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Management Strategies

09:59 AM
Lisa Valentine
Lisa Valentine
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Investing for the Future

Not burdened by legacy baggage, Vittorio Severino, Hartford Life's CIO and SVP, can spend his energy on emerging technologies.

Vittorio Severino, CIO and senior vice president of Hartford Life, a subsidiary of The Hartford Financial Services Group Inc. (Hartford; $18.7 billion in revenue), knows he's luckier than many of his peers - given his company's commitment to continually reinvesting in technology, Severino doesn't have to handle nearly the amount of legacy mainframe baggage that other CIOs do. Instead, he can focus his attention on promising technologies such as grid computing and Linux as he leads the nation's fourth largest life insurance group into global markets.

I&T: From a technology perspective, what sets Hartford Life apart from its competitors?

Severino: One area that distinguishes us is our risk management capabilities. We've taken on the risk management of our annuities guarantees, whereas before we relied on reinsurance. We've built a whole risk management structure that is more akin to what you may see at an investment banking or a trading organization than what you traditionally would see at a life insurance company.

I&T: What technologies power your risk management area?

Severino: We're harnessing grid computing - stringing together servers and desktops - for massive computations. Some people call it a virtual supercomputer. Hartford Life probably has 10,000 desktops, of which we use only 1 or 2 percent of their CPU potential. Even if we use 100 desktops for grid computing, we're aggregating CPU power that otherwise would remain underutilized.

Right now, we're using grid computing in our risk management area, but we are looking to use it in other areas of The Hartford as well. Grid computing is best for highly computational, intensive work used in applications such as underwriting or product pricing. For example, we could use grid computing to supply the horsepower needed to simulate what would happen in the case of a terrorist attack or a storm or a market collapse to enable us to better price our products.

I&T: Hartford Life has gone global and now is the No. 1 seller of annuities in Japan. What challenges have you faced in moving to become an international company?

Severino: Since our international areas are growing wildly - especially in Japan - we've done a lot of work in a short period of time to keep up with that growth. While that growth impacts us from a pure technology orientation, it also impacts us culturally. We've got to perform and manage work half a world away.

We need to bring in new disciplines and expand our service level agreements with our business customers to 24x7, and in some cases be multilingual. We've got to be more globally minded. We have to travel more and learn to deal with people of a different culture. We've got to understand their customs so we can recruit the right people in the local subsidiaries, such as Tokyo. It's forced Hartford Life to be more culturally global, and that's exciting to be part of.

I&T: How do you deal with your existing legacy systems? Do they restrict what you can do with new technologies?

Severino: The good news is that, although The Hartford is 190 years old, Hartford Life has only been around since 1959. We've grown tremendously since the early '90s, so a lot of our applications don't predate that growth. We don't have a huge legacy problem, and that does provide competitive advantage.

I see a lot of my colleagues in other companies trying to upgrade this huge baggage. It's like needing to drive faster and cheaper, but you have a car from the 1950s with parts that weren't meant to go that fast. If there is any lesson to be learned, it's that even if it costs money to constantly upgrade, it is a very good return on investment.

I&T: Where are you going to be spending your technology dollars in the next 12 months?

Severino: One of the things we've done pretty well at The Hartford is that we have avoided chasing fads. Years ago, if you asked a company that question, they may have talked about customer relationship management and knowledge-based applications. We didn't follow those fads, and we're glad we didn't because a lot of those companies overspent substantial sums and didn't get a lot of return. Other than pockets of cutting-edge technology like grid computing, we're pretty conventional.

We're trying to move applications off the mainframe to distributed systems. At some point, we are going to do a bit more research and development in service-based architectures, mostly in our P&C area, which has more of a legacy issue that they need to build out from under. At the life company, we are going to look at different architectures, but not in a radical, dramatic way. Because we are in good shape with our legacy issue, we don't have to take any big risks or chances. We're going to be pretty thoughtful about major technology change.

I&T: What is your plan for moving those applications off the mainframe and onto distributed platforms?

Severino: What we have is a migration strategy rather than a plan - a plan sounds like we've already made decisions about which applications to move, which we haven't done. We have a migration strategy to understand which applications would be best to move - those that are easier or less expensive to move, or have a better return once we move them.

I&T: Are you investing in technologies that can improve the overall customer experience?

Severino: Self-service is a major area of our technology spend. For example, we recently installed voice recognition software so customers can bypass the phone keypad and speak instructions. A lot of people prefer this, especially since you don't have to remember complicated menu items. You can say, "Transfer money," and it brings you to another menu; and you can say, "From this fund to that fund."

We are also doing things behind the scenes to enable call center reps to bring up more data, or bring data up faster to better serve the customer. We're also trying to capture more information about previous customer interactions, such as what questions they've asked, so we can better answer their calls. If we see that someone always calls us just before quarter end, we instead can call them with the information, or at least have all the information they typically ask for available when they do call.

I&T: What do you see as the next big technological breakthrough?

Severino: I attended a research board meeting recently where we discussed the lack of technology innovation coming out of the West Coast. There's just not a lot of new technologies being developed that could destabilize our industry or provide big, new opportunities.

The hottest product is probably radio frequency identification (RFID). Right now, most of the applications for RFID are in retail, but RFID might make its way to insurance. One speculation is that, if every part of your car could identify itself, you could get a quick readout of what is working and what is not in the event of an accident. This could dramatically speed up claims or make them more accurate. To me, that's the technology that seems to be the most interesting.

I&T: Do you believe Linux will play a role at Hartford Life?

Severino: We've started testing Linux in a few non-mission critical and one mission critical application, and we've had some good experiences with it. We're very optimistic about Linux. Some of the Wall Street firms have made a move to Linux, and that's given us a lot of confidence.

I&T: What is Hartford Life's strategy for business continuity?

Severino: Although it's certainly high on everyone's priority list, companies have different strategies for how to attack the business continuity. Some companies have a regional strategy where they will have a data center very far away from their primary data center. Others have a more localized strategy with a data center close by. We're a hybrid. Our data centers tend to be more local, but we do have the ability to do business in many parts of the U.S.

I&T: What is the most challenging aspect of your job?

Severino: This company has gotten more real-time and global at the same time, and managing that change, both technologically and culturally - and every other way - has been very challenging.

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