Wiring the Rock

Having completed demutualization at the end of last year, Newark, NJ-based Prudential Financial ($379 billion in assets) continues its growth as an integrated financial services company. In support of that goal, William D. Friel, who in 1995 became the company's first corporate chiefinformation officer, balances good governance with visionary use of emerging technologies, such as wireless and widespread broadband capabilities.

William D. Friel, senior vice president and CIO, Prudential Financial

I&T: How is the technology organization's contribution seen within Prudential?

William D. Friel: The organization provides all the technology solutions for the businesses, so the CIO in each business unit has responsibility for developing technology solutions. We also create centers of excellence where there may be some significant capability that was developed first in a particular business unit, or centrally, for that matter, and it's a methodology that we use to share solutions across the enterprise. We're expected to deliver solutions that allow Prudential Financial to compete successfully in the marketplace, so the initiatives that we go after are built around business plans and directions and are focused on ensuring that we're delivering the capabilities that the business needs to be successful.

I&T: How does Prudential Financial's IT governance structure maximize collaboration with the business side to achieve strategic alignment?

Friel: Making sure the technology organization is aligned appropriately with the business starts out with a three-year business plan, wherein each of the individual businesses puts together an IT plan with their business unit and gets full understanding of the priorities of the business, the direction it's going in, and how much funding the business has available during that period. We also review that plan within the corporate technology organization, primarily to look for opportunities for sharing or leveraging areas between business units, as well as looking to review the architectural plans to make sure they're compatible with architectural consistency across the enterprise.

I&T: How important is IT/business cooperation in tough economic times?

Friel: I don't think you can survive if you don't have the kind of working relationship where the technology organization is working directly with the business owners, putting together all of the initiatives that the business is interested in, and then work with the business to rank those projects to ensure that the most important projects are addressed first—certainly not in this kind of economic environment, because there aren't going to be enough dollars to satisfy everybody. Accordingly, we have to make sure we're spending on the most strategic and important projects in the company.

I&T: How has Prudential's demutualization, completed by the end of last year, affected how IT interacts with the business?

Friel: Demutualization was certainly a big event for us. Becoming a public company after so many years as a mutual company is certainly a significant event, but we began preparing for demutualization four to five years ago. So much of what we did in preparing for demutualization has helped us be prepared to be a public company, as well. One of the things that being a public company certainly does do is keep your eye focused on the ball, and that ball is delivering value to customers. It's delivering to the stockholders the kind of performance that they're interested in, as well as employees. We are very focused on delivering that kind of value to all the stakeholders. We, like every other company in the US today, especially those in the financial services business, are focused on three things: using technology to reduce costs, to support opportunities for additional revenue growth, and using technology to improve customer service.

I&T: Use of wireless in financial services has not grown as quickly or become as widespread as was expected. What is the future of this technology?

Friel: The vast majority of people are much more interested in brokerage-related applications than others, but wireless is growing slowly. We believe that wireless a very important medium, a very important vehicle for Prudential and its customers, and we believe it will grow and continue to grow. But there are some obvious problems that are keeping it from quite getting to having the explosive growth everybody expected a couple of years ago. One is footprint and quality issues with disconnection, etc. A larger problem is the amount of money and effort telecom has spent in various ventures, whether they were acquiring companies, buying wireless spectrum at very high prices, or figuring out what it was going to cost to build out G3 capability for always-connected, higher-speed wireless connectivity. As the telecommunications marketplace starts to dig itself out of the hole it found itself in recently, I think you'll see a lot more infrastructure supporting wireless.

I&T: What advantages do you see in the use of broadband?

Friel: Obviously there's much more opportunity for people to have access to their work systems from home, whether for jobs that don't require an employee to physically be there for everything, or just for greater flexibility. To the degree you want, you could have a virtual call center, where people are actually handling customer calls from home, as opposed to necessarily being in a very large call center—which can help provide a nice backup plan in case of an event such as a major snowstorm. Broadband can also help companies to utilize the Internet for access to information around the world, or around your company in multiple locations, without the high cost of private lines. We're using VPN (virtual private network) connections to all of our agents, all our financial advisors' offices; we use VPN connections from home, so it's significantly changed the cost element of access, as well, for many companies, and we're among those that have taken advantage of it—and in a secure way.

I&T: Could you give an example of how Prudential balances technology vision and economy?

Friel: We found ways we could improve our business continuity planning abilities and also an opportunity to save some money. Prior to 9/11 our data centers ran at One New York Plaza for the broker/dealer business and they were fully backed-up on a mirrored, real-time basis by our data center out in Roseland, NJ, so that if there were a failure at the One NY Plaza site, we could switch over to Roseland and continue the operation. Having gone through the process of creating that kind of capability, that also gave us the opportunity to look at a data center consolidation plan in a very cost-effective way and in a way where there would be very little disruption, even if we were going to fold a very large data center into two existing large data centers. Over the Labor Day weekend we completed that process, so all the Wall Street processing is now coming out of Roseland, NJ, and all the back up is out in Ft. Washington, PA—again, with the same immediate backup mirroring of data as it occurs. So there was a strategic direction that improved our business recovery back-up capability, took us further away from downtown Manhattan and saved us money at the same time.

I&T: How is Prudential using technology to support distribution?

Friel: We see our products being sold and serviced through our advice-based channels: Our financial advisors in the broker/dealer world and our agents in the insurance world. Four years ago we provided those channels with laptops equipped with application software allowing them to have information, because they needed to service their clients in both connected and disconnected modes. We've continued to fill out that capability and provide more application support and functionality. We've also created a browser-based capability that operates in both a connected and unconnected mode. Everything else looks and operates like a browser, so it gives the advisor/agent the same look and feel for all the applications. For advisor in the office, we've built an electronic application capability that flows directly into an automated underwriting engine which processes applications through a complex set of about 4,800 rules. The engine rates the applications, and a high percentage of them go straight through without further review by an underwriter. Where there is some further review needed, the system focuses the underwriter on one area to look at, so it's not like he's seeing things cold for the first time.

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