Organizational Innovation: CUNA Mutual Relies on IT/Operations Partnership

Facing dissatisfied customers, a more-competitive marketplace and unnecessary costs related to redundant applications and facilities, Madison, Wis.-based CUNA Mutual - the largest provider of financial services to the credit union marketplace - has embarked on an ambitious organizational transformation that relies on a unique partnership between the IT and service/operations organizations. Tom Gosnell, CUNA Mutual's CIO, and former CIO Rick Roy, SVP of Customer Operations (and a 2006 Elite 8 honoree) reported to the Executive Summit attendees about where the company stands one year into what is expected to be a three-year transformation.

Top-Down Change

With a goal of "changing the customer experience," according to Roy, the transformation was "chartered" by CUNA Mutual's CEO, Jeff Post, who joined the carrier two years ago. "He chartered the transformation," Roy notes. "Change comes from the top down, starting with him."

But to go beyond the rhetoric about change "requires a strong relationship between the two of us," Gosnell said, referring to his predecessor. "Rick is my largest customer in the IT group. It was evident that as the company changes, we have to change - it's not optional."

Prior to the transformation initiative, CUNA Mutual's service center agents lacked access to enterprisewide data, and there was an overall lack of integration in the company's back-office systems. Additionally, 30 operations centers across the U.S. and more than 1,500 employees were duplicating functions. There were 37 different call centers, eight claims processing groups, and more than 57 core product administration systems. And, according to Roy, "The legacy application portfolio was immense and complex, reflecting the old philosophy of a distributed business model."

This has been consolidated into three operations centers, in Madison; Waverly, Iowa; and Fort Worth.

But accomplishing such a significant restructuring "forced us to rethink the (IT) organization and (our) internal processes," Gosnell said. An organization that traditionally had focused on in-house development now had to consider "the skills we wanted and the expectations we had for folks to drive the business change."

Both Gosnell and Roy emphasized how critical the people factor - defining new roles and expectations for IT staff and management - has been in the success of the transformation initiative. From the start, both executives focused on "where the best people were and putting them in the right roles," Gosnell said. "We changed the culture and the way we did things." At the same time, the size of the IT staff has been reduced by 15 percent through what he describes as "substantial managed attrition," while also making "sure we're retaining the top performers."

So far, the efforts seem to be paying off. Roy reported that, in making the business case to CUNA Mutual's management for the operational and IT initiatives, he and Gosnell used the concept of an ante - an investment that would be required just to "be in the game. We sold this around a goal of $10 million in run-rate improvement. We will have $19 million in run-rate improvement this year." This underscores what Roy described as key targets of "success, results and sustainability."

Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio