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Quiet Co. Makes Noise

Northwestern Mutual implements online learning tools and Web sites for its field force of financial representatives.

The Northwestern Mutual Insurance Company's (Milwaukee, $92.1 billion in assets) strategy of keeping technology aligned with business is nothing new. "The quiet company," however, manages to keep competitive—not necessarily by being the first out of the starting gate, but by taking its time to make sure that what's good for business is done right the first time.

The provider of life, disability income and long-term care insurance, annuities and mutual funds has seen a lot of change in its 144 years, and the present is no exception. "We now have a brand identity that better reflects what we've become," says Deborah Beck, executive vice president, planning and technology. "We are expanding our product lines and that adds complexity to what we do."

Northwestern Mutual, which uses the Northwestern Mutual Financial Network name to interface financial representatives with customers, has been offering mutual funds through broker-dealer Robert W. Baird & Co. (Milwaukee) since the early '80s. Within the past four years, the company has added its own mutual fund, a trust company and a long-term care product. "Especially during these changes, we want to be partners with the business side in making sure that we make the most effective use of technology," Beck says.

One result of Northwestern Mutual's business/technology partnership strategy is The Learning Network, an online training program for its field agents, to whom it refers as financial representatives.

"The Learning Network does a lot of training in the area of variable product sales," says Beck. Northwestern Mutual uses IBM's (Armonk, NY) Knowledge Producer as an authoring tool to create the online courses. Knowledge Planet (Reston, VA) software ties various parts of the Learning Network together. The Learning Network runs on the virtual private network (VPN) that has been used for the field force since the late '70s.

Online Learning

"Members of our field force are able to take courses and \ tests online," says Beck. "Our field force is more motivated to get this training because they can do it at a time and place that is convenient for them."

Making the field force more effective also has been an important driver of Northwestern Mutual's Internet strategy, according to Beck. The other part of its strategy focuses on policy information self-service for policyholders through its site. Although it hopes to offer its customers further self-service options in the future, Northwestern Mutual will not sell policies online.

"We have tried to match Internet strategy to business strategy, instead of thinking that the sale of products over the Internet will broaden business strategy," says Beck.

Northwestern Mutual believes that financial representatives are an important part of the sales process. "Our value proposition is that we provide expert guidance through financial representatives," according to Beck. "They are important to what we provide in terms of product and service."

Accordingly, a new initiative that Northwestern Mutual is in the process of implementing is the creation of Web sites for all financial representatives. "Each rep will have their own Web page," says Beck. "We are linking these pages to our home office Web site, so customers will be able to get policy information directly from their representative's Web site, as well as Northwestern Mutual's site."

Quality Is an Imperative

Implementing this system effectively for lasting quality is important, according to Beck. "I am sure that we are not the first company to have Web sites for our financial representatives," she says, "but we want to take our time to implement this in a way that is going to maintain quality, rather than get something out quick and dirty."

As the insurer adds greater functionality to and its financial representatives' Web sites, security is becoming a more important issue. "We are making sure that our data security keeps pace with our standards for privacy and confidentiality," says Beck.

Northwestern Mutual is doing this by working with its auditors and outside consultants to assess risks. "We have people in IS whose full-time jobs are to think about security," says Beck. "We also do regular audits and we hire companies to test our systems and see if they can break through our firewalls. This is an ongoing process, as the systems change." Mainspring (Cambridge, MA), PricewaterhouseCoopers (New York) and Deloitte & Touche (New York) are among the firms that review the company's security, according to Beck.

In terms of overall IT expenditures, "We tend to be a conservative tech spender if you compare what we spend based on our revenue, as compared to other financial services companies," says Beck. The company's IT budget for 2001 is $170 million. "Every year we get a little bit better at making sure that we are funding the right projects. Northwestern Mutual has very low expenses and our spending on the right technologies is a very big reason for that."

Northwestern Mutual holds annual prioritization meetings for the heads of all departments that will be affected by proposed technology initiatives. During the process, it is determined which projects make the most sense to implement, and also how many projects will be started, depending on the company's budget.

With the addition of product lines, timeliness is playing a bigger role in strategy. Northwestern Mutual has outsourced a significant amount of its work to IBM, which does the company's Web hosting. It is also planning to outsource client management software with Siebel Systems, Inc. (San Mateo, CA). "Technology can be added much more quickly if we outsource, rather than doing it ourselves," says Beck. Infosys (Bangalore, India), according to Beck, is a long-term partner to Northwestern Mutual. "Infosys began working with us on Y2K issues. They have continued to do other projects and programming work for and with us."

Northwestern Mutual tries to be proactive in vendor management. Lately, the company is buying more and building less technology, Beck says. "Members of IS keep track of technologies that are out there. They stay up-to-date and try to keep the decision-makers informed." The company is then enabled to seek out best-of-breed vendors.

Future initiatives at Northwestern Mutual will focus on adding self-service functions for policyholders, who currently are able to access policy values and related information. "We will shortly be adding online statements and confirmations, as well as customer billing and payment information," says Beck. "In the future, we intend to add online fund transfer capabilities, and we hope to send more mailings like proxy statements via email."


Field Force Focus

COMPANY NAME: Northwestern Mutual Insurance Company, Milwaukee, $92.1 billion in assets.

LINES OF BUSINESS: Life, disability income and long-term care insurance, annuities and mutual funds.

KEY EXECUTIVES: James D. Ericson, chairman; Edward J. Zore, president and CEO; Walt Wojcik, chief information officer; Deborah Beck, executive vice president, planning and technology.

IT STAFF: 600 internal and 600 contract employees

IT BUDGET: $170 million.

KEY INITIATIVES: The Learning Network-an online learning program used to educate the financial representative field force. Northwestern Mutual is also working to implement Web sites for each of its financial representatives and general agents. The sites will be linked to Northwestern Mutual's Web site.

IT ARCHITECTURE: Virtual private network over the Internet utilizes 105 Hewlett-Packard (Palo Alto, CA) Unix servers, field office servers connected by Cisco (San Jose, CA) routers serving more than 300 dial-up PCs. Currently, the company's Web site,, has 4,000 pages of information with 170,000 hit per day.


DEBORAH BECK: "As with most financial companies, we are expanding our product lines and that adds complexity to what we do."

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