Gary Scholten, a 2003 Elite 8 honoree, hasn't slowed down since we spoke with him last year. In fact, he's racked up frequent flier miles while visiting all but one of The Principal Financial Group's (Des Moines; $152 billion in assets) international operations. The federated governance model that Scholten facilitated at The Principal Financial Group continues to ensure that the company's technology decisions are tied to the business, and Scholten continues to monitor technology with an eye on accelerating growth.
Gary Scholten, Senior Vice President and CIO, The Principal Financial Group
I&T: What is your vision for technology at The Principal?
Scholten: Technology strategy and direction is completely driven by business needs and opportunities. We are not a technology company; we are a financial services company, so we are led by business strategies. We won't back down from exploiting any technology that will help us further the business strategy and capitalize on opportunities. We are not going to lead with technology, but technology is a driver.
I&T: How would you describe the role technology plays at The Principal Financial Group? How do you as CIO enable that role?
Scholten: IT's role is to help the company capitalize on growth opportunities. My role as CIO is to make sure that IT enables the company to be poised to strike when the right opportunity comes along - for example, to make sure that IT is agile and nimble enough to help the business get products and services to market quickly.
I&T: Has IT always had this role?
Scholten: A few years back, IT in a large financial services company was focused on helping the company gain scale and efficiencies. Today, as companies are more focused on growth, we look at IT as a key accelerator. We are not going to grow because of IT, but IT is going to help accelerate our growth.
I&T: What are some ways that IT can accelerate growth?
Scholten: A key part of growth is in external integration, such as working with distributors and third-party providers, and IT is critical in making sure that we can securely and effectively integrate with those external partners. Having an effective, easy-to-use and well-integrated system can help attract distribution. IT is also at the heart of our cross-sell and up-sell capabilities by making sure that we have the right customer and market information in the hands of the people dealing with customers.
I&T: What technology initiatives at The Principal illustrate IT as a growth accelerator?
Scholten: We've launched two new products that are completely dependent upon fairly sophisticated technologies. Our Principal Income IRA is an example - it's a complex product designed for people coming out of their accumulation years and going into their retirement years. Were it not for the technology embedded in the product that helps customers and their advisers work the product, the product would be difficult to use.
To attract distributors, we've launched the Electronic Financial Professional, which is a Web-based tool that consolidates the different product lines a sales professional may have with us into a consistent look and feel. They can view their customer base across our different business lines. We're using technology to provide a value-add for that professional to choose to work with Principal.
One of the reasons we retain the assets of people leaving their retirement plans is that we use customer relationship management technology to power our cross-sell and up-sell initiatives.
I&T: How does the need for IT security fit in to all this?
Scholten: A few years ago, security was more of a backroom operation and didn't get a lot of attention. Today, it's a strategic part of our company and something I talk a fair amount about with the board. The board reads all the stories about growing threats from hackers and terrorists and such, and it wants to make sure we are doing what we can to appropriately safeguard our customer and employee assets. Since our network perimeter expands as our business and alliances expand, making sure that we expand on a secure basis is key.
I&T: How will technology enable the insurance industry five years from now? What technologies will have the biggest impact?
Scholten: There are a few areas of emerging technology that I'm excited about and think have real potential. I can't say exactly how they will affect the insurance industry, but you can certainly conjecture that they will have an impact.
One area is connectivity and access. The Internet has done a lot to make it easier to connect, and there are emerging technologies that will make it even easier and more cost effective to connect in different ways with different constituents. Look at BlackBerrys as an example - how many executives and salespeople had them a few years ago? And now they are critically important. There are other technologies that will emerge to allow other constituents to connect with insurance companies in ways that had been impossible or cost prohibitive.
Another technology that will significantly affect the entire financial services industry will be the convergence of voice and data. Companies are starting to deploy technologies now for cost advantage, and as the technologies become scalable, more and more companies will be able to take advantage of them. The true potential for the convergence of voice and data is how you present a face to the customer and marketers. It's hard to predict exactly what that will look like, but it will enable things that people aren't even thinking of today.
I&T: Are you experimenting with IP telephony?
Scholten: We have some initiatives going on it that area - some are more mature and are ready to be exploited and others are maturing or getting to the point where they will be scaling to accompany a more Principal-sized future.
I&T: Are there other technologies that could have an impact?
Scholten: Although they do not directly impact the business, autonomic computing systems will affect information technology professionals. These self-healing infrastructures are becoming more real. Rather than wait for problems that cause downtime to occur, the system alerts you to a problem before it happens. These technologies will mature and become more reliable and increase the value that IT provides to the company.
I&T: The Principal has consistently been named one of "The Best Places to Work in IT." To what do you attribute this recognition?
Scholten: Since we have such great alignment between business and IT, IT professionals at The Principal see the impact of their work on the business. We also use a broad range of technology, so there is plenty of opportunity to work with different technologies, which most IT professionals find very attractive.
I&T: Do technical staff move around a lot to take advantage of different opportunities within IT?
Scholten: We certainly move IT people around. If people see something going on that they think is better aligned with their career direction, they can pursue those opportunities. We also make sure that we are fully leveraging people, so there is a fair amount of movement between the different IT organizations - some planned and some by employee choice.
I&T: What do you do in your spare time?
Scholten: I'm a runner. I used to compete, but now I'm less competitive. My children are both athletes and involved in music, so taking part in their adventures is exciting. I do enjoy playing with technology, and my son is at the age where he enjoys it too, so we spend a fair amount of time working on our home network.