Serving Those Who Serve

"Knowing" your customer is one thing, but taking that knowledge and translating it into IT initiatives that will provide customer service is another. At USAA (San Antonio, $64 billion in assets), Stephen Yates, president of the multi-line financial services company's IT operation, says the company excels at providing industry-leading customer service not only because it thoroughly understands its members, but also because top management believes in the important role IT plays in servicing customers.

I&T: In connection with the war in Iraq, many US servicemen and women have been deployed overseas. How does USAA's technology make managing insurance and financial service products easier for members of the armed services?

Stephen E. Yates: While the war may dramatically change the lives of our members, the way they deal with USAA does not change. At any given time, not just during war, our members can be in the middle of the ocean on a ship, or in a tent in Kuwait, or a number of places that don't necessarily allow them to leisurely give us a call. They may only have 30 minutes on the ship's or post's computer or outbound phone to conduct all of their personal business. It doesn't matter if the USAA member is stateside or overseas: We are committed to ensuring that we operate in such a manner that our members can take care of their individual financial needs in an efficient manner, with one phone call or by going to one Web site, usaa.com.

I&T: Did you see an increase in applications for life insurance or other financial products as the US prepared for war with Iraq?

Yates: USAA is the only life insurance company that we know of that will provide life insurance to a member of the armed forces heading to war who doesn't already have a policy. USAA wrote a considerable number of life policies for military personnel, just before they headed overseas, and for some who applied after they had been deployed. We also provided deploying members up to $250,000in coverage-allowing them to supplement their Servicemembers' Group Life Insurance (SGLI) coverage-without requiring a blood test or medical exam.

I&T: How did USAA's IT systems handle the increase in applications for insurance products?

Yates: Because of the immediacy of the troops being deployed, in many cases we were able to issue policies more quickly than normal. It did not cause any stress on our systems.

I&T: How do you measure quality and return on your IT initiatives? What project management procedures do you use? Also, what types of metrics are used to track results?

Yates: We measure quality from our members' point of view by several indices: lost members, complaints, and customer satisfaction surveys, to name a few. We measure our technology or systems quality by software defects, system downtime, project execution performance to plan, mistakes in document routing, etc. System downtime is measured very closely. Every outage is logged, along with the impact on the users or members, and multiplied by the designated system priority. The IT community has called this the "pain index" for years. This is also tracked for all Internet outages, whether caused by in-house problems or outside suppliers. This process instills quality in many areas of IT.

We measure our return on technology initiatives by a cost-benefit analysis done in the design phase of every project. Business executives are held accountable for delivering that return. Our CEO, Bob Davis, pays very close attention to all development projects on a monthly basis. That review includes an earned cost and earned progress index. I have never worked for a CEO who understands project management and pays as much attention to it as he does. He is even a stronger supporter of our IT architecture definition, and supports IT whenever anyone wishes to deviate from that path. The simple answer on measuring return is the obvious results either show up or they don't. Most of the systems projects we do are of such visible consequence that it is easy to see the return on the investment. We've either delivered new and useful member features/products on the Internet or we're producing real employee productivity.

We use a home-grown project management methodology called Business Project Management Process. It has well-defined phases not unlike most methodologies. It also defines roles of all participants and deliverables from each phase. A great deal of responsibility is placed on the business sponsor to see that the promised results are achieved. The IT folks all know they must deliver very close to plan, on budget, and on schedule, once the design is locked down for development. We've used this approach for several years and it works very well for our company.

I&T: Do you benchmark the costs of USAA's IT operations against other insurance companies, or against industry rankings?

Yates: We make heavy and frequent use of IT benchmarks for the operations and the software development side of our IT company. We use various experts to be sure we are getting honest objective numbers. We also challenge outsourcing vendors to review our shop and make us a price offer. I feel this is the very best form of benchmarking-actual street pricing. We also buy a good bit of IT processing from various ASPs, particularly in our Federal Savings Bank. Since we contract for these services and manage those relationships, we have excellent knowledge of street IT prices. (Since we are a for-profit internal IT company, we charge for all our services.)

I&T: What is the status of the Web-based policy administration system that USAA is building for auto and home? Last fall you said that the system should be ready by the end of 2003. Will it reach its target date?

Yates: Our new Auto Policy Administration System is about to come online this summer. We will turn on the first state in July, with five more before summer's end. We will roll it out to all other states over the following year. Work is underway on the property insurance side, including a claims module, as well. These are all part of what we launched as the "Application Renewal Program." The first of the new claims systems will roll out late this year.

Development progress has been terrific. Our users couldn't be more pleased as they move through system testing as we speak. We are using a new 24-hour-a-day testing and debugging method that was developed around this program. This is the largest program we've ever undertaken.

I&T: USAA is known for its exceptional customer service, primarily through its call centers. How does USAA link its call centers, e-mail, Internet and paper-based (mail) transactions to form a single database of customer contact?

Yates: For many years, we've scanned a great deal of inbound paper mail so that it can be viewed by the phone rep while in contact with our members. We are in the middle of a CRM implementation that links all member contact, as well as all customer-product information, into one browser-based launch screen. We call this our member portal and it crosses all lines of our company: banking, life, P&C, and investments.

I&T: In what unique ways does USAA develop and train to provide customer service? USAA is commonly thought of as a model for the insurance industry when it comes to customer service. Why is that and how does information technology support customer service?

Yates: Nobody knows our membership better than we do. Our employees either have military experience, or they are given special training to help them understand the different types of situations the men and women of the armed forces go through day-in and day-out. When you can relate to your consumer base the way we can, you're going to figure out very quickly what works and what doesn't. We are one of the few companies, especially on the property-and-casualty insurance side, that doesn't actively market to the general public. Other companies can market to our members, but we will not market to other companies' customers. If our customer service didn't outpace the competition, our members could easily go somewhere else.

We also spend a great deal of resources on our customer-facing processes and the technology that enables those processes. I've been a CIO at multiple companies, but I have never seen anyone place the executive priority on systems as does USAA. We have seen dramatic returns on our investment over the years. No one has to convince us of the value of information technology.

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