It’s no surprise that IT directors say their jobs are becoming increasingly stressful. The pressure is on IT, and from just about every direction – whether it’s finishing off year 2000 work or helping to launch an e-commerce strategy.
That pressure is here to stay. The pace of business change is accelerating at a merciless rate, and the forces of globalisation are mobilising – driving consolidation within and between companies and markets, and increasing the need for pioneering competitiveness across the board. All of this translates directly into acute, unrelenting and sustained pressure on corporate IT.
So it’s fair to say that Mike Wright, group IS director at global insurance brokerage Willis Coroon, has a host of challenges. He has two business drivers to respond to.
The first is to reduce spend all round, not just to satisfy new masters KKR, who now own 80% of the company. He also has to drive down operating costs so the firm can compete with the two global broker giants – Marsh and Aon – who can apply greater economies of scale to their operations.
The second is to leverage Willis’ unique selling point – its high reputation for client service. As revenues in corporate broking come increasingly from fee-based advice rather than a percentage of the premium transacted, a reputation for excellent service is business critical.
“We want to be genuinely distinctive,” says Wright, “offering the flexibility of niche players but with sufficient scale to benefit from a global presence.”
This, of course, is a circle that IT has to help square – how to cut costs and get economies of scale while increasing quality of service and keeping the business highly flexible. And all this in an industry that, Wright admits, “is consolidating rapidly and unpredictably”.
The insurance-broking marketplace is shifting away from merely brokering the insurance transaction to assessing and advising on risk. Willis has to provide top-quality information to its risk management consultants, who help clients assess the level of risk they face, whether it is a factory burning down, or a public-relations disaster.
“Our information management capability is critical,” says Wright. “We have to be able to be much more effective at sharing information around the world – it’s a huge and daunting challenge of which information systems is a key part. My major challenge is to build enough of a sense of vision and direction both in IT and the business.”
What does not help Wright’s cause is the fact that Willis was formed from two separate companies, and the IT organisations, infrastructures and architectures have never been fully merged. The company has two main IT centres, one in Ipswich and one in Nashville, with the 350 IT staff split between them. Wright himself works out of London and there are an additional 150 IT professionals spread around the rest of the business.
The lack of IT cohesiveness extends to the system portfolio as well. Willis has four major businesses, each with its own systems complement, which are supported out of the two centres.
“My big strategic question is what and where should we be sharing between business to get worldwide synergies but not take away local responsiveness,” says Wright.
It’s a paradox facing all major corporates – how to reap the advantages of size, yet present clients with the advantages of a highly personal customer face. Wright sums it as a question of balancing efficiency, where big is beautiful, and effectiveness, where small is all. How does he resolve this in IT terms?
The fundamental dilemma is that the more one centralises, the more efficient but less effective one is, and the more distributed one is, the more effective one is, but at the cost of duplication and inefficiency, says Wright.
So, how is he tackling the task? To begin with, he has ensured the commitment of his top management, and their confidence in him.
“I report to the executive chairman,” he says. “I wouldn’t have taken the job otherwise, because it gives me the clout, the perspective and the time on the senior management agenda to build the [IT] capability we need.”
For all that, “a lot of my job is having to make an impact through influencing, rather than directing”, he points out.
Nevertheless, the most important message Wright is seeking to convey to IT on both sides of the Atlantic is a very familiar one, that IT is not an independent, standalone entity – business is the owner of IT. A cultural shift is what he is seeking to accomplish and embed - that IT exists solely to advance and support the business and for no other reason.
Wright takes as his motto one borrowed from Ford: that in IT, “everything we do is driven by you” – and that means by the business.
As with so many other IT directors Wright finds his challenge is to get the IT community to think of IT as a service to business.
As ever, of course, “techies like complexity and jargon”. Also, as ever, business people don’t - they are busy with business.
But turning their backs on IT is no answer either, believes Wright. IT is just too critical to be ignored or relegated to techies.
