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Ready To Roll

Farm Bureau Financial Services builds information technology to navigate the demands of rapid growth.

Farm Bureau Financial Services (FBFS, West Des Moines, IA) may not be the biggest company that Doug Gumm has worked for. But what it lacks in scale it makes up for in complexity and aggressiveness, according to Gumm, FBFS's vice president, information technology.

FBFS comprises two principal companies, FBL Financial Group, covering its life operations, and Farm Bureau Mutual Insurance Company, on the P&C side. FBFS's traditional Farm Bureau distribution markets cover 15 Midwestern and Western states. Through FBL Financial Group, the firm sells variable life products in 33 states through alliance partner companies.

But that's just today. The firm recently acquired several Farm Bureau companies, including those of Arizona, New Mexico, Colorado and Western FB, as well as Kansas FB, which it purchased last year—and it has another acquisition in the works even now.

Three-Pronged Strategy

That kind of activity can only be expected to continue, as part of what Gumm calls the company's "three-pronged strategy," aimed at internal growth, alliances with other companies and consolidations, or acquisitions—a strategy that requires an information technology organization conditioned to regard change as a constant.

"Our driving force is maintaining a technical infrastructure that's adaptable and easy to modify, because the nature of our business and working to grow through our three-pronged strategy gives us a lot of ways we need to connect with all our partners," Gumm says.

In anticipation of bringing new companies on board, FBFS's IT organization is tasked with "developing and maintaining an adaptive infrastructure that allows you to jump on those deals when they present themselves," Gumm says. "You've got to be able to connect up fairly quickly with other companies when they become a merger or a consolidation candidate and start to squeeze the duplication of operations out fairly soon. And this is a tactic that I think differentiates us a little bit in the mergers and consolidations arena." That tactic? "We actively look for the IT integration and consolidation on the front end."

Perhaps a more fundamental challenge is being able to provide a single face—what Gumm calls "ubiquitous access"—to all the users across FBFS's complex web of internal and external partners and end-users. "The complexity really is in the integration that we have to do to touch our customers, who could own all products," though diverse sources, he says. Those customers, by Gumm's definition, include not only policyholders, but also FBFS's captive agents, and those agents of other carriers that sell FBL Financial Group products through alliance agreements.

The technology challenge this brings is "to be able to present a common look and feel," he says. "In our technology infrastructure, there's a lot of complexity, and on the application side almost everything we do has to come together in terms of the way that we present it to our customers and agents."

To get the right data and information to those who need it, FBFS has made a substantial investment in Web-based technologies—for example, to serve agents of alliance companies selling FBL Financial Group's life products. "We support the sales in those companies by leveraging our existing policy processing systems with Web-based interfaces that we call our Alliance Extranet," Gumm says. FBFS has also deployed a Web portal to give its captive-agent field force access to information process throughout its back-office systems. "Through the extranet and our portal we also push sales information and communication, eliminating mailings and printed reports," he adds. "Obviously this requires a robust middleware infrastructure to support the many relationships we have with our partners in the alliance chain, as well as in our business-to-business chain." The insurer deploys middleware technology that includes Websphere and MQ Series from IBM and Orbix from IONA.

FBFS's efforts in growing internally through its captive agents is centered around improving product sets that agents have available to them, and making the products more attractive through features or price, according to Gumm. Technology has a role in getting those offerings to the customer.

"We don't have what you'd call a classic CRM initiative underway, but we have been building many of the kind of underpinning functions and trying to utilize them in a very specific way to improve our cross-sell through our knowledge of the marketplace, and to improve our understanding of the specific customer," Gumm says. "We were a fast-follower, in this respect, but we stopped short to avoid some of the pitfalls suffered by our peers in the industry," such as "overspend/underachieve kinds of problems, moving forward without goals, and not being able to measure success," Gumm adds.

Regarding the opportunity to do more with existing clients, Dan Pitcher, vice president, information systems, says, "We have a lot of P&C customers that don't have any of our life products and there's a significant opportunity to deal with that."

