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Liberty Mutual CIO: An IT roadmap to business value and agility

Mojgan Lefebvre, CIO of insurance giant Liberty Mutual's Global Specialty, believes there are five ways to create business value: the right IT roadmap, governance, an agile IT structure, an IT team that understands the business it's in, and a federated IT organization. In this CIO Innovators video interview, filmed at the MIT Sloan CIO Symposium in Cambridge, Mass., Lefebrve sits down with SearchCIO Editorial Director Christina Torode to delve into these business-value creators and discusses how her company is harnessing the power of data analytics.

Christina Torode: The theme of this year's MIT CIO Symposium is "Architecting the Business for the Future." If change is the new normal, how do you plan for a future that is constantly being redefined?

Mojgan Lefebvre: It's a great question. Really, for me, the most important thing in a CIO's role is to understand what the business strategy is, then to have the IT roadmap that actually supports that strategy. Rather than thinking, "What should my IT strategy be?" it should be a roadmap that supports that. I never try to think of a roadmap that's five or 10 years long because I think, in this changing world, it's no question that neither the business nor IT as a result of that can really have a plan that long in terms of taking everything into account. And so it constantly changes.

We truly manufacture data ... so everything is truly information-based. In doing this, there are multiple challenges that we face.

As things change, the most important thing is to really have the agility to change your plan with it and how you operate and how your team operates with it. So, really thinking of that: What are the obstacles to any IT organization to be agile?

I would say one is perhaps bureaucracy: too many layers for approvals and slow software development lifecycles, not really having the right key decision makers and instead sometimes having decisions by committees and many people.

All of these things go to governance -- having the right governance and making sure that you've got the right accountable individuals. And you know who needs to make the decisions are really having much more of an Agile development style, as opposed to the waterfall, long processes is one of the ways that we try to make sure that our governance is set up in a way that we are agile and aware of the changes that need to take place.

I say the second one is more organizational, and truly for IT to be part of the business and very close to the business, making sure, first of all, that your employees are well versed and understand the business that they're trying to support through the technology. And then, for us, we've got a federated IT organization, which truly fits with the business, and so I am part of the executive committee of Liberty Mutual Global Specialty, part of all of the discussions, from planning all the way through operational reviews and financial reviews and so on. So, it's really understanding and being close to the business and making sure that you are their confidant from a technology perspective and [understand] what we need to do from a business perspective. You come with a perspective of how technology can support that, and drive that sometimes, even.

Then, I'd say the third is really more of a technology aspect, where ensuring that the technologies [and systems] that you're putting in place allow for agility and really leveraging some of the new technologies that are coming about that actually allow faster development lifecycles. [Other things, such as] REST APIs, which [are] all about much faster, much simpler architectural setups, [and] truly having service-oriented types of architecture enable you to change things as opposed to [having] more legacy systems, which can take a long time to change things.

Have you created any new services by using some of these technologies or approaches?

Lefebvre: We have definitely done some of these things. First of all, we've created a cloud computing utility where even the resources to build some of the solutions are much more available to our developers. Where in the past, they had to take into account lead times for having access to even hardware and software, [those times have] become much shorter. So that's one thing. Then, we're in the process of doing pilots, also leveraging some of the cloud services that are outside, like Amazon Web Services, where we're of course just testing out the security capabilities of that. But once we prove that, we definitely plan on using some of those to do much faster software development.

What projects have you led in the past year or so that produced business value or created a new opportunity at Liberty Mutual?

Lefebvre: Of course there are many, but I'd say probably one of the most impactful is one of our claims analytics solutions. Within the span of six months, working very closely with the business, we had an integrated team that developed an analytical tool that would help our claims handlers recognize claims that might look very normal and that might be done [easily] and not really become a big claim. But based on some psychosocial factors and information that we would have about the customers using predictive analytics and predictive modeling, [we can] predict some of these claims that would potentially become big ones, and actually flag them. Then, using visualization, [we] make it very evident to those claims handlers that these are ones that, while normally during the process of their jobs they might not have paid attention to them, they should pay a lot more attention, and potentially bring experts such as nurses and other medical staff onto them.

So, we've got anecdotes of where it has truly paid off, and with a $5 billion payout that we do for our workers' comp, we know that even if we save 1% of that cost for the company, it has huge impact. I'd say that's one of the projects that's had really big impact.

What are you doing to leverage the power of big data?

Lefebvre: As an insurance company, data and information is probably our most important asset. We don't manufacture gadgets. We truly manufacture data: We take data and we analyze it, and we make decisions, whether it's underwriting decisions or decisions on payoffs for claims. So everything is truly information-based.

In doing this, there are multiple challenges that we face. First of all, given that we are a global organization and data travels [to] different boundaries, I would say that data policy is one that we have to be very aware of and ensure that, as we're dealing with data, we're not breaking any regulations, and that we're actually aligned with all those regulations. [We're also] taking into account security, privacy, even liability and the legality of all of that.

Then, the second one is the technology itself: ensuring that we've got the right computing and storage power and the right analytical software in place. [We're also ensuring] that they actually integrate with our legacy systems, which are there and will be there to stay for a while and don't necessarily always integrate well with the new technologies.

Third and potentially most important challenge for us is talent -- talent both on the business side to make sure we've got individuals who really know how to use the data and what are the best questions to be asking and looking for -- and technical talent, with mathematical and truly statistical capabilities to build the models and incorporate them into our software and to truly leverage all of the data that we have access to.

According to your IT roadmap, what technology do you think is going to revolutionize your industry or the way we do business in general?

Lefebvre: I can't personally and necessarily point to a specific technology and say that this will revolutionize. The other thing is that many of the technologies that are there today are different shapes and forms of similar things that were in different shapes in previous years. I would say today, we're probably living in a time where a lot of things are coming together.

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Between the whole globalization of the world and the advent of mobility where everyone is connected to each other regardless of where they are, combined with all of the different technologies, whether it's computing technologies, storage, analytical software and all of that -- [these are all] very powerful new technologies that are in place and coming together. And then with the advent of businesses, we're actually leveraging these technologies. There are companies like Amazon who've truly taken technology and built new business models and have shown that you can do that. I think all of these coming together are what set the stage and make it a very exciting and different time for us to live in.

Potentially, the biggest area where we're going to lack, or we're going to be needing more of, is the talent to actually use these technologies and understand how you can leverage them both from a business and a technology perspective.

What advice would you give to up-and-coming CIOs? Are there certain skillsets or knowledge they should have?

Lefebvre: It depends on what stage of their career they're in. I think one of the most important things, which will always be the case and not go away, is ensuring that you're technically as capable as you can be -- that you have the computer science and math background and a really deep understanding of it, as much programming experience as possible.

Unfortunately, our high schools don't really offer that. It's one of those areas where there's a lot of talk and effort going into potentially making it become mandatory for our high school students to actually know how to program. I think that's kind of a given. That's foundational but then, beyond that, if your aspiration is truly to become a CIO, I'd say, again, an understanding of business and the industry, obviously, that you want to go in. If you want to go into healthcare, you go into companies that are healthcare-based and truly develop your knowledge of that, or if you're going into financial services or insurance, ensuring that you go into those industries.

I think business-domain knowledge is also critical, and so I was thinking, for any CIO before they become a CIO, [it would be good] if there were a crash course on being able to work in the different domains -- be it finance and manufacturing and all the others. Because, truly, as a CIO, you are at the crossroads of all of these domains, and you truly need to become that leader that can see the intersection of all of these and how they integrate and how you can truly leverage that and help become that partner that can take the business in a new direction.

Christina Torode is editorial director for SearchCIO; write to her at [email protected].

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