SVP Bob Buchanan Builds IT-Business Success at Auto-Owners Insurance Co.

When you talk to those who work with him, a commonly heard characteristic used to describe Bob Buchanan, SVP of information systems and technology for Lansing, Mich.-based Auto-Owners Insurance Co., is "modest." And it's true. Buchanan is quick to credit his team before himself for the IT department's accomplishments, from making it easy for agents to do business with the company to helping build a claims experience that has earned multiple J.D. Power & Associates awards.

"It is a privilege to work with a great group of associates in our information systems and technology division," Buchanan says on cue. "It is also a privilege for our IT division to be an important part of an elite company where IT receives so much needed support from all divisions."

According to Buchanan, in his more than 30 years with Auto-Owners ($4 billion in 2010 written premium), he has formed a management style that combines a readiness to make enterprise changes with a willingness to make midstream adjustments as needed, traits that are exemplified by the company's ongoing core systems modernization effort. "Like many companies, we have COBOL-based legacy claims systems, and we realized that what we had wasn't going to work. We started on a build process [for modernization], but that wasn't going as well as we would like," he says.

"You have to develop a tough skin in IT," Buchanan continues. "You have to be willing to take a step back sometimes. We formed a new group to take a fresh look at it. We brought in some business partners to help us, and we'll be making a decision yet this year on what we're going to be doing for a new claims system."

Meanwhile, Buchanan and his team have embraced Agile development strategies as they have gained favor in the insurance industry. But true to his understated, blue-collar nature, following the rules to the point of perfection isn't as important to him as finding a process that helps the IT department achieve its goals.

"If '1' means you're poor and '10' means you're great [at Agile], I don't want to be a 10 -- I'd rather be a smart 7," he asserts. "I'd like to be very good at what we do -- I'd like to get more agile, and I do believe that small, directed teams are more effective than big teams. But I don't want all the project management that sometimes surrounds those bigger projects. We try to avoid the fluff as much as we can."

Buchanan credits the business/IT alignment at Auto-Owners with creating an easy environment in which to innovate. During his time with the company, employees have crossed from the business side to the IT side and vice versa, he relates, increasing the understanding on both sides of how the other works.

"In the past, sometimes the company itself was siloed in terms of what it was trying to do," Buchanan acknowledges. Now, "Our entire company is helping make our IT initiatives successful -- there are very few 'just IT' projects."

In addition to enabling business/IT alignment, staff development at Auto-Owners takes on other forms as well, according to Buchanan, who notes that the IT department at the company had a strong "build" mentality in the past but increasingly is more open to buying solutions. Auto-Owners also partners with Michigan area colleges and universities to recruit high-quality talent to add to its 500-strong IT team, he relates.

"We are taking a fresh look at our options to make sure we are making the best choices for our company and our independent agencies," Buchanan says. "In order to help the IT organization do this effectively, we are also focusing on leadership and talent development as well as deliberate and measured change."

One of the major reasons Auto-Owners has become more open to vendor solutions is that vendors' attitudes have changed from one of pure salesmanship to one of cooperation and partnership, Buchanan says. While he is willing to work with companies from anywhere -- for example, Auto-Owners works with a Boston-based company for business process management -- he adds that he likes to work with Michigan companies because the local connection enables a stronger personal relationship. (Buchanan declines to name specific business partners.)

"One particularly important business partner was here, for probably a year and a half or two years, every Wednesday at 10:00 [to help out]," Buchanan says of the vendor relationship. "Now it's maybe every two weeks. But in the old days we might have thought they only came if they wanted to sell us something. I think they want us to get better because they like us. We still ask for great pricing and good service from our business partners, but they also benefit by learning from us."

The New Face of Business

According to Buchanan, a key IT goal at Auto-Owners is to be viewed by independent agencies -- the carrier's exclusive distribution channel -- as the easiest carrier with which to do business from an automation perspective. One example of that commitment is the company's use of automated testing tools for the user-acceptance process. The insurer also operates an automated agency help desk that assists callers with Auto-Owners' agency-facing systems, which mostly concentrate on web-enablement of core systems.

In fact, even as Auto-Owners looks to make wholesale changes to some back-end systems, the company has put a new Java-based front end on its legacy policy administration system, Buchanan reports, which has been well-recieved by its independent agency partners. "We sell 100 percent through independent agencies, and they don't care what's on the back end," he notes. "It's like a car: You might not know much about the engine, but you want it to get you there and back."

Buchanan's team has implemented web-based applications that allow agencies to process most of their policyholder transactions over the web using what the company calls the Web EZ process. It also is working to provide the same capabilities for agency management systems, such as Applied and AMS, as well as various comparative raters. "Initial implementation for personal lines is essentially complete and we are making good progress on our commercial lines applications," Buchanan reports.

The company also has installed a disaster recovery plan heavily focused on document management. Relying less on paper and more on backed-up digital files gives Auto-Owners' stakeholders peace of mind, Buchanan says. "Imaging of our home office paper-based files and our regional offices and remote claims branches should be completed by year-end 2012," he reports. "This will ... give us the flexibility to serve our customers from alternate locations even if a branch or remote office is down for any reason."

When Auto-Owners looks at emerging technologies, such as mobile, he adds, key to the company's strategy is how the technology can enhance the agent experience. And it doesn't do the company any good to hang back and ignore changes in the wider tech environment, Buchanan says, asserting that the company needs to stay abreast of market changes that affect its agencies. "We don't want to rest on our laurels," he insists. "Changes in technology and changes in customer expectations, for example, lead to the desire to accomplish many things via mobile devices. This requires IT to continue to hone our capabilities and competencies and be equipped to help Auto-Owners meet these expectations."

Buchanan envisions a similar situation to web-enablement of core systems: a services layer that supports multiple devices and operating systems in the rapidly expanding mobile environment. "In terms of native iPhone or 'Droid apps, we don't have that. I do believe down the road they're going to be selling fewer and fewer PCs and it's going to be more smart devices," he says. "But you can't just rewrite applications as the latest and greatest things come out -- you'd be doing that constantly. We're in the process of evaluating the best approach for us to handle the mobile technology as it's going to relate to our current systems."

This approach perhaps encapsulates Buchanan best: He is a pragmatic executive who doesn't resist change, and he concentrates on building the best stable of team members and vendor partners to achieve his goals. "We think the best way to get the best systems is to just get better every single day," Buchanan says. "We try to learn from our mistakes -- be proactive, not reactive."

Nathan Golia is senior editor of Insurance & Technology. He joined the publication in 2010 as associate editor and covers all aspects of the nexus between insurance and information technology, including mobility, distribution, core systems, customer interaction, and risk ... View Full Bio