Insurance & Technology is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.


12:40 PM
Connect Directly

Nationwide's Catalyst Program Consolidates Commercial Business and IT

Through a five-year endeavor, Nationwide consolidated its Allied, Nationwide Insurance and Nationwide Agribusiness commercial lines onto a single business model, product portfolio and processing system.

Running a major transformation program is like being an air traffic controller, muses Dan Greteman, VP, P&C - Independent Agency, Commercial and Agribusiness, for Columbus, Ohio-based Nationwide. "All the planes have to land in a certain sequence, and if you shift the runway you get into a lot of problems," he says.

As the executive responsible for the IT side of Nationwide's Catalyst program, Greteman had a lot of planes to land. The five-year business/IT transformation initiative, which was concluded in November 2010, consolidated the commercial business systems and processes across Nationwide's Allied, Nationwide Insurance (NI) and Nationwide Agribusiness operations, resulting in a common business model, product portfolio and processing platform for the companies' respective independent and captive distribution channels, he explains.

There are two approaches to delivering large programs, Greteman submits: "You can either lock in the date and work to it, or you can let the date be set to the work." Greteman says he chose the former option for Catalyst, reasoning that the more variables he could hold constant, the easier the equation would be. By building some scheduling contingencies, Nationwide (approximately $20.8 billion in 2009 total revenue) made the approach work, he reports, adding, "We never shifted an end date on any of our major builds."

The Need for Change

The concept of Catalyst grew out of Nationwide's recognition that there were major efficiencies to be gained by consolidating aspects of its Allied, Nationwide and Nationwide Agribusiness business units, according to Katherine Hedrick, associate VP, commercial program delivery, and Greteman's business delivery counterpart. Acquisitions had left Nationwide's distribution channels with disparate policy systems, products and processes, which in turn resulted in duplicate data capture, multiplied systems support needs, created delays in policy issuance and complicated new product development, she says. The business units market typical commercial lines products, such as various business owners policies, general liability, property, inland marine and workers' compensation, as well as various farm owners products.

As the project got under way in 2005, Hedrick relates, Nationwide identified the first of four major goals, or "program pillars," for the Catalyst program: "Conversion and Expansion" -- defined as converting captive commercial agents and products to a single commercial platform based on the Allied independent channel side. The other pillars of Catalyst, she adds, include Consolidation, which aimed to create consistent capabilities across policy platforms and improve processing automation; Imaging and Workflow, which would extend workflow to improve automation and reporting functions and add independent agent channel front-end and back-office processing capabilities; and Commercial Business Intelligence, a subinitiative to develop retention profiling capabilities and build out a common commercial business data warehouse.

Because of the characteristics of the businesses affected by Catalyst, the conversion of agents to a common platform and product portfolio would open up new states for the independent channel and Nationwide Agribusiness, in addition to reducing operating expenses associated with redundant systems, Hedrick says. "We had multiple distribution channels, but many of their needs were the same," she explains. "We had different product sets and different groups to support from a processing and service perspective -- we had all these people in their own worlds and silos, and yet the markets they pursued were very similar."

The differences among the business units drove the expansion opportunity, Hedrick adds: Allied's business tended to be concentrated in the Western United States, and NI's in the East. "One of the opportunities was to leverage the product set that has historically made Allied very successful in commercial lines," she says. "We have brought that value to bear across the other units."

That required materially changing many aspects of the NI way of doing business and making them more like the Allied operations, Hedrick acknowledges. "We went through a significant business change, particularly for one side of the house," she says. "However, there's huge benefit because we have fewer systems to support, fewer products to support and a streamlined rate review process -- when we make changes, we make them for the benefit of all of our agents, regardless of distribution channel."

An IT Metamorphosis

From an IT perspective, Catalyst was a massive, multiyear endeavor centered on policy administration system-related consolidation efforts, according to Greteman. However, the magnitude of the project might be better expressed by the metamorphosis it required of the commercial lines IT organization: "Catalyst took a maintenance organization and transformed it into a large delivery shop," he comments.

Greteman implemented what he calls a factory domain structure, under which his organization managed about 10 distinct streams of work at any given time, which paralleled correlated activity that was undertaken on the business side. By adopting a scalable delivery model, the IT team was able to deliver 10 major builds between 2005 and 2010, and 17 to 22 items overall per year, including about two major builds annually, Greteman reports.

The 10 major builds accounted for anywhere between 50,000 and 200,000 work hours, depending on the item, with each additional delivery item requiring about 10,000 hours. While the Catalyst IT team sat within the commercial business, it had significant tasks with regard to coordinating with corporate and other downstream systems -- 84 to 126 systems were impacted at one time or another during the initiative, Greteman notes. To handle the workload, the overall capacity of Greteman's shop was increased to approximately 250,000 effort hours per year.

