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July 20, 1998

Unified Front

Prudential's IT must engage customers and pull together the company's units in a fast-changing financial industry

By Monua Janah

ust about every IT project at Prudential Insurance Co. of America supports two business objectives set by CEO Art Ryan: Engage customers more actively, and operate as "One Prudential" rather than five independent business units. These goals seem ordinary. But for a 123-year-old institution that for decades stressed divisional autonomy over teamwork--yet where decisions often emerged from consensus rather than priority--this new emphasis represents an extraordinary shift in direction.

Among the technology initiatives extending Ryan's mandate is a "virtual" call center, still under development, that will route customer inquiries to those Prudential representatives most qualified to handle them. A companywide data warehouse due to be completed in August will, among other things, help Prudential's business units cross-sell to customers. Prudential's Notes-based intranet already lets employees share information and ideas, as well as order supplies, enroll in training courses, and file expenses. Sales-force automation programs still being rolled out to Prudential financial advisers and insurance sales agents encourage them to do business in customers' living rooms rather than over the phone.

These and other IT initiatives are critical for Prudential, a company trying to rehab its ossified business practices to position itself for a deregulated, consolidated financial services industry. Furthermore, Prudential's core life insurance business is slowing because of demographic changes. And the company is preparing for a watershed in its history: demutualization, or the transition from a mutual company owned by its policyholders to a publicly owned and traded company. Demutualization, if approved by regulators and policyholders, would give Prudential access to equity capital for expansion.

Ryan, a former systems programmer who rose through Chase Manhattan's ranks to become president before joining Prudential in 1994, is the company's first CEO from the outside. Observers say Prudential needed a leader who could cast a critical eye on its old-line culture and obstacles to communication, as well as someone who understands the strategic role that technology can play in that transformation. "The application of technology in some specific areas has helped redefine how we touch our customers and support their needs," Ryan says.

Prudential is getting more aggressive with its IT dollars. About 35% of the company's $1 billion IT budget this year will go toward custom application development, compared with 27% in 1996. Some 60% of that activity will be in Web, call-center, and other IT projects that "touch" customers. It's the company's No. 2 IT priority after year 2000 testing, says Prudential CIO William Friel. "We're preparing to market to the consumer in any way the consumer wants to be marketed to," he says.

The No. 3 priority, Friel says, is data warehousing, data mining, and other systems that improve Prudential's "knowledge" of customers, especially how the company interacts with them across its five business units: Insurance, Investments, Securities, HealthCare, and Diversified. One goal is to predict which products customers of one group would likely buy from another group. It's virgin territory for Prudential, which estimates that 70% of its 50 million customers use only one of its product lines. Much of Prudential's 46 terabytes of data is now tucked away in repositories that can't be accessed across business units. In August, when the companywide warehouse is deployed, 98% of that data will be available to any unit.

"A customer who has a low-value product in terms of margin for us might have a very valuable relationship if you look at it across the entire enterprise," Friel says "So we're building an information warehousing capability that allows us to recognize those relationships."

Ryan put the structure for One Prudential in place in 1995 with a management overhaul that included the promotion of Friel to the new position of corporate CIO, overseeing five divisional CIOs, and the creation of an operations and systems group that bonds the IT organization with the five business groups. Friel and the business group heads now report to Robert Golden, executive VP in charge of the operations and systems group, who reports to Ryan.

"Before, every business unit was basically responsible for all the things a corporation would be responsible for," Friel says of Prudential's former "silo" structure. "Each business had its own data center, its own development activities. When Art looked around, he recognized that we weren't leveraging information and sharing it as effectively as possible. The operations and systems organization is one of the key elements in teaching Prudential how to leverage, how to share, and how to get more results."

Leveraging technology across the enterprise continues to be a major emphasis. It was the main theme of Prudential's Technology Leadership Council gathering on June 1 and 2. The group, comprising 100 of Prudential's brightest technology thinkers, meets twice a year to discuss IT strategy. Prudential is also promoting cross-enterprise IT thinking with the creation of a new position, chief learning officer, filled by Frank Bordenaro. And with the establishment this year of a center for learning, in Norwalk, Conn., the aim is to bring thousands of employees together for training and to share ideas about how to better understand customer needs.

Cross-fertilization is also a priority at the IT project level. A recent example is LaunchPad, a $100 million program rolled out by Prudential Insurance two months ago that's equipping agents with 12,000 IBM ThinkPad notebook computers. With LaunchPad, Prudential Insurance drew on the experience of Prudential Securities, which in February 1997 issued notebooks to thousands of its financial advisers to promote anytime, anywhere contact with customers, as well as access to desktop and intranet resources. "The financial advisers are technically savvier than the insurance agents," says Barbara Koster, CIO of the Prudential Insurance unit. "But we talked to Pru Securities about the packages to run, what worked and what didn't work, and laptop security."

LaunchPad also underscores the customer orientation of Prudential's IT projects. The Notes-loaded notebooks, which also run sales and contact-management software, let agents break free from the office to visit customers in their homes, offices, or wherever they feel most comfortable.

Forced Change
LaunchPad places a heavy emphasis on training. "Otherwise, people are going to use the laptops just to run the same old sales illustrations," says Christine Ludwig, VP of field technology for Prudential Insurance. "Our objective is to force change. There's a wide disparity in technical sophistication among the agents. They're salespeople. Technology isn't something they rush to embrace."