Jaffe Makes STP a Reality for Met’s Annuity Distribution

It is a little strange to hear a CIO say, "I am not running a software shop," since that's essentially what an IT department is. But Kenneth Jaffe, executive vice president and CIO at MetLife Investors (Newport Beach, CA), a subsidiary of New York-based MetLife ($302.5 billion in assets)that sells variable and fixed annuities through non-traditional distribution channels such as financial planners and banks, makes a distinction between a typical IT shop and the operation that he runs.

"We are here to provide technology to gain efficiency and reduce operating costs for the business," Jaffe says.

Jaffe's focus on providing technology solutions that solve MetLife's business needs goes hand in hand with his outlook on the role that IT plays in any company. "The people who are succeeding in IT today are no longer tied to a development platform; they are tied to a business," Jaffe says. "In traditional IT, people focus on skills and programming language. But technology is changing so fast, it is almost impossible to keep up." For instance, it is easy to find Java developers, he says. "However, there is an unlimited need for developers that understand the business. Today, the people who are successful in IT are more business partners than pure IT developers."

Making STP a Reality

At MetLife Investors, Jaffe says, IT takes ownership in projects and all initiatives are aimed at improving profitability and service to the business as a whole. "We do not build technology for technology's sake," according to Jaffe. "We apply technology to solve business issues. That is the only way it can successfully be done. We are technology and business partners. As CIO, it forces me to understand the business better."

The close relationship with the business has paid off, in terms of IT success. MetLife Investors now has the ability to process an entire annuity transaction, from cradle to grave, electronically-or straight through (STP). The technology, while aimed at improving service to financial advisors, also improves efficiency and profitability at MetLife. "We have the ability to do everything electronically," Jaffe says, with approximately 44 percent of transactions being completed with STP. "The electronic capability reduces our Not-Good Order NGO rate," or the number of transaction requests that have to be sent back to the financial advisor for additional information or corrections. The electronic system will not accept transactions with incomplete information that would normally result in not-good orders.

"If we can bring down the NGO rates, we can increase efficiency and reduce operating costs," Jaffe says. "Better service ultimately reduces cost. That is what drives us. If we can reduce the total cost structure, that is a good thing."

Jaffe also looks to develop technology with a low-cost mindset and has committed to developing systems using Internet-based technology, rather than mainframe applications, partially because they are cheaper and easier to develop. "Even the difference in cost when you compare a server and a mainframe is dramatic," he says. "Internet applications can be developed faster. If we developed a mainframe distribution system where the producers had to be wired into it, there is no ROI in that."

MetLife Investors' distribution technology leverages Dallas-based Docucorp's Documaker product and FileNET's (Costa Mesa, CA) eProcess Service tools for workflow, as well as illustration tools from Insurance Technologies (Colorado Springs).

Jaffe has also worked to reduce cost in his own development area by eliminating the use of consultants. "We have a mandate from our CEO not to use consultants," he says. Instead of looking outside the company for a particular skill set when it is needed, MetLife's IT project managers look internally through the partner provider model, which encompasses all of the IT areas inside MetLife, including New England Financial (NEF). The model focuses on what he calls "resource loading," where managers meet, and if one area needs additional help, developers are shifted from projects that are not that busy at that particular moment. "We have been using it heavily over the past year. We make sure we are making the best use of our IT staff."

Vision of the Future

MetLife Investors' focus on lower-cost development with Internet-based technologies has paid off. The STP annuity application is currently being rolled out to all areas of MetLife and NEF. "Last year we developed the technology and this year our goal is to roll it out company-wide," Jaffe says. "Things are going quite well. Since it is Web-based, it is easy to implement and we are already beginning to see a return," in the form of decreasing NGOs. "Only the exceptions need attention, and as more move to the electronic system the exception number will go down. We want to get that exception number as low as possible to reduce cost. MetLife is an insurance company. MetLife Investors is a distribution company. We make it easier for people to do business with us. For us, it's all about efficient distribution," Jaffe adds.

Jaffe's next goal is to enhance the wireless capability for producers. "Taking a Web application and delivering it over wireless is hard, but it can be done," Jaffe says. "Financial advisors will want the ability to work anywhere. And when they do and when MetLife is ready, our application will be 100 percent wireless capable."

----------------------

KENNETH JAFFE

Executive Vice President and CIO, MetLife Investors

SIZE OF IT STAFF: 70

BACKGROUND: After starting his carrier at JP Morgan, Jaffe has stopped at Pacific Mutual as director of management IS, and at Equitable Distributors as CIO, before joining MetLife Investors as CIO in 2000.

HOBBIES/INTERESTS: Spending time with his wife and two children; skiing, golf and tennis.

Greg MacSweeney is editorial director of InformationWeek Financial Services, whose brands include Wall Street & Technology, Bank Systems & Technology, Advanced Trading, and Insurance & Technology. View Full Bio