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Extreme Makeover

To reposition itself for growth, Fireman's Fund Insurance Co. enters into new contracts with AT&T and IBM to completely rebuild its networks and technology infrastructure.

Recent deals at Fireman's Fund Insurance Co. (FFIC; $12.6 billion in assets) will render the carrier's networks and infrastructure nearly unrecognizable. The Novato, Calif.-based P&C insurer announced that AT&T (Bedminster, N.J.) will design and manage an Internet protocol-based virtual private network for the carrier to replace several disparate voice and data networks and support FFIC's mission-critical applications under a five-year, $42 million contract. At the same time, in a seven-year, $157 million deal, FFIC is implementing an on-demand technology infrastructure from IBM (Armonk, N.Y.) to automate tasks, increase system performance and improve return on equity goals. The projects are scheduled for completion by May 1. The news at press time that AT&T will be acquired by SBC Communications (San Antonio) will not impact FFIC's strategy, according to spokesman John Kozero. "One of the reasons we chose AT&T was the scale and additional service they bring to telecommunications. If anything, an even larger organization should bring even more possibilities for enhanced service," he says.

Following a recent financial turnaround, FFIC is positioning itself for growth, according to CIO Fred Matteson. "I put out a mandate for my own staff to figure out how to double output - to reduce our time to market and lower unit cost," he says. To improve efficiency, FFIC first looked at network consolidation. Looking for an end-to-end network solution from a single provider, FFIC selected AT&T, which also will manage bandwidth and equipment that runs the networks, printers, phone systems and voicemail.

Next, FFIC turned its attention to its infrastructue, which the insurer was outsourcing to CGI (Montreal). CGI also managed equipment that ran FFIC's various networks. "At the time, our switches and routers and core network equipment were being managed along with the infrastructure by CGI," says Matteson. But since those functions will now be managed by AT&T, he continues, FFIC decided to transition to an IBM infrastructure.

IBM stood out because of its Universal Management Infrastructure model, which allows the vendor to draw computing powers as needed from a shared pool of data center resources, relates Matteson. "The shared infrastructure allows you to take advantage of newer technologies like clustering and server technologies while buying at capacity and on demand," he says. "We get workload capacity that is only unlocked as we need it."

The rollouts will occur simultaneously, with transition teams from AT&T, IBM, CGI and FFIC working to meet the deadline. The hard work reflects the value of FFIC's business to its vendors. "Vendors see FFIC as a very desirable account because, besides being a strong brand with a rich history and complex projects in terms of P&C and specialty lines nationwide, we are part of the $130 billion Allianz Group," notes Matteson. "And they certainly want stronger relationships with Allianz."

The next phase of Matteson's technology strategy is investing in a capabilities model that combines some outsourcing of development functions with training and new skill sets "to have an IT organization that is more focused on delivering new systems to support business outcomes than on maintaining legacy systems," he relates. Matteson hopes to begin the transition in the next few months.

"All of this is happening because of FFIC's business" growth, explains Matteson. "We have a new CEO [Charles Kavitsky] with a strong vision of positioning in the marketplace and an understanding that all of our product is distributed through independent agents," Matteson says. "For us, that distribution channel is our primary customer."

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