The scope of the plan and Anania’s presentation of it was impressive. Indeed, last year CIO singled her out as a winner of its 20/20 Vision Award.

Still, some observers ask why it took Cigna so long to get started on all this, given the age of its legacy systems. Several Wall Street analysts, for instance, question whether Cigna spent too much of its capital from various sales of noncore companies, such as property and casualty insurance, on stock buybacks rather than on infrastructure improvements. Between 1996 and 2001, Cigna spent $7.6 billion on buybacks aimed at propping up its stock. "What they should have been doing is investing in IT and infrastructure improvement," says Shellie Stoddard, a director of Standard & Poor’s in New York City. "They could have spent a half or a third of the money spent on repurchasing stock and put that back into their own systems."

Cigna’s late start, combined with its rush to jump-start the new systems and save money on headcount, would prove disastrous. The benefits in customer service that Cigna expected to reap from transformation not only did not materialize but actually backfired, antagonizing members both new and old.

The Roots of Failure

To achieve transformation, Anania and her team had to build an entire AS400 infrastructure from scratch that could support the two main platforms for claims processing: PowerMHS software, which was already on a few AS400 computers, and ProClaim software, which was still running on IBM mainframes.

"We had to develop our own wrapper architecture to connect these two platforms and integrate claims eligibility on the front end with banking and billing on the back end," Anania recalls. "[To do that,] we had to completely reengineer the back-end systems."

Cigna did most of that architectural work in-house, Anania says, but the company did hire New York City-based Cap Gemini Ernst & Young (CGEY) to help implement the change management and business processes involved. Cigna HealthCare also worked with CGEY to develop and implement the new customer facing applications that would allow members to enroll, check the status of their claims and benefits, and choose from different health-plan offerings?all online. Those apps would also give customer service reps a single unified view of members so that when a member called with problems or questions, the reps would have a full history of his interaction with the company. Cigna purchased Siebel software to handle the call center functions and selected a Computer Sciences package for claims processing.