Speaking your language

Banking and insurance companies today face mounting pressure to both win and maintain market share of an increasingly demanding customer base, and are investing heavily in technology to address those needs.

As Executive Vice President and CIO of MetLife – one of the world’s largest insurers and an organisation that has shown impressive growth both at in the US and in Europe, Steve Sheinheit, it seems, has succeeded in achieving the kind of revenue-growing IT investment that is the Holy Grail of every business today.

CXO. One of the biggest challenges facing today’s CIO, especially in financial services, is seeking ways to innovate to gain market share. How do you approach this challenge at MetLife?

SS. I think the first thing to consider here is whether or not I actually agree with the statement – and my response is ‘not exactly’. We look at it in terms of the state of the possible. It’s about helping businesses understand what they can do with technology, and clearly supplying those capabilities so that the business can innovate. It’s more important that the focus be on business innovation as opposed to technology innovation, and from that perspective I think we do a lot of things with our business units in terms of using technology very creatively and innovatively, but it’s not for the sake of innovation itself.

CXO. So in what ways have you been successful in using technology to drive business innovation?

SS. We tend to avoid being bleeding-edge; we’d rather adopt proven technologies. What I find is that when we implement technology, because of our size, scale and dimensions, we get agreement pretty quickly on how the technology can truly be effective in a broad way across the enterprise. It’s about allowing the business to differentiate itself in the marketplace and to be able to compete more effectively.

What we do find is that because of our scale and the breadth of products and capabilities, we are often perceived to be a technology leader. Our very size demands that we be perceived as leaders. It has to do with the partners we deal with – their demands on us as well as their expectations – and then what we need to do in the marketplace to use technology effectively to support our business.

Over the last five years, we’ve transformed our technology from internal-based systems to very customer-facing, self-service and highly automated systems that have significantly reduced our costs, improved our service, enhanced our image and capability to service the marketplace, and allowed our customers to be more effective and productive – which has in turn resulted in improvements in business revenue, in service, in sales and in product capability, right across the business spectrum.

CXO. IT touches on so many diverse elements of an organisation today. So how does IT – and your own role – fit within the rest of the organisation?

SS. The key thing here is to recognize that IT works on two planes within the organisation. The first is that it provides the infrastructure capabilities for that organisation to be able to operate. We all know that large companies such as MetLife can no longer operate without technology – technology is so critical to performing basic business that it absolutely has to be there.

The other plane relates to how IT integrates with the business units to allow them to effectively utilise technology to enhance their business from the perspective of products, services, costs and capabilities. Effectively, we tend to operate by looking at IT as a business within the organisation, maximizing our scale and providing shared services and scaled benefits; but then we also have what we call a federated model that allows us to have groups within IT that are dedicated to each line of business, and are there to supply and support the applications and new systems and product development capabilities the business is looking for. It’s a combination of these things that allows us to be successful with our technology.

CXO. What connection or communication is there between departments and how are you able to measure how your work impacts on other areas of the business?

SS. We’re at the strategy table with every line of business. While I’m the CIO for MetLife overall, I have CIOs that work for me within each of the lines of business. Each of those CIOs sits at the table with their business heads in deciding upon planning, strategy, operations – everything. And they’re equal players at that table.

CXO. How do you feel the role and the influence of the CIO has changed over the years?

SS. I’d say the role has changed a great deal and is still evolving – after all, it’s still a fairly new role. In my experience, we didn’t start calling people CIOs until around 15 years ago. I think the emergence of the CIO role marked the point at which IT switched from being a support function to a much more strategic function within the organisation – and this is the reason we’ve seen IT attain a place at the table with the business heads as they develop business planning strategies, and indeed achieve executive management status in the form of the CIO.

When you think about the role of technology today at any major company – but especially in an industry such as financial services that is full of information-based companies – it’s easy to see how technology strategy and technology capability have become part of the companies’ core competencies and a requirement for the development of their business as they go forward.

CXO. With IT becoming more of a strategic function, how has this impacted IT budgets? Do you think more is now expected from those budgets?

SS. Clearly the bar rises every day with regard to what is expected, there’s no question about that. Technology spending as a percentage of operating spend has grown over the years – for example, we’re doing so many more things with technology than ever before with regards to automation, self-service and other customer-facing capabilities, and as a result the expectations of our customers have also risen. We’re expected to be the best, and so we’re judged by what our customers see as the best in the marketplace, which changes the ball game somewhat.

We also have to recognize the fact that technology has to be viewed as an investment. We look at our technology as a portfolio of investments that have to provide a return. While there are some fixed costs associated with that where our goal is to continue to be more efficient and drive down costs, there is also a whole set of what I call discretionary spending where we have to demonstrate that we’re getting return on the investments we are making. This model is changing how businesses perceive technology budgets, and over time I think we’ll see technology costs continue to rise as a percentage of overall operating spend – provided we continue to do the right things, such as add measurable value to the business.

CXO. How important is it when implementing new technologies to be able to demonstrate transparency of costs and identify scope for ROI?

SS. The first thing to recognize is that even though we’re in IT, it’s our role to ensure we communicate in the language of the business, which is really finance. Costs, ROI and this idea of transparency are critical to enabling businesses (together with IT) to make good business decisions, and to build confidence in what we’re doing so that the right choices can be made and the appropriate investments can be supported. It really is critical.

CXO. What particular technologies are making an impact at the company?

SS. Over the last five years, we’ve deployed a number of technologies. It started with the web enablement of our systems, which allowed all sorts of constituents to access data and information that is embedded in our systems through web-based technology.

The next step was to build on this and foster a culture of self-service. This actually reduces the internal costs to MetLife, and one of the benefits of engaging self-service-type technology is that the quality of information and the speed at which you can do things increases dramatically.

We’ve also spent the last few years implementing image and workflow systems to drive towards a paperless office and employ a digitized system. Digitization allows transactions or commands to be processed almost anywhere, which gives us flexibility to service and support businesses pretty much anywhere in the world, with great cost and other benefits associated with it. We’ve done a great deal of work with straight-through-processing, which can be anything from automated underwriting to automated claims approval, and these types of technologies are dramatically reducing the expense of processing very high transaction volumes in our product lines.

Collaborative technologies are another important area for us. We’re a very large company with a dispersed workforce in many different locations, and collaboration technologies are enabling us to bring these dispersed locations together so that people in different offices can connect and share information effectively. Our use of mobile applications to provide the ability for our people to work from anywhere is one such instance – we can now connect our systems to people’s homes and allow them to operate from there, or we can hire the best people anywhere in the world and bring the information to the expert rather than the expert to the information.

Today we are seeing another wave of technologies that are giving us additional capabilities, cost leverage and ease-of-use, which is really key in terms of our growing customer base and how we operate. Integrated customer information and business intelligence, voice and video over IP, speech recognition, integrated access devices – these are just some of the technologies that are driving our business forward today.

CXO. How do you see the company moving forward in the next few years? Do you have a particular vision or a strategy in place, or a roadmap for achieving specific goals?

SS. With MetLife being number one in so many of its products and markets, continuous improvement is obviously a big area for us. I also see some new market opportunities. MetLife is becoming an increasingly global company so that will open up a number of markets for us, and there are also a number of opportunities around the changing demographics – for instance, the retirement of the baby boomers opens up the possibility of new products and capabilities being specifically targeted to that area. We also see changes within the industry itself, such as the movement from employer to employee-based pay benefits, so there are new channels to be serviced and supported there.

All of these opportunities are enabled by technology. Technology is enabling us to bring our products, services and capabilities out into the market in a cost-effective way so that we can service a much broader marketplace and product set.