Executive Summit: Competitive Advantage Via Leading Edge Architecture

In the presentation, "Gaining a Competitive Advantage Via Leading-Edge Architecture," given at Insurance & Technology's Executive Summit 2005, in Palm Springs, Calif., Rick Omartian, IT CFO and chief of staff, Guardian Life Ins. Co. of America, related the challenges of presenting the business case to senior management for an $11.2 million architectural transformation to a services-oriented model beginning in 2001, which would take place over 36 months. "The CEO was a little leery at the time and said, 'Would you be willing to sign this in blood?'," Omartian related. "I didn't have a problem with that -- knowing that he was retiring in two years!"

The business case modeled application programming spending from 2001 over two five-year periods, Omartian said. "We modeled it based on what it would be with the architecture and what it would be without it, and by 2004 in that model we would have achieved a four-year payback." The model showed that by 2006, total spending on application programming would be reduced by 32%.

Nearly five years later, the project is right where Omartian and his colleagues projected it to be. "Fortunately we delivered on the architecture, and we are seeing the savings that we had projected," Omartian said. "In fact, the first 20 applications that we implemented on this new architecture resulted in savings greater than the investment itself, so it actually paid back in three years."

Omartian's partner in the presentation, Guardian CTO Jaime Sguerra, cautioned that enthusiasm for services-oriented architecture (SOA) on the business side, while useful for selling the project, could result in unforeseen difficulties. "SOA requires a lot of discipline, a different mindset," Sguerra remarked. "To the extent that they understand that, it will be successful, but they need to buy into it and they need to work with you to implement that."

Above all, according to Sguerra, IT executives should keep in mind the ultimate purpose of the technology they construct. "You can build the greatest architecture, but if the business isn't going to use it or it doesn't meet their needs, it's not going to be worth it," he said.

Sguerra also emphasized the efficiency of buying commodity-type components when possible. "Buy what you can and build only what you absolutely must," he advised.

He also commented on the need for flexibility in executing an architectural transformation and how, by observing that need, Guardian was able to succeed beyond the plan, even within its budgetary restrictions. "Enterprise security architecture was not part of the plan, and yet we were able to pull that off," he recounted. "That was a mix of components and a framework that we built around those components as well."

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Insurance & Technology's Executive Summit 2005

Guardian Life Insurance Company of America

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