See You On The Flip Side

For some, getting a foot in the door at a company takes a lot of work. For others, a company will roll out the red carpet.

In 1994, after deciding to buy a packaged policy and claims administration solution from SDS (Strategic Data Systems), executives at Providence Washington Insurance were so impressed with the skills of SDS' Ed Leveille that they wrote him into the contract as implementation manager. A year later, the multi-regional P&C insurer hired Leveille, and since 1998 he has been the company's vice president and chief information officer.

While there obviously never was a literal "red carpet," Provident Washington's choice in its technology leader appears to have been a good one. Leveille and his IT team won three awards at this year's annual ACORD conference, including the Business Integration Award, the Early Adopter Award for Property & Casualty, and the Property & Casualty XML Certification Award.

But the amount of hardware in Leveille's trophy case is not the only thing that is growing as a result of IT initiatives at Providence Washington Insurance Co., serving 100,000 policyholders with a premium volume of $200 million and headquartered in Providence, R.I. The carrier's business is growing, as well as the amount of IT dollars dedicated to new development and enhancements of existing systems.

"When I joined Providence Washington in '95, I started looking at the time and money that was being spent to support the existing systems," reflects Leveille. "We were spending most of the money on support, and very little was being spent on enhancements or infrastructure," and Leveille knew he needed to spend more in those two areas, he adds. At the time, 60 to 70 percent of Providence Washington's IT expenditures were focused on support. Leveille wanted to "flip" the number and have 60 percent spent on enhancements and research and development, with the remainder spent on support.

However, shifting funding is not as easy as flipping a switch. Leveille estimates it took three to four years to get the spending percentages to where he wanted them. "I started by having all of the IT people track the time that they spent doing work in four areas," he says. Leveille defines the areas as: operation time and overhead (including vacation), maintenance and production support (e.g., production stoppages), maintenance of legacy, and new development.

"Obviously, the internal staff did not like" tracking their time, Leveille says. "But while they were tracking, I was educating them about why they were doing it and where we wanted to get to," in terms of time spent on maintenance and R&D. "Also, I began to tap into their feelings about their careers and explained that if we could dedicate more resources to development, they could get into new technologies and leading-edge technologies. That definitely helped to reinforce the plan."

Leveille's goal was to get operational time and maintenance as low as possible during the first two years of the process and have the staff dedicate more time to development. However, Leveille had to convince more than just his 30-person IT staff to embrace the plan-he needed business buy-in. "Business users grasped the idea and they thought it was novel," he says. "My pitch to them was that 'We are going to deliver more value with less dollars.'"

However, IT began to receive some pushback from business managers as the spending flip began. "As time and resources started to shift to R&D, I received some resistance as we reduced the enhancement budgets and we were not able to satisfy the enhancement appetites of the business users," he recalls.

The problem was not an IT problem or a business problem, he notes; rather it was combination of both. "IT had to learn to work faster in some areas," he says. "And we only have a limited budget. We needed some prioritization about what IT was supposed to do first."

Leveille worked with his business counterparts and created a steering committee that would prioritize projects and at the same time manage business leaders' expectations. "The committee votes on what has to get done first," he says. "It is a business-driven committee and IT is represented on the committee." To help the committee prioritize projects, every time there is a request Leveille and his team supply the business with an estimate of how long and how much a project will cost, in both time and money.

Jack Be Nimble, Jack Be Quick...

However, Leveille notes, the "flip" of Providence Washington's spending habits is not something that he could have done so quickly at a larger insurance company. "Our size definitely is an asset for us," he says. "I think our decisions are made a lot faster and a lot more efficiently than similar decisions are made in the larger organizations. Our systems people talk directly with the business to get the answers they need," when developing applications. "We don't have 1,000 IT people and we don't have a need for huge committees." Providence Washington has 30 IT people-half are developers and the remainder are business analysts and help desk staffers.

The focus on R&D has shown benefits over the past few years. For one, with more resources to use in development, Leveille has been able to move to newer technologies-such as Web-based technologies that leverage ACORD (Pearl River, N.Y.) standards, business-process integration technology from Metaserver, Inc. (New Haven, Conn.), and a rules-based, componentized underwriting system from ILOG (Mountain View, Calif.). The system, based on ILOG's JRules, has moved thousands of rules from three-ring binders to an automated system and has allowed the company to drastically reduce underwriting errors and increase underwriting efficiency.

The BPI technology from Metaserver, used in conjunction with ACORD XML standards, is helping Providence Washington automate many of the traditionally manual underwriting tasks.

The processes are a precursor to moving to Web services. "XML and Web services are part of my long-term strategy," he says, estimating it will take a few years to truly have a robust suite of Web service offerings.

However, even with dedicating more spending to new development, Leveille says one of his greatest challenges is still finding the necessary resources. For instance, another goal is to move policy issuance to a straight-through process.

On the flip side of the tough economy, Leveille says it has been a great time to negotiate with vendors. "I need to stretch our funds farther every year, but it has been getting easier over the past year because it's easier to get good deals with vendors."

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ELITE 8 FACTS

ED LEVEILLE

Vice President and Chief Information Officer, Providence Washington (Providence, R.I.), $200 million in annual premium.

SIZE OF IT STAFF: 30.

BACKGROUND: Leveille was a senior consultant with Strategic Data Systems, Inc. (SDS), before Providence Washington hired him after purchasing an SDS admin package.

HOBBIES/INTERESTS: Outdoors, the beach, warm weather and investment properties.

LAST BOOK READ: "Harry Potter and the Order of the Phoenix," by J. K. Rowling.

Greg MacSweeney is editorial director of InformationWeek Financial Services, whose brands include Wall Street & Technology, Bank Systems & Technology, Advanced Trading, and Insurance & Technology. View Full Bio