CIO Magazine: November Issue

Top CIOs Start the Journey to the 'Digital Enterprise'

The buzzphrase 'digital enterprise' can be a bit mushy. What does it really mean? And how do you get there? Here are five emerging models.

CIO Magazine: November Issue

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Meanwhile, AT&T has begun the process of figuring out how to interact with connected cars, smart homes and wearable computing devices. "The lines between technology and what we do with our business are going to continue to blur," Arroyo says. "The first [step] is pulling down the barriers within the organization itself and really driving collaborative teams."

2. A Digital Process, Start to Finish

At Liberty Mutual, the company's personal insurance unit is further along the path to a mobile-based, all-digital process than the global specialty insurance business is, says Mojgan Le­febvre, who is CIO of Liberty Mutual Global Specialty. Today, Lefebvre says, consumers expect to interact with any service the way they do with Amazon.com--from their smartphones, with no need for paper and no need to physically interact with a person or place. "If the digital enterprise means to do the entire business end to end from a smartphone, the personal [insurance] lines are much closer, if not there," she says. The commercial unit is not as digitized. Her unit, which has nearly 250 products to cover high-risk, highly specialized insurance needs, is probably furthest away.

Customers in the specialty markets, which may include insurance for fine art, sea vessels or terrorism risks, for example, have widely diverse needs. But one thing they all have in common is documents. Liberty Mutual Global Specialty this year began replacing some of its document management systems, moving toward being able to trade documents over the cloud, no matter where in its 19-country market the document starts. It's also reworking APIs into its "book of business"--insurance industry jargon for listing customers by the volume of business they generate --so that application developers can more easily reuse the components of the system. For its largest books of business, the company has digitized most of the process, so the journey from quote to policy is all done digitally. It's now digitizing smaller parts of its business.

Complicating its future plans are the millennials, people born from roughly 1980 to 2000, who don't follow the insurance-buying patterns of previous generations. Lefebvre and other executives from Liberty Mutual are now doing things like spending time with Silicon Valley startups to get insight into how they think millennials will disrupt existing markets.

For now, "we don't say we have to digitize everything," Le­febvre says. "We try to look and see what makes sense and where the value is." Knowing what's valuable to the business isn't easy, though. "The new business models emerging and how you should engage with your customer--those are the biggest challenges and hardest things you need to think about," she says.

3. Data-Driven Interactions

At $18.7 billion biotechnology company Amgen, the digital enterprise simply means an organization that can reach its customers in digital ways. Amgen's customers are changing. Technologies like electronic health records, wearable health-monitoring devices and cloud computing are "creating an opportunity for a company like Amgen to participate directly in that patient/physician and payer space that didn't necessarily exist for us five years ago," says Diana McKenzie, CIO at Amgen. She argues that healthcare is the industry most affected by digitization, because of how it breaks down long-standing industry silos.

She sketches a scenario that underpins the company's technology investments: An oncologist has to treat a wide variety of cancers using a growing number of treatment regimens. "By applying mathematics we can better understand and model the human biological system," McKenzie says. Amgen has vast clinical trial databases and thinks combining that data with real-world data from electronic health records, then applying mathematical models, may help caregivers predict how a patient will react to different treatments.

But getting to that scenario presents a huge challenge. "Our organizations were never constructed to operate in this new way," she says. "When I'm together with my peers at payer/providers, at service companies, at life sciences organizations, the No. 1 problem we all say we could work together to solve is the data interoperability issue."

In the meantime, she's also working on the company's internal operations, such as giving staff mobile access to key analytics--sales data for sales representatives, for instance. Another digital aspect of Amgen's enterprise is an iPad video chat application, which allows doctors to communicate with the appropriate Amgen experts when they have questions.

McKenzie says Amgen's internal operations are completely automated, but she estimates that the company is only 25 percent down the path to providing the staff with new digital tools, such as data analytics for salespeople. Meanwhile, Amgen has just started to work toward delivering the data-driven, personalized patient care scenario that is her end goal. The company began investing in that vision 18 months ago.

4. Unleashing Digital Logic

When he talks about the digital enterprise, Ray Voelker of Progressive Insurance starts with mobile technology. But that doesn't just mean smartphones and tablets. He also cites his company's Snapshot tool. A sensor device that plugs into a car's onboard diagnostic port, Snapshot automatically tracks how drivers drive, offering dynamic updates about how their driving habits affect their insurance rates and comparing them to their peers in its databases. It's the ultimate custom product, and more than 2 million Progressive customers have used it.

Creating Snapshot meant figuring out how to store and analyze the data it was going to feed into Progressive systems in real time. Pricing algorithms analyze the data on driving behavior to determine whether a discount is warranted.

Snapshot wasn't cheap, and it wasn't clear what the company would get in return for developing it. That's one of the challenges of moving to a digital enterprise, Voelker says, adding that Progressive faced similar challenges in the 1990s, when it pioneered automated underwriting. "That was an expensive thing to do," he says.

Progressive is fortunate for a variety of reasons, Voelker says. For one thing, its CEO, Glenn Renwick, once worked at AT&T Labs and has experience as a CIO. In addition, the company sells a service, not a tangible product. Even so, the digital enterprise of the present, let alone the future, presents big challenges. "IT didn't know just how happy times were when there was nothing much to worry about as long as you had Internet Explorer and a fast Internet connection," he muses.

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