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Aetna Rejects Outsourcing, Brings IBM In-House

Carrier says IBM will help it build a unified claims-processing center and more self-service systems for customers. Co-sourced arrangement will also lead to achieving certification at CMM Level 3.

While more and more businesses are turning over IT work to contractors, at least one high-profile CIO says he'd prefer to keep the bulk of his technology development in-house. "We have no intention of abdicating critical functions," says Wei-Tih Cheng, CIO and senior vice president at Aetna Inc (Hartford).

The insurance company said Thursday that it has tapped IBM (Armonk, N.Y.) to help streamline its IT operations under a five-year consulting deal. Rather than turn over Aetna's technology operations to IBM's vast outsourcing unit, Cheng is bringing IBM consultants to Aetna. "We want to leverage IBM's skills and knowledge to help our own people," he says.

A principal goal of that help is to achieve CMM Level 3 certification within a few years, according to Cheng. "This is a very deliberate initiative to bring in someone strong like IBM to help us to not only deliver our solutions, but to help us to become much stronger ourselves in terms of productivity and quality of business solution delivery."

Sources familiar with the agreement say it's worth a total of about $200 million.

Among other things, IBM will help Aetna build a unified claims-processing system that will reduce the time and effort needed to pay an insurance claim. IBM also will help Aetna build more self-service systems for its customers. "We want to take a leadership position in creating consumer-directed health plans; IT is what's going to allow us to create and administer those plans," Cheng says.

IBM will dispatch about 300 staffers from its business-consulting unit to work alongside Aetna's IT staff.

Editor's Note: This article originally appeared in InformationWeek, a sister publication of Insurance & Technology. It includes a contribution by Anthony O'Donnell.

Paul McDougall is a former editor for InformationWeek. View Full Bio

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