Over the duration of Catalyst, according to Greteman, Nationwide also built up the project management skills and certifications of its staff, intensified interaction with its key integration partner (which Nationwide declines to name), implemented an integrated tool set and new management processes for delivery management, established a 70-person offshore development team, and built an advanced testing capability, including requirements traceability, test automation and common configuration.

Catalyst's governance structure included oversight from an executive steering committee that included presidents of Nationwide's business units and key regional distribution executives, Greteman adds. Allied president W. Kim Austen was the business sponsor, interacting with Hedrick and Greteman.

"There was a great deal of work done on the business side to ensure participation and communication about the program at a high level, with a focus on the significant change management dimension," Greteman says. "Within each of the work streams there was an individual project structure housed beneath the factory domain structure."

Early in the process, Nationwide began a systems selection process to identify the central "goal state" policy administration platform, including evaluation of existing Allied and Nationwide systems and a review of several vendor products, Greteman relates. "When we looked at packages, there was much discussion around whether business processes could be bent to the system we were looking at," he comments. "There were basically two factions. IT folks were very interested in the technology; one platform in particular was more capable -- it was more table-driven and configurable and had other cools aspects. On the business side, the concern was with the processes."

Uniting the Business and IT

In the end, Nationwide chose as its goal-state platform an in-house-built system from the Allied, independent channel side of the commercial business. According to Greteman, the decision set the stage for the specific goals of the transformation's Conversion and Expansion stage and clarified where some of the greatest change management efforts would have to be directed.

"One side had to convert to a new way of business," Greteman observes. "The technology could have been done faster, but the business side had to tackle rate and product structure and regulatory compliance tasks as we pursued a state-by-state rollout. We were very thoughtful in how we proceeded, gaining momentum by taking on the largest and most complex states early."

As part of a highly structured change management plan, IT worked with business solution lead Tina Rodriguez to help communicate changes to business partners in the field, Greteman reports. "We were sophisticated enough that we identified key stakeholders, worked to understand their personalities and tailored messages to eight different styles," he recalls. "We could quickly structure the content of our communications to match the style of the stakeholder in question."

Internally, IT and the business worked at an extremely granular level both to affect change and to prepare for future change, according to Christina McNeeley, software quality assurance leader. In order to deliver Catalyst's goal of common products, she says, "Our teams had to go down to the level of mapping every single class code, territory, form rate and deductible. So our focus was very much on creating a reusable stack of requirement deliverables that would carry us from build to build, rather than having to start from scratch each time."

Whether the task was requirements or code, the team always built with the end goal in mind, in order to maintain consistency and ease the downstream training burden, McNeeley says. The team maintained tight audit controls to manage the large volume of decisions Catalyst would require and to anticipate questions that might arise once functionality was in the hands of end users. "We leveraged those to keep the team moving and not get into roadblocks and churn that you often see in larger deliveries," she notes.

As part of the enhanced capabilities within the factory delivery concept, McNeeley's team was given the opportunity to build what she calls a full-fledged automation regression suite. "It's not often that you can start from scratch and build your automation right along with it," she says. "We've put ourselves in a position where everything we've built on Catalyst has been incorporated into our production space along with the application code."

The magnitude and complexity of McNeeley's challenges remained manageable in part, she says, because of unwavering support from the requirements side of the house. "We had the luxury of business partners who were fully dedicated to our efforts," she reports.

"I had a very clear path of escalation and support from either Tina [Rodriguez] in her role, Katherine [Hedrick] in hers, or the whole executive steering committee," McNeeley continues. "The business presented a very united front -- we never had to deal with one person saying one thing versus another. That didn't exist because it wasn't allowed."

A Change for the Better

It's too early to gauge the long-term impact of Catalyst on Nationwide's growth ambitions, but as the agency force continues to adjust to the changes to the business model, product portfolio and platform, Nationwide is beginning to reap the rewards of the multiyear effort, according to Hedrick. "We still have a few months of business conversion activities, but we're already beginning to see synergies, particularly in our processing organization," she says. "For example, we can now flow work virtually from one location to another, so we can respond to capacity demands and not worry about things like location closures."

By completing all of the objectives of the massive program, Nationwide has achieved its stated goal to provide a powerful product set across an enlarged geography within a simplified business environment. But it has done more than that. "It also brought the excitement and uplift of working with a new engine, with greater ease of doing business," asserts Greteman, who adds that the effects of the consolidation work on the commercial IT organization itself were game-changing.

"I effectively cut my internal IT costs in half," Greteman reports. "We now maintain one core system instead of two, and since we moved from a hard-coded platform to one that's table-driven, I've enabled my business partners to make modifications without having to rely on my technology resources. There's a lot of savings there." n

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

1 of 2
Register for Insurance & Technology Newsletters