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09:36 PM
Lisa Valentine
Lisa Valentine
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Slow and Steady

Judith Campbell, CIO, New York Life

There have been important changes in the way IT functions at New York Life (New York; $202 billion in assets) in the seven years that Judith Campbell has been CIO, but nothing earth-shattering, she calmly notes. It was "business-as-usual" during the dot-com boom, and it's been business-as-usual during the bust. Part of the reason for Campbell's serenity is her decidedly slow-and-steady approach to IT planning, which focuses on the return on investment - not entirely surprising at a company that has been in business for more than 150 years and resolutely resists demutualization.

I&T: In the past few years, New York Life has invested heavily in its infrastructure. What technologies have you invested in, and how has that spend resulted in competitive advantage for the company?

Campbell: One of the paybacks is that our maintenance expenses are substantially lower than our peers' expenses. Our infrastructure spending allowed us to reduce the complexity of our architecture, and that is really paying dividends to us by lowering long-term costs.

We are also able to create products and get them on the street quickly by making our legacy system data available to newly developed distributed systems and then feeding that data back into the legacy systems. We use data warehousing, operational data storage, front-end systems built in J2EE, and we are building a strong middleware component. It's an overall enterprise architecture that will enable us to reduce the cost of development without impacting the workings of the legacy systems.

I&T: What projects do you have planned that will take advantage of the streamlined infrastructure?

Campbell: We will be investing in two major areas. We are redoing all of our life and annuity business processes from an agent perspective. We're also in the midst of developing an agent portal that will enable agents to get information about customers and their own performance by themselves - information that had been available to them previously but was in different systems.

I&T: How are your agents adapting to these changes?

Campbell: It's not so much the agents having to adapt, but IT having to adapt. Our agent population is changing, and they have new methods of selling. We're really looking to react to what agents need rather than telling them what they should use. They are such experts in what they do that they tend to be a little bit ahead of us in a lot of places.

I&T: How is compliance affecting your business?

Campbell: It's difficult times on the regulatory front. Compliance is having a fairly major impact on our business and people, and has become a major focus from a technology, business and legal perspective. We are spending a great deal of money on it. Although we are a mutual company, we still have some impact from Sarbanes-Oxley.

I&T: Have you made any major technology changes to facilitate compliance?

Campbell: This year we put in a records-retention system that retains all of our e-mails in the way the regulators want it, which is certainly a lot more robust than anything we would have done for our own purposes. It cost us almost $1 million.

I&T: Have you changed your IT governance process to deal with increasing regulatory demands?

Campbell: We are actually a little bit ahead of the game because we are heavily centralized and I serve as CIO for the entire company. Even areas with their own IT organizations have a dotted line to me. We've been federally organized from the time I got here. That makes dealing with regulatory issues a bit easier for me than for some of my peers.

But it's certainly not perfect. We have international organizations that are not as clearly tied to us from a governance perspective as we might like. There isn't as clear-cut a way to manage some of that governance, and we are learning as we go along. But certainly the information security world is sending us down the path of tightly controlled IT, perhaps more than anybody ever wanted.

I&T: How do you balance the need for governance with the need for business lines to move forward with new technology initiatives?

Campbell: Each business really makes the determination about new technology initiatives, with our help. My group acts as a consultant for each of the businesses. In essence, I have an account rep on my team for each of the businesses, and that account rep works with the head of that business unit to make sure that they have a technology strategy. The account rep comes back to my infrastructure team to make sure that the infrastructure team understands the out-year plans for each of these business units.

I present a technology strategy to the management committee that reflects all of those business area initiatives. Each business sets its own priorities on the application development side, and then the management committee helps me set the priorities on the infrastructure side.

I&T: Is this a new way of running your IT organization?

Campbell: No. We've been at this for about four years in a very disciplined, sophisticated way. We're really good at it now, although during the first couple of years some of the priorities got out of whack. We also had issues with business units not taking this seriously and wanting to change priorities six months later, although we have built in flexibility so that each of the businesses can change priorities to reflect changes in the business. Perhaps we went into the year thinking we were going to do a lot of work on the life side and something happens with interest rates so we do work on the annuity side that wasn't expected. Those changes can happen within the governance model.

I&T: Once priorities are set, how does the application development process work?

Campbell: We develop applications for our business customers on a fixed-price basis. They tell us what they want us to do, and we give them a statement of work and quote them a price. We do it within that price, or I eat the difference. If they make changes, we get a change order that changes the price or changes the time frame.

It's a very fair system. It's just like you would do if you had outside people working for you. What happens is that the businesses are very serious about what they are spending and it gives them an opportunity to do a good cost-benefit analysis because they have clear costs. I get a chance to manage a P&L and work toward my goal of keeping a zero balance. I should have no costs and no profit.

It's a wonderful way to manage with my business peers. We really are all peers, and they understand my stresses on my P&L and I understand their stresses on their P&L.

I&T: What emerging technology do you see as being really important for New York Life and the insurance industry as a whole?

Campbell: I don't see an awful lot that's new and that may be a good thing - we can mature the things we've already got and make sure we are getting the efficiencies out of them we ought to be getting. That said, although we don't see a need to do much with wireless and handhelds domestically, internationally, wireless is an imperative. Our agents in India and China use a wireless infrastructure because they don't have a wired infrastructure to rely on.

We have some wireless pilots domestically, but they are "nice-to-haves." Agents like to fool around with them and perhaps do illustrations on a handheld. But we are very disciplined on cost-benefit return on investment and realize that these are fun things that don't necessarily give you a return on investment. We don't do much that doesn't have a good return.

I&T: What is the most challenging aspect of your job as Chief Information Officer?

Campbell: I have to tell you that the most challenging - and most rewarding - aspect of my job is working with the heads of our businesses to be sure we are solving the right problem at the right time with the right solution and at the appropriate cost. Any one of those things is challenging enough, but to make sure you are doing all four all the time is clearly the biggest challenge.

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