The insurance giant is transforming its business processes, using a centralized set of business processes, which enables it to make more data-based decisions.
By Michael Vizard
After a near-death experience that required billions of dollars in bailout funds from U.S. taxpayers, AIG is back in the black.
Now the insurance giant’s challenge is transforming its business processes on a global scale, using a centralized set of business processes that are now delivered via eight data centers, as opposed to the 30 that the company previously managed.
AIG’s new OneClaim system, which is built on top of business process management (BPM) software from Pegsystems, is being rolled out on three continents as part of an effort to scale the company’s operations on a global basis, says Erik Martinez, executive vice president for global claims, operations and systems for AIG Property Casualty.
Prior to the deployment of the OneClaim system, AIG operations in countries around the globe often operated independently of each other. “Every country had its own services,” says Martinez. “But without any scale, there could be no efficiency.”
The goal, says Martinez, who oversees IT at the insurer, is to leverage technology to break down the silos in a multi-billion-dollar company that is not only trying to better govern its data, but also to help a team of 70 data scientists minimize risk for both AIG and its customers via the application of predictive analytics applications on a global scale. The end result? Enabling AIG employees to make better informed decisions based on the data.
AIG has been working on this transformation since 2009, when Robert Benmosche became CEO. At that time critics were calling for the company to be dissolved. One of the strