: Looking at
everything that is available with the cloud
arrangement at the moment, it’s more of
a managed service than a ‘true cloud’.
NEIL WHITEING, IAG: What do you mean by
a ‘true cloud’?
SANJEEV GUPTA, WESFARMERS GENERAL
INSURANCE: It’s not a ‘pay by the drink’ service,
you’ve still got to own the bar to buy a drink.
Amazon has got it; and so does Microsoft, but that
is more aimed at consumer type service and not
corporate users. Corporate applications that I’m
seeing are named cloud but are managed services.
STEVE COLES, ALLIANZ: The cloud solution today
doesn’t justify the hype. Sometimes I
wish they would sell me the software and I’ll
stick it in my data centre. However, I can see
the market changing especially where there
is a stronger reliance on centrally managed
infrastructure and where the market is looking
for more cost effective solutions to reduce risk.
At the moment, it has the risk of being a
technology that a user could manipulate.
People could get a credit card out and get a
whole bunch of exciting stuff. Then data
management and IT control principles are
suddenly out of the equation. It has the
risk of enabling a ‘cowboy IT country’ at
the moment, but I’m sure it will settle into
something a lot more serious and valuable.
Our IT governance is embedded in the
organisation; people don’t go out and select
an IT solution just because it’s accessible.
However we have to get the IT plumbing right
for any commercial opportunity we need to
explore. We’re looking at Salesforce as a case
study to see how we can empower the business
to do some practical stuff and leverage the
technology, but still have the appropriate
controls around it. We’re not quite there yet.
JOHN MYLER, ALLIANZ: I agree. Insurers are a
risk-based business and need to avoid importing
operational risks. From an IT perspective,
we are conservative around the adoption of
new technologies. As a distribution owner
I’m also faced with increasing diversity from
my customer base and I need to leverage my
existing processes multiple ways across multiple
sites. It requires an agility to meet customer
complexity head-on and respond appropriately.
MATTHEW PALMER, TCS: John, in terms of
managing down costs, what’s your viewpoint on
how the industry will address this situation?
JOHN MYLER, ALLIANZ: I look at it from a
user perspective and what the technology will
allow me to do. There is a truism: ‘The most
customer-focused process you can design
will often be the most efficient’. So start with
the customer experience, design the internal
process accordingly, and then deploy technology
to support it end to end. Companies who
start with what the potential cost savings
technology can bring and then try to retrofit it
into a business can end up with higher overall
operating cost and a poor customer outcome.
STEVE COLES, ALLIANZ: In 2005 we separated
‘running the business’ from ‘changing the
business’. Part of my organisation just focuses
on taking business costs down. That’s given
me the opportunity to reinvest in a framework for
keeping our IT expense ratio competitive.
If I can make savings of $2 for every $100 of
insurance premium, then from a competitive
perspective it means that we can grow more
by offering a better price, a better
profit or a mixture of the two.
ERIC REISENWITZ, METLIFE: Part of the
issue is timing when the benefits of the newly
implemented technology catch up with the
cost savings that you’re trying to accomplish.
One of the challenges we face when we implement
new technology is catching up with our customers’
own systems, but there’s also part of the

Accelerating Profit Growth through Innovation
customer base that is not ready to move, so there
is parallel running of old programs with the
new online technologies. The savings you’re
expecting to get from the new automation
don’t always match up with your investment
at exactly the same time. More importantly,
customers don’t want to pay for it. Once they
see the ‘new world’ they think that should
be standard, and they assume your price
includes that. Other industries have made
these moves such as the airline industry, and
now that everything can be done online, you
actually pay more for a customer service agent
or when you get a paper ticket. I don’t know
if we’re ready to say, “You can still have the
old way of doing it but it costs you more”.
NEIL WHITEING, IAG: Why don’t
you think we are ready for it?
ERIC REISENWITZ, METLIFE: We’re ready for it;
I’m not sure the customers are yet. They want and
actually are using the technology. We’re going
to get there. We’re talking about the challenges
in trying to balance the cost of running parallel
processes and dealing with an annual budget that
assumes you have the cost benefits lined up.
STEVE COLES, ALLIANZ: The real surprise for
me was online claims. I was very cynical about
online claims before we tried it, but we’ve had
instances where 40 per cent of our incoming
claim lodgements have been online. There’s lots
of evidence that consumer behaviour is changing.
ERIC REISENWITZ, METLIFE: It’s clearly moving,
and that’s part of the discussion – how we move
consumer behaviour? With life insurance, people
don’t like the whole process of signing up because
it’s making them think about things they don’t
want to think about. Simplifying the process is
great, they love that. At claim time I am amazed
at how many people are willing to go online. From
a death claim perspective, there are only a few
things you need: proof that they were covered
and proof that they have died. There’s really
not a lot of additional investigation required.
Part of me says, “Why did it take us this long
as an industry to move things along?” You still
need to have fraud controls and privacy but
there is now a comfort level. I don’t know whether
it’s because of the nature of our product, which is
not very tangible, or whether people are
shocked when they push buttons, it works.
The biggest ‘aha’ moment was when we started
our online application process. We did some
focus groups with people to see: can you do
this; is this user-friendly; how do we do this?
People entered their data and clicked on to
the next screen. When they got to the end it
said, “You’re approved; here’s the PDF of your
certificate; something will come to you in the
mail”. Most of them did not believe that they
had actually obtained the insurance; they
wanted to know what was going to happen
next. They were amazed that it was that simple.
They are saying, “I’m comfortable with this
process now and I didn’t think I could be.”
ANDREW BOLDEMAN, TOWER: From a life
perspective the market’s changed a lot. Going
back 10 years people used to think, ‘people are
sold life insurance, they don’t buy it’. When we
set up a call centre where people could ring in
and apply for life insurance people said, “Well
that’s not going to work.” Ten years later it
has been very successful. People are picking
up the phone and choosing to take out cover
for themselves. Now on the web consumers
shop around and check out prices but they still
generally want to speak to someone. Telephone
interaction is becoming increasingly important
across all channels in the process of obtaining
life insurance policies; 10 years ago people
primarily had an adviser sitting down with them
when they considered their life insurance.
JAMES INGHAM, QBE: Have you noticed
much pushback from the business itself
during this 10 year simplification, and are
we eroding our competitive differential?
ANDREW BOLDEMAN, TOWER: To a degree
but it is not insurmountable. People who
have been in the sector 15 years are used to
a particular way of doing things. Trying to
encourage people to reconsider their processes
is not without challenges, but people pick it
up and then they get passionate. Often those
who were the strongest in opposition become
the biggest advocates. That’s a transformation
we’ve seen over the last four to five years.
MATTHEW PALMER, TCS: In the UK the
regulators are encouraging various levels of
personal financial decision making in the life
insurance sector: simplified advice; executiononly
advice; more complicated advice. The two
drivers are, first to improve people’s awareness
about what they need, and second to make simple
products available to them. The problem for
insurers is how do you operate cost effectively
in an execution-only channel where there are
very thin margins? It’s very difficult to achieve
this with existing operating models and being
constantly under pressure to reduce costs.
“Allianz has assessed
different types of
models but we believe
that we can provide a
better expense ratio
by leveraging the
infrastructure
that we’ve already
got – that supports the
traditional business.”
– Steve Coles, Allianz
“We’re talking about
the challenges in
trying to balance
the cost of running
parallel processes
and dealing with an
annual budget that
assumes you have
the cost benefits
lined up.”
– Eric Reisenwitz,
MetLife

Accelerating Profit Growth through Innovation
“By getting distribution
onto the same
platform and getting
more consistent
process, I’ll achieve
10 to 15 per cent
operational
expense saving.”
– John Myler, Allianz
“What makes our
IT job difficult is
managing costs and
achieving scale when
there are different
business customers
trying to achieve
different things.”
– Andrew Boldeman,
TOWER
STEVE COLES, ALLIANZ: Allianz has assessed
different types of models but we believe that
we can provide a better expense ratio by
leveraging the infrastructure that we’ve already
got – that supports the traditional business.
ERIC REISENWITZ, METLIFE: Until recently
there were specific channels where you
would get your insurance: through an IFA,
somebody you knew, though your super, or
maybe some retail relationship with banks
and/or credit cards. They’re all still there
but now within those channels are dozens
of different ways of getting the insurance,
whether it’s online or through telephone calls.
The generation of people who are now doing
all their transactions online don’t sit back and
think about the financial institution they’re
going to deal with. It’s about how to get it all
online in the easiest way and how to process
more quickly. Those are the types of things
that we need to react to. We are there
from a conceptual perspective; it’s again
about transition from the traditionalists
versus this new group of thinkers.
STEVE COLES, ALLIANZ: If we take the most
efficient distribution model being internet direct,
I can deliver that service more cost efficiently as
a service provider by leveraging the capability
and scale that I’ve got, rather than building a silo
that would support just one part of the business.
JOHN MYLER, ALLIANZ: We have numerous
channels and teams using different systems
to distribute products. By getting distribution
onto the same platform and getting more
consistent process, I’ll achieve 10 to 15 per cent
operational expense saving.
MATTHEW PALMER, TCS: In Europe the
‘new world operating model’ is back on the
agenda. Businesses are thinking about running
free of their current constraints, driving out
process inefficiencies and costs, and thinking
what to do next to achieve this end-state.
STEVE COLES, ALLIANZ: We would be completely
opposite to that approach – it’s key to the way
we run the business but it all depends where
you started from. Go back to the question
about outsourcing and radical change.
MATTHEW PALMER, TCS: They are not taking
that decision from purely an outsourcing
point of view. This is about a ‘blue ocean’
strategy that frees them from the constraints
of their current operating model.
STEVE COLES, ALLIANZ: I don’t see it
as a constraint to innovative thinking
or creativity. My view would be that the
customer would be driving that.
NEIL WHITEING, IAG: It’s a clear separation
in business strategy. One line is along
the lines that Steve is taking; we’ve seen
that in organisations like Santander.
STEVE COLES, ALLIANZ: That’s right.
NEIL WHITEING, IAG: Locally Commonwealth
Bank (CBA) has absolutely taken the approach that
Steve’s taking. Others believe in a more federated
model, where decisions about technology and
the provision of services will be retained at the
business unit level, and you’ll get flexibility or
speed to market choices along those lines.
I can’t say one’s right and one’s wrong, but
the organisations that are going to be in deep
trouble are the ones that sit in the middle.
The ones that clearly put a foot in one or the
other camp will leverage it and make it work.
Trying to play in both is not a good thing.
ERIC REISENWITZ, METLIFE: That’s even more
important with how fast technology is moving.
If you try to play in both worlds and the new
world starts to evolve into something – whether
it’s cloud or something else – if you’re still
playing in the other world, it’s going to be much
more difficult. You won’t be able to evolve.
ANDREW BOLDEMAN, TOWER: There are
different issues across different channels of our
business. Over the past few years in group life we
have been building a new capability from a largely
clean sheet, so our issue is building systems and
capability in a way that’s scalable and sustainable
into the future. At the same time we have other
business channels that are more mature that
might be supported by three or four systems. We
don’t want IT resources maintaining multiple
systems that largely do the same thing so in that
space its more about simplification. What makes
our IT job difficult is managing costs and
achieving scale when there are different business
customers trying to achieve different things.
NEIL WHITEING, IAG: That’s an operational
challenge. What we’re talking about is a strategic
approach. Most people haven’t defined what
their strategic approach is, so they deal with
it as an operational challenge. It’s important
that you have a clear strategic foundation
otherwise you can be caught between a fast
growing business and a more mature business.

Accelerating Profit Growth through Innovation
You need to step back from that detail of
operational pressure and review your corporate
principles. It’s not black and white. If you have 10
decisions and three of them go against the strategic
vision but meet operational requirements it might
seem like a good balance. On the other hand, if
you have a strategic direction and seven to eight
out of 10 decisions are point-to-point, you have to
decide if you are committed to the strategic vision,
or whether you go point-to-point. Businesses
that are caught in the middle will say one thing
and they’ll do another. It’s okay to say. “We’re
point-to-point and we’re going to manage it for
flexibility” but to say one thing strategically and
do another thing operationally is very dangerous.
MATTHEW PALMER TCS: That’s very interesting
in terms of the channel strategy and the
customer experience.
NEIL WHITEING, IAG: The long-term implication.
You’ll end up with something that is not what you
wanted. I’m talking over five to eight years. In the
short term you’ll meet your objectives because you
made point-to-point decisions. It’s a front-loaded
long-term journey to go down the strategic path.
Look at how much money CBA’s pouring into it. It’s
not cheap or easy. It takes executive commitment
to do that. The operational choices that they’re
making are completely aligned with the strategic
choices. We’ve got a more federated market and
we’re making choices against federated business
decisions and our business is going very well. It isn’t
right or wrong, it’s about alignment of operational
decision-making with your strategic framework.
ERIC REISENWITZ, METLIFE: In my 30 years in
insurance we’ve always had technology partners.
Technology is the enabler of business strategy.
With all the change over that 30 year period, that
is still the basic core of how to do things. You
need your business strategy, and what we do in
IT is the enabler to that. There have been times
where it’s felt like IT was driving the business
but that’s an excuse businesses use when they’re
not doing well. When you have the alignment set
up then you are moving in the right direction.
NEIL WHITEING, IAG: The variety of business
models that technology can now enable is
where the complexity comes in. Technologies
will emerge that will deal with security and
data protection in the cloud, and as long as you
understand how to make them work you’ll be
okay if that’s your strategy. Thirty years ago
you really only had one option – centralisation.
You didn’t have distributed; you didn’t have
cloud; you didn’t have SAPs. Now with the
proliferation of new technologies, the challenge
for technologists is education. I’m a teacher;
my job is to educate my business partners
about the choices they have in a way that they
understand so we can maintain our alignment.
ANANTH BASAVARAJU, TCS: IT trailing the
business is a very interesting point. What we
observed in the Australian market is continued
focus moving towards bringing agility, scalability
and flexibility in their business. We are
continuously seeing the trends where businesses
want to showcase their services to their customer
a different way and they are asking how IT could
bring the differentiation. Business is driving this
culture and more importantly both business and
IT are working in tandem to make this journey
a great success to meet their end customer’s
objectives. One of the initiatives happening in
the insurance industry now is consolidation and
rationalisation of the systems and it is underpinned
by the rationalisation of some of the products in
the banking sector a few years back and now that’s
the trend in the Australian insurance market.
MATTHEW PALMER, TCS: The agility
point is really important. Neil, how are you
encouraging agility around product speed
to market via your federated model?
NEIL WHITEING, IAG: In a federated model
it’s more obvious than in a centralised model.
Traditional logic would say that with a federated
model via distributed decision-making closer to
the customer. You get to choose how to position
things. Sales reps are pretty good at that and
it’s a useful mechanism for informing us.
We have a brand new business product
to market; a totally online experience, very
different to anything we have today. It’s not
just a skin on top of direct book business. It’s a
totally new book of business and it was eight
months from board approval to go-live. That’s
a pretty quick turnaround for our industry.
We leveraged some of our infrastructure
components, but for the application layer and
things like telephony and click-to-chat, we
sourced those externally. If we had tried to
do it internally we would have got there, but
it probably would have taken longer and we
would have had a few hiccups. So we sourced
the services and then integrated them together.
So there is a demonstrated proof point. That’s
where the federated model came into play. A
centralised model doesn’t prevent you from
doing this, but you probably want to internalise
some of those capabilities more so that you
can offer them out to other customers.
“The variety of business
models that technology
can now enable is
where the complexity
comes in. Technologies
will emerge that
will deal with security
and data protection
in the cloud...”
– Neil Whiteing, IAG
“We are continuously
seeing the trends
where businesses
want to showcase
their services to
their customer a
different way and
they are asking
how IT could bring
the differentiation.”
– Ananth Basavaraju,
TCS

Accelerating Profit Growth through Innovation
“We’ve taken a
culturally driven
transformation
approach to drive
efficiency into the
organisation and as a
consequence we’ve
got high credibility.”
– Paul Detheridge,
Suncorp
“If it’s a very federated
business like
Wesfarmers General
Insurance, then having
decision making closer
to the customer – where
actual value is added –
makes more sense.”
– Sanjeev Gupta,
Wesfarmers General
Insurance
JOHN MYLER, ALLIANZ: Some of the
investments that I’m making in the business
would not stack up without the capability to
leverage other channels. Yes, I want to spend
$2 here to make $2 back here, but it’s also
got to make $2 there, there, and there.
NEIL WHITEING, IAG: That’s a thought
process and strategy; there has to be a belief
underpinning it. In a business that does not have
clarity on strategy and a proven track record
of executing against it, history proves that
they can’t deliver. It is about the alignment of
strategy and IT and business and the operational
decision making that goes with that.
STEVE COLES, ALLIANZ: That is ‘business as
usual’ you wouldn’t have it any other way. There’s
going to be a tipping point around product
flexibility. We’re not facing it yet, but I’m sure
we’ll face it down the line, which will be an
interesting challenge. There is an opportunity
to take a step back from your products and look
at what we call good and bad complexity. We
try to embed good complexity within products
where we can and remove the bad complexity.
SANJEEV GUPTA, WESFARMERS GENERAL
INSURANCE: Depends on the operating model,
if your business has an integrated operating
model, then some centralisation makes sense.
But if it’s a very federated business, like
Wesfarmers General Insurance, then having
decision making closer to the customer – where
actual value is added – makes more sense.
NEIL WHITEING, IAG: Yes, but take CBA for
example, they offer a wide range of products
from wealth management to core banking,
mortgage, retail brokerage and insurance.
Those are all fairly autonomous yet they still
manage to drive some consistency in the back end.
That’s where leadership comes in. All the other
banks would like to say that they’re going
to execute against those things but most of
them are having problems. The difference
in CBA is you’ve got Ralph Norris who has
a very passionate belief, comes from the IT
side, understands what it’s all about and
is taking a much firmer hand on the wheel
to get the right business behaviour.
ERIC REISENWITZ, METLIFE: The people
responsible for the business strategy
need to drive this. You could have all the
technology capabilities in the world.
NEIL WHITEING, IAG: Technology cannot drive it.
ERIC REISENWITZ, METLIFE: No. They need to
stay on the narrow focus of execution, and always
have people around them to reinforce the strategy.
Without that it’s not going to be successful.
PAUL DETHERIDGE, SUNCORP: We found two
regimes, one model stated to be consolidation but
in fact a federated business with huge amounts
of power; and a new world model with a very
clear decision-making process for consolidating
single platforms to build business value. The
only way to be successful is if you have the
leadership right from the top of the organisation.
Our claims platform was a war zone between
lines of business and we dealt with that with an
executive table decision to state our direction.
The conversation around our executive table has
been under Jeff Smith for three years – how do
we create a culture of productivity, efficiency, and
innovation? We take input from the conversations
that come to our table, but that’s not how we
actually take our technology business forward.