“My role is to enable business leadership to understand enough about the infrastructure to understand why we want to invest over, say, a three year horizon. I have to encourage the business into some technical debate and encourage IT to let go and understand why ‘their’ topics are actually worth sharing with business – this is a big challenge.
“IT will say that the business is not competent to understand the trade-offs [that the choice of technology inevitably imposes], to which I have to reply, ‘No, but it’s their money we’re spending’.”
The issue of IT spend is sensitive in any company - in one with new owners, like Willis, it is even more so. But while it is always essential to ensure value for money, becoming too obsessed with assessing return from IT spend can be counter-productive, suggests Wright.
Trying to allocate every last penny to either a business spend or an IT spend misses the point, he urges. “Everything should be business-oriented with a bigger or lower IT element,” he says.
Regarding IT as just an element in a business project, rather than a project in its own right, is an attitude he is keen on.
“First and foremost I’m trying to ban the concept of an IT project,” he says. “We have business change projects that may or may not have an IT element. All projects need to be fundamentally owned and driven by the business – including IT infrastructure, such as implementing Notes or installing a wide area network.”
But Wright does divide IT’s job into two parts. “We see a clear distinction between changing what we do and running what we do,” he says. “If we’re changing something, then that needs to be driven by one part of the business or it doesn’t get accepted and people ask, ‘Why is IT spending so much money on this?’”.
But what about infrastructure investments? For Wright, the benefits of infrastructure investments are often invisible to the business eye. “For example, if we want a WAN for our international business, it may have no tangible financial value to us, but it helps remote offices feel part of a global business,” he says.
Whether this is worth it or not is not the responsibility of the IT department that installed the WAN – it’s the businesses, he stresses.
IT’s responsibility is to ensure that what is decided is implemented at the lowest cost in terms of time and money, as efficiently as possible and without letting technology choices act as a brake on business flexibility.
Willis Coroon is a commercial insurance broker that was taken private a year ago by former notorious junk bond artists, KKR (Kohlberg Kravis and Roberts).
The company faces the challenge, not only of servicing the leveraged debt that the buyout entailed, but more importantly of clawing its way up into the top echelons of global corporate insurance brokers.
The two current kingpins, Marsh and Aon, each have around 30% of the market, and are both at least three times bigger than Willis’ $1bn turnover.
Then there is a big gap between Willis’ 8% share of the market and the niche players below with 2-3% each.
On top of that, Willis has the added problem that it was originally formed out of the merger of two smaller global brokers, one British and one American, which were never totally integrated even before the KKR buy-out.
Willis Coroon - IT structure
Willis Coroon consists of four main businesses, each with their own IT architecture:
- UK retail business focuses on UK customers and has a traditional legacy system running digital equipment VMS on Alpha machines, based in Ipswich.
- North American retail business running on legacy Dec VMS/Alpha machines, based in Nashville, USA.
- Global speciality business, which runs on another set of legacy systems, partially VMS and partially IBM mainframe.
- International business – a patchwork of subsidiaries and associates - running their own local office systems and communicating over a wide area network hubbed at Ipswich.
Mike Wright’s game plan
All of Willis Coroon’s four businesses have separate systems with different application code and data structures.
Wright’s current strategy is to keep the operations separate for the foreseeable future, but he would like to be able to share knowledge and exchange more information throughout the business.
His game plan is to work his way down through legacy systems and patchwork infrastructure.
- Eliminating legacy systems that are not sufficiently flexible and can’t be wrapped into a Web-enabled world. Packages would be nice but suppliers don’t do them for an industry like Willis’ that has only a few players.
- Implementing a whole set of knowledge management capabilities across the group to bring culture sharing onto desktops, although he is actively trying to steer away from making knowledge management technology-centred.
- Demonstrating that IT can deliver on a short-term turnaround - it’s not a formal rapid application development policy, but an informal 90-day implementation.
- Expanding the company’s extranet, Adviser, so that he can quadruple the 100 plus clients already using it. "Adviser is a wonderful capability which is distinctive to Willis," says Wright.