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Balancing Act

Tech-savvy CEOs leverage technology to balance cost, communications and regulatory demands.

Once upon a time, an acceptable answer to the question, "What is the sign of a great CEO?" might have been, "One who makes the job look easy." But nightmare headlines covering the AIG, WorldCom, Marsh and Martha scandals have dispelled the notion of the CEO's life as a fairy tale. In addition to the traditional pressures of growth and profitability, renewed and more intense regulatory scrutiny is raising the stakes for industry CEOs in terms of transparency, accountability and results - transforming the CEO's throne into more of a hot seat.

As a result, technology has become something of a modern-day white knight. Already recognized as the bringer of business intelligence, improved profitability and enhanced customer service, technology's role as provider of transaction processing accuracy and reliability has become heightened in regard to regulatory compliance. Now more than ever, being an effective CEO means being able to use the strength and flexibility of technology to balance the ever-shifting complexities and demands of the financial services environment.

Put simply, technology facilitates the dissemination of information, according to Jim O'Connor, former executive vice president of Bank of America's commercial insurance subsidiary, Fleet Insurance Services, and a current partner of employee benefits consulting firm Egan, Amato & O'Connor (Manasquan, N.J.). "A CEO must use technology not only as a means of communication but also as an essential tool in the speedy dissection and analysis of information," he asserts. Basically, a strong technology platform can serve as the eyes and ears of the company as well as the informant. "It is also essential to the efforts of full disclosure and in the analysis of information for financial management and compliance," continues O'Connor.

Surrounded With Talent

While the latest trend seems to be operational-minded CEOs appointed by boards that want a chief with the ability to run the back office as well as the more visible parts of the business, today's top CEOs probably are finding that it is as much about the people with whom they surround themselves and the way they adapt to the changing business environment as it is about their own backgrounds. Clark Manning, CEO of Lansing, Mich.-based Jackson National Life Insurance (JNL; $61.6 billion in total assets) and the carrier's former chief actuary and COO, says, "Because of my background, I have a good understanding of how we make money and back-office attributes, which helps a lot in difficult financial and regulatory environments. But what is critical is being surrounded by talented distribution people and IT people who understand the business."

True leadership means having a vision for the future and "thinking from a stewardship perspective about what is going to be the fundamental basis of competition in five to 10 to 15 years," says Bill Pieroni, GM of IBM (Armonk, N.Y.) Global Insurance Industry. "That being said, you won't make it in the long run unless you operate your business effectively and efficiently along the way," he adds.

Both a CEO's visionary stewardship abilities and bottom-line business management abilities are impacted by the firm's technology investment. "While under investing in technology isn't going to kill you this year or next year, it has implications over the long term," says Pieroni, who believes that consistent technology investment year over year rather than boom-and-bust, cycle-based investment is a characteristic of a winning CEO.

The benefits of steady technology development for insurers are evident in JNL's proprietary broker-dealer back-office system, which was rolled out in 2002 and enhanced in 2003 with a proprietary Web-based transaction processing platform, according to JNL's Manning. "This system has accommodated any more-recent inquiries from regulators, and because it is automated, we are able to respond quickly and demonstrate that we are on top of our business, data and customer situations," notes Manning. "Technology makes it easy to operate in a framework where the agenda is always the needs of the business."

Knowledge Is Power

To understand the business' needs, CEOs need more than information - they need to understand that information. This creates a challenge for vendors such as insurance and claims services BPO solutions provider Cambridge Integrated Services Group (Greenwich, Conn.), which helps its clients' CEOs stay tech-savvy by giving them the ability to be power users of information.

"When working with a client, such as an insurance CEO, we seek to create power users of data," says Tracey Carragher, president and chairperson, Cambridge. "Power users must have easy access to real-time data," she says. Carragher points out that technology is the key to providing raw data and turning that data into contextualized information, which provides CEOs with the knowledge to run a business successfully.

"Not staying plugged in to the different operations of their businesses is what has gotten a few CEOs in trouble in the past," says Egan, Amato & O'Connor's O'Connor. "I don't mean CEOs should be micro-managing, but rather regularly engaged with their leadership teams and able to understand the decisions that are being made in their businesses," he continues. "Technology can help with these lines of communication."

For that communication to be effective, "Technology's organizational structure must be driven by the strategic intent of the CEO, which should be driven by the intent of the company," says IBM's Pieroni, who suggests that an insurance CEO should steer technology in the direction of three primary areas: core insurance capabilities such as policy administration and underwriting - which are the "cornerstone" of regulatory functions - followed by distribution and products. "Very few insurers are, I think, exhibiting the longer-term vision and leadership and investing discretionary dollars in this core," he asserts.

Long term doesn't have to mean predicting the future, but rather being keenly aware of what is going on in the present. "The world is shrinking," observes Cambridge's Carragher. "Today's CEO must know what's happening in the company, from India to England, in a few seconds," she says. "He or she must have access to the real-time data to stay informed and make decisions while bringing an analytical mind-set to the interpretation of this information as well as the ability to find the interrelationships that occur between it."

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