We try to apply the same principles to
everything we do, either by consolidating
legacy technologies or delivering new
technologies to the front end. We’ve taken a
culturally driven transformation approach to
drive efficiency into the organisation and as
a consequence we’ve got high credibility.
In the new world of customers, Gen–Y kids
may see an innovation that they don’t see
in another product, whether it’s insurance
or banking or phone or whatever, and they
go ‘why not?’ Gen–Ys don’t need to do due
diligence, they’ve got 500 million heads on
the planet who they communicate with on a
daily basis and they just ask the question.
That’s going to transform the way we respond
to the market, because we have to be agile and
there’s no hiding behind advertising campaigns
and working ‘Jedi mind tricks’ on the general
population. It’s all out there; it’s all in social
media. The integrity of your product and your
company are constantly under challenge as a
consequence. Agility, productivity, efficiency
– those are the things that we had better be
really good at. It doesn’t matter what the
problem is, we must adapt, adjust and deliver.
MATTHEW PALMER, TCS: John, in terms of
what Paul’s just said how agile do you think your
organisation will be in six or nine months time?
Would it be different from where you are today?
JOHN MYLER, ALLIANZ: No. I’m less interested
in disruptive innovation and more around
sustainable improvement for our customers. What
we’ve done in Allianz is very much about that

Accelerating Profit Growth through Innovation
culture of improvement and reflects the saying,
“You overestimate what you can achieve in the
short term but often underestimate what you
can achieve in the long term”. Conservatism in
the industry is not going to change if you’ve got
insurance companies being led by experienced
insurance leaders who understand the risk profile
inherent in their products. Whilst significant
operational and technology innovations are
often considered sexy or beneficial, it is having
a proven sustainable improvement culture
that leads to achieving long term success.
MATTHEW PALMER, TCS: Developing scale
benefits across the IT operation remains an
important strategy for insurance organisations
who want to invest in the future transformation
of their business. The industry maintains a
vigilant focus on achieving scale benefits.
IT executives are clearly keen to support
their business colleagues by creating flexible
business models and optimise existing business
models in order to provide customer value.
There is a general consensus that the industry
continues to strive for less complexity. However
competitive tendencies are potentially increasing
the complexity of insurers’ operating models.
This will be a key challenge for business and IT
executives in coming months.
Maintaining and improving the business and IT
relationship remains a critical success factor if the
industry is to continue to transform IT services.
Evidence exists that these relationship are in
good health. This has led to process and agility
improvements across the business and IT value
chain. For example online insurance purchases,
claim process improvements and agile delivery of
new line of business operations.
There remains keen interest in the value of
cloud services and exploration of its value is
underway in most organisations. However opinion
is divided amongst IT executives regarding
the future value of cloud services. Governance
models will need to evolve to embrace cloud
services based on the ‘test and learn’ activities
that insurers have initiated to explore the value
of cloud services. A successful organisation is
dependant on strong leadership regardless of the
type of strategy or operating model being used.
This leadership plays a critical role in maintaining
the belief of the organisation in the chosen
strategy. Strong leadership is also required to
align the day-to-day operational decisions with
the strategic principles of the organisation. *
“Success is dependant
on designing customer
centric processes and
using technology as an
enabler.”
– Matthew Palmer, TCS
Financial Services Technology Media
where the market meets
About FST Media
FST Media is an Australian company producing
the industry’s most widely received technology
conferences, roundtables and specialist publications
tailored to the banking, insurance and financial
services sector. For more information
email info@fst.net.au or visit www.fst.net.au
About Tata Consultancy Services
TCS is an IT services, business solutions and outsourcing organisation that delivers
real results to global businesses. TCS offers a consulting-led, integrated portfolio
of IT and IT-enabled services delivered through its unique Global Network
Delivery Model. TCS has over 198,500 of the world’s best-trained consultants in
42 countries. The company generated consolidated revenues of US $8.2 billion for
year ended March 31, 2011. Please visit us at www.tcs.com