The Guts To Say 'Go' - InformationWeek

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9/26/2003
11:44 AM
Chris Murphy
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The Guts To Say 'Go'

How Hewitt's grid-computing project got the green light.

Finding a better way is an obsession with Hewitt's IT group under Cliburn and chief technology officer Sanjiv Anand, who has championed the company's tech strategy for more than a decade. Two-thirds of Hewitt's revenue comes from HR outsourcing services, which handle everything from managing health-insurance benefits to cutting payroll checks for companies that can have tens of thousands of employees. Client companies consider information about employees their data, so if they want access to it, Hewitt needs to figure out ways to deliver it while still making money.

Sanjiv Anand -- Photograph by Chris Lake

Hewitt's strategy under CTO Anand: Identify and execute on innovations that let it maintain market leadership.

Photo of Sanjiv Anand by Chris Lake
Outsourcing services aren't only completely technology dependent, they've been Hewitt's largest growth engine since 1995, when the company launched a concerted effort to grow the business. Hewitt, known as the kind of employee-friendly place where lunch is free in the company cafeteria and there's ice cream available all day long, more than doubled revenue from 1998 to 2002, reaching $1.7 billion in its 2002 fiscal year, thanks in large part to surging outsourcing sales. More than 2,000 of Hewitt's 2,700 IT staff members work on outsourcing.

Hewitt considers the systems that run its outsourcing business one of its main competitive advantages. When prospective clients come to its corporate campus in the Chicago suburb of Lincolnshire, they're treated to the "Heartbeat" video--sort of an XML meets MTV effort that showcases Hewitt's early adoption of tools, such as Web services and Parallel-Sysplex mainframe clusters, as key parts of its marketing message.

Yet Hewitt doesn't hold a single patent related to that technology. There's nothing stopping rivals from copying what Hewitt has built. Instead, Anand's philosophy depends on identifying and executing on the next technology-driven innovation that will let the company maintain market leadership.

Speed and innovation don't always lead to glory, of course. Take Hewitt's Sageo project. In retrospect, Sageo was so January 2000: launch a standalone, Internet-based spin-off offering standardized health and welfare benefits for companies with less-complex needs. Sageo brought in $25 million in revenue over its two-plus years but had a $91 million cumulative operating loss. Beginning in September 2001, the Sageo Web site was integrated into Hewitt's larger system, its software written off as a $26 million onetime charge, and its clients integrated into Hewitt operations.


Daniel Kaberon, Jim McGhee, and Tim Hilgenberg -- Photograph by Chris Lake

Kaberon, McGhee, and Hilgenberg (from left) proved grid-computing could do a calculation at 10% the mainframe cost.

Photo of Daniel Kaberon, Jim McGhee, and Tim Hilgenberg by Chris Lake
Sageo might have been mostly a failure of business strategy, but Hewitt's long-serving IT staff doesn't draw much distinction between business and IT strategy. Most of the Hewitt IT staff have been with the company long enough that they're steeped in HR-industry experience and have built close ties to the business. Kaberon, whose speech is far more likely to include a wisecrack than obscure IT jargon, isn't unusual for having spent 18 years with the company. (Long enough to remember when Hewitt delivered the free ice cream to employees' offices!)

But Hewitt has far more often succeeded as an aggressive early adopter of technology--like component architecture before it was cool, and before there was Java or the Web. In the early 1990s, the company began planning a technology platform to offer integrated delivery of all of a client company's employee benefits from one data source and code base. The IT architects of that system, which was unveiled in 1995 and called Total Benefits Administration, or TBA, knew they would have to efficiently reuse that platform for every new customer. So they wrote the system in Cobol on a mainframe in a way that's similar to what people do today for Web services. "The only object-oriented language we had was Cobol," says Tim Hilgenberg, chief technology strategist for applications. "It looks like a container system like J2EE."

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