According to Pitcher, an important innovation on the P&C side is FBFS's Member's Choice product, a "true personal lines package policy" that allows the consolidation of all a client's property and casualty policies into one. "P&C personal lines had become a very commodity-type product in certain areas and our P&C company chose to make a significant investment introducing this new product that's backed by entirely new technology," Pitcher says. FBFS built a conversion utility designed to "go out and harvest data from any monoline system and start an agent on his way with a packaged policy." Member's Choice was first rolled out in Utah in 1999, followed by South Dakota. A release is planned for Minnesota in 2002.

Managing Priorities

Since FBFS isn't of a size to have massive resources and a separate R&D facility, its ability to provide such innovative offerings is the result of more targeted efforts. Growth can bring "more work to the table than can get done 'today,' so we have to manage priorities within those three prongs" of the firm's business strategy, Gumm says. In moving FBFS forward as a business, he adds, "there's a role for technology, and we're very open to taking on whatever technology we need to get the job done. But there's a stronger focus on adaptable architecture, both on the application side and the infrastructure side."

For example, when many in the insurance industry were pondering the matter of online sales, FBFS considered the question from a "business first" perspective, according to Ray Wasilewsky, vice president of emerging technologies. "We had the courage to stand our ground," he says. "We didn't exactly disbelieve in the potential for success in online sales, but we believed that our agent channel was our most profitable channel." At the same time, since it's not possible to know what the customer of the future will want, according to Wasilewsky, IT has identified capabilities that FBFS must have in order to do business online. "But we've also found ways to deliver those so agents and customer can use them in ways they want to right now, while building that capacity for the future, should it come," Wasilewsky adds.

That kind of anticipation marks all the endeavors the IT group embarks upon, particularly when it comes to M&A and alliance-building activities, according to Pitcher. "There are lots of companies that make the buy and then leave the data centers alone, sometimes in perpetuity, leaving behind a lot of opportunity to improve expenses," he says. "We have infrastructure in place that some other Farm Bureaus didn't want to build from the ground up." Using variable products as an example, Pitcher notes, "many looked at putting a system in place to do their own variable business and decided it was cost-prohibitive, and concluded we could get them up and going for less money in a quicker time period."

Putting It All Together

From an e-business perspective, according to Wasilewsky, "We always build our systems so they expect any state could come along at any time," he says. "We literally put the extranet together so that we can add a new alliance partner in about four hours—it takes the business far longer."

Building with "How do you put it all together?" in mind is a focus that FBFS has retained for a long time, and indeed institutionalized, says Gumm. "We have enterprise architects who have a very strong influence over what we do and how we do it, day to day. Their only job is to pay attention to how we're wiring all this stuff together," he says. "In the end, I think technology is cool, but the key to success is how you wire it all together. The architecture has to reflect your business. In our case we're looking for something that supports our growth strategy, and obviously, like any other insurance company, you have to be able to reduce the cost of your internal processes all the time."


Change Masters

COMPANY NAME: Farm Bureau Financial Services (FBFS), West Des Moines, IA, $3.96 billion in assets.


KEY EXECUTIVES: Doug Gumm, vice president, IT; Ray Wasilewsky, vice president of emerging technologies; Dan Pitcher, vice president, information systems.


IT BUDGET: $30 million

KEY INITIATIVES: Alliance Extranet, captive agent Web portal, Member's Choice personal lines P&C package policy.

IT ARCHITECTURE: Microsoft (Redmond, WA) NT Servers; Sun Microsystems' (Palo Alto, CA) Solaris; IBM (Armonk, NY) mainframe; IBM and EMC (Hopkinton, MA) storage; Cisco Systems (San Jose, CA), Novell (Provo, UT) networks, frame relay WAN. OS: Microsoft Win95/98, WinXP, IBM OS/390, Novell, Sun. Middleware: IBM Websphere and MQ Series, IONA (Dublin) Orbix. Systems/network management: IBM Tivoli, HP (Palo Alto, CA) Openview, Compuware (Farmington Hills, MI), Radia (Sunnyvale, CA). Voice & data: AT&T (New York), QWEST (Denver).


DOUG GUMM: "It's an ongoing challenge to keep track of the latest developments in business and technology and then match the right technologies with strategic business needs in a cost-effective way. Getting the right balance of sticking with what we know best and introducing the right new technology is a daily challenge."

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

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