The Efficient Frontier: AXA Financial Inc. - ' Page 4 '

Keep Evolving

Three years later, AXA now appears ready to make the next evolutionary leap, moving forward to the highest level of what UMT CEO Mike Gruia calls the "portfolio management maturity model." Bateman's first move had been to install a system of governance structures; his second was to convince the organization that portfolio prioritization not only works, but is non-negotiable if the company wants to achieve its stated business objectives.

Now, he's in a position to apply the model not only to IT, but across the organization—asking everyone, in effect, "What are you capable of?"

"All sorts of trade-offs and alternatives can be plugged into the model based on different sets of strategic objectives," says UMT's Gruia. In other words, just as a broker might consider the risks of one set of investments as compared with another, Condron and upper management can ask Bateman to determine the best set of IT investments if they want to pursue a strategy of top-line growth, or a more conservative, bottom-line approach, or one emphasizing cash flow.

Management can obtain a different prioritization report for each set of strategic objectives. As the company changes, the model can change with it, creating an ever-expanding set of scenarios based upon the growth, stability or retraction of the company.

In terms of cost savings, Bateman doesn't have an exact figure. In addition to the $5 million to $10 million he figures AXA saved the first year, he cites several intangible gains—far better levels of communication, information flow and alignment of resources with overall business objectives. "There are ways that [portfolio management] has helped that I couldn't even put a dollar amount on, because in a way it's actually changed the culture of the way we operate," Bateman says.

What's next? Beyond rolling out the latest version of UMT's dashboard, Bateman envisions a centralized repository of all data as it relates to an IT portfolio, a company's investments and resources, where a CIO could go to his or her desktop and centrally manage everything from within that one model. Of course, that would be the brass ring for bridging corporate governance and IT.

"It gives you the ability to look at any aspect of your portfolio, whether it's people, whether it's timing and launch, whether it's actuals versus plan or approved rates, or return on investment," Bateman says. "Everything from end to end, the holistic process viewed through one microscope."

Portfolio management can't address all the challenges that AXA Financial and its parent, AXA Group, face. Though its proposed acquisition of New York City-based MONY Group Inc. gained approval in May, AXA's share prices have slipped slightly, from a 52-week high of $24 in January to $20 as of May 26. Securities analysts say AXA is benefiting from higher insurance prices and rebounding equity markets, but they complain that the company hasn't reported its financial results clearly, and analysts worry about the firm's estimated $1.1 billion in asbestos and environmental liability.

Many of these concerns are well beyond Bateman's immediate control; portfolio management, he says, has made AXA more effective at what it can control—making the company more efficient. In fact, Bateman confesses surprise that IT portfolio management has only recently caught on. "I'll be honest with you, I don't know why it's taken so long. Maybe it's because people are so caught up in changing platforms and consolidating servers and building the latest operating system," Bateman says. "To think there are companies not even in the infancy stage of this is mind-boggling."

Peter D. Henig is a contributing writer at Option- etics.com. He's also written for Forbes ASAP, Venture Capital Journal, Red Herring, The Economist Intelligence Unit and The Daily Deal.