One of the first things that John Sommerwerck did after arriving at Erie Insurance Group (Erie, PA, $3 billion direct written premium) two years ago was hang a plaque in his office that read "Information Technology has no other purpose than to support the business of the enterprise." The sentiment was something of a departure for the technologically laggard company.
Erie had, in fact, recruited Sommerwerck after its leadership determined that continued success depended on modernization. Being old-fashioned was fineeven advantageouswhen it came to upholding the level of service associated with the brand. But delivery of that service going forward, both to end customers and an independent distribution force, was going to require some engineering in order for the P&C and life carrier to remain competitive.
By the time he arrived at Erie in May 2000, Sommerwerck had often played the "Mr. Fix-it" role, starting at manufacturing-oriented companies soon after college. In 1985, he joined West One Bank Corp in Boise, which "didn't have viable systems or programming discipline and very fewprocesses," he recalls. "Over my 11-plus-year career there we developed those processes."
Sommerwerck's stay at West One was career-shaping, not least because of the mentoring he received from Scott Hayes, the firm's CFO. "One of his biggest mantras was, 'Risk isn't a bad thing, but you have to do it prudently and it must always be justified by the reward,'" he relates. Hayes took a chance on Sommerwerck, promoting him from a position supervising about 120 people to one with a staff of about 1,000. Hayes was seldom wrong, Sommerwerck claims, and in this case the new responsibilities "proved to be well within my grasp because I had an understanding of the processes." What has attracted Sommerwerck to the industry ever since has been his conception of IT as the manufacturing component of a financial services organization. "Without computers you don't have policies, you don't have checking accounts, or any of those things," he says. "When Hayes gave me the operations component at the bank, he was really giving me the manufacturing."
When called upon to manufacture a change at Erie, Sommerwerck not only faced risk and uncertainty from his perspective, but he represented it to others, as well. The carrier's 70-year record of success encouraged more confidence in stability than changeand that attitude was reflected in a technological apparatus that, upon Sommerwerck's arrival, resembled "a 1980s IBM mainframe shop," he says.
After a formal assessment of the state of technology at Erie, Sommerwerck guided an infrastructure upgrade. The initiative included implementation of a new network infrastructure, deployment of a standard desktop, implementation of a standard PC-based e-mail system and installation of components for IT asset management and software distribution.
With the infrastructure in place, Erie is launching its new agency interface, ErieConnection, with total projected expenditures of $150 million to $175 million. The multi-year build-out and launch of ErieConnection will replace the carrier's existing Policy Management Systems Corp. policy processing system with a new online version from a vendor yet to be announced, and the implementation of a customer relationship management platform. ErieConnection will provide employees and agents an interface to Erie's various systems "so they have a common, coordinated view of all relationships when they are interacting with policyholders," Sommerwerck says.
Sommerwerck's organization met its objective to get ErieConnection into production by July and exceeded by more than a month the goal of deploying all Release 1.0 users by the end of September. The success of Erie's transformation so far is tied to a "passion for action" that has taken hold among its IT employees, by Sommerwerck's account. "Early on, when we needed to implement organizational changes to enhance our effectiveness, employees stepped up to the plate with remarkable flexibility," he says. "During a time of transition and uncertainty, they were able to collaborate effectively on a strategic plan."
Collaborating with the Business
To foster collaboration with the business, Sommerwerck has inculcated in his staff the idea that "the business needs to describe the 'what,' and we need to describe the technological 'how.' That causes us as the technologists to be able to listen to the business component and understand their needs," he says. Sometimes this is easier said than done. Executives are already prone to think in terms of solutions rather than needs, a circumstance that is exacerbated by the common occurrence of "the skilled salesperson from the ABC Systems House calling up the business and saying 'I've got the answer for you!'" In such cases, when the business person ends up on the IT doorstep with a preconceived set of specifications or a specific product in mind, the right response, he counsels, is to say, "I understand that you want XYZ system, and I'm not going to argue the merits of that system; but let's use our analytical skills to determine what you really need and then we can figure out how we go about meeting that."
JOHN P. SOMMERWERCK
Senior Vice President and Chief Information Officer, Erie Insurance Group
SIZE OF IT STAFF: 400
BACKGROUND:Sommerwerck was CIO at West One Banc Corp and Excellus Health Plans before joining Erie in 2000.
LAST BOOK READ: "Execution: The Discipline of Getting Things Done," by Larry Bossidy.
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