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Perspectives on Service

On the Record with Jan Franklin, vice president and CIO, Farmers Insurance Group.

Over her 25 years at Farmers Insurance Group (Los Angeles, $12 billion in assets), Jan Franklin has spent all but the last 18 months in technology positions. Having been IT COO, in 2001 she was tapped to run the company's largest service center. Now stepping into the CIO role (replacing Cecilia Claudio, who was named CIO for parent Zurich Financial Services), Franklin reports her priorities will include delivering continued agent support and providing operational efficiencies.

I&T: In 2001 you moved over to the business side as executive director of Farmers' largest service center, which houses more than 500 employees and handles well over 50,000 calls monthly. How did that experience inform your approach to customer service?

Jan Franklin: Having the experience of being a customer myself, out in the Los Angeles service center, I had the opportunity to reflect on the expectation placed onIT as a utility, and to look at our service levels and to see if we were measuring them correctly. Also, there is a tendency in IT to wait until our business partners come to us with ideas about how they want their business to run. Being at the service center gave me the chance to identify lots of opportunities where technology could reduce expenses and improve quality and controls.

I&T: Last year Farmers made a bold—and expensive—gesture to express its commitment to its independent distribution force by buying each one of its agents a laptop. How is IT working to continue that level of support?

Franklin: One of our key areas of technology investment relates to service not only to our approximately 14,000 agents, but also to the 40,000 to 50,000 people that work in their offices. They have largely been working on green-screen CICS platforms with a market-management system that we built for them. We're currently focusing on providing intuitive, Web front-end interfaces that will not only be easier to work with day-to-day, but will also enable very quick training for tasks such as submitting an auto application, for example. We've already created an agent dashboard that allows them to access documents and information about customers and claims, and we're moving now to where they can use the application to issue auto and homeowners' policies. We're building a new market-management system for the agents, as well, and as we can move more and more of them to the new technology, we will be able to replace their AS/400s and existing systems with it. From a service perspective, this can be a tremendous benefit both to the agents and their customers.

I&T: How are Internet-based technologies combining with automation features to drive service?

Franklin: In our homeowners and auto lines of business we've focused over the last couple of years on driving true straight-through processing. We have a percentage of business, especially in the commercial area, that is still partially manual, so we're focusing on automating as much of that as we can to ensure the proper levels of service quality. We've moved a lot of processes and information onto state-of-the-art document processing systems and we're building customer self-service applications so that policyholders can change their address or get an idea of what their premium would be if they made certain changes. We're trying to drive ease of business in general, and provide the customer the ability to chose the mode of interaction with Farmers, whether it is through the agent, by calling our service center or using the online self-service option.

I&T: How do you measure customers' satisfaction with the services you provide them?

Franklin: Quality in our customer experience is a very high area of focus for us. I am a metrics manager, and believe that you can't manage it if you can't measure it. We provide our customers with results-daily, weekly and monthly scorecards-and we are currently going through a review to ensure that we're performing to customer expectations, and to see if we are measuring the right things.

Part of that is considering what efficiency opportunities we have. We have to make sure that we are not over-delivering. Are the service levels we're providing the result of genuine service-level agreements, or have we just established them without agreement? If a customer doesn't really expect something in, say, half a second, we may reconsider providing it if we can achieve a significant dollar savings.

I&T: What are some of the efficiency and cost-reduction opportunities you have identified for Farmers' IT organization? Is cost control a high priority at Farmers?

Franklin: There used to be a joke around Farmers that we counted staples—which points to the fact that we already have a culture of efficiency. However, we're continuing to look for additional opportunities. It has been a top priority for some time to drive more cost out of the "utility" side of IT, by identifying efficiency opportunities and determining, for example, how we can run our back office and infrastructure much more efficiently than we run them today.

For example, we are consolidating helpdesks from various parts of the country into our primary site in Oklahoma City, and seeing significant savings. We are also in the middle of consolidating a large data center in Columbus, OH, to our main Los Angeles data center, which will also yield significant savings. The two centers had acted as each other's recovery site, which worked very well for us. But when we analyzed the cost structure, it made more sense to consolidate the centers into one and outsource our disaster recovery to IBM.

I&T: What is your relationship to your parent, Zurich Financial Services (Switzerland, $231.6 billion in total assets) from an IT perspective? Do you operate independently or do you work to share resources?

Franklin: Our relationship with Zurich has changed pretty dramatically. Having operated pretty independently in the past we're now going through a transition throughout the group. What Zurich and the affiliated companies have agreed is that IT is an area where we should be able to aggregate our spend and be able to get a lot more leverage with our vendors. Over the last several months we've been working on projects, looking to consolidate more of our IT, to move to more of a shared infrastructure and shared application service providers in some cases, and to significantly reduce some of our costs across the companies.

I&T: Does outsourcing play a role in limiting costs? What is your philosophy on outsourcing generally, and what is your approach to managing outsourcing contracts?

Franklin: We are definitely a supporter of outsourcing, and it's one of our efficiency initiatives. But we have a very tight philosophy of how to go about it. You have to make sure that your vendors cannot get leverage against you, so you only outsource utility programmers and not your business and systems analysts. We also believe in the philosophy that you should have a dual vendor elationship. Today we outsource with two India-based outsourcers, Wipro and Cognizant. By having the dual vendor relationship we can keep them in a competitive position. The fact that we outsource the utility-type programmer makes it easier to say, '"OK, Cognizant, you're not giving me the rate structure I want, so Wipro, here's your opportunity to take these next five people, if you can give us the rate structure." It works very well for us. We also do everything to pretty much marginalize our infrastructure vendors. In that respect, we believe in a dual sourcing arrangement, either for people or infrastructure. So we tend to have two vendors for our storage, for our PCs, for Unix servers, etc., so we can always get them competing.

I&T: How do outsourcing and other efficiency moves affect staffing of your IT organization and reliance on outside consultants?

Franklin: A couple of years ago we would spend hundreds of thousands of dollars on highly paid contractors. We're no longer doing that. In terms of staffing, the focus is being placed on architects, systems analysts and business analysts. We are currently rebuilding our architecture group and have a relatively new CTO, Situ Ramaswamy, who took on his duties in June last year. We'll outsource a utility programmer, a person that we can swap in and out on any given day, who is relatively easy to train and where there is little risk. By maintaining the intellectual capital of our IT organization, we benefit both in terms of efficiency and cultivating strategic creative resources.

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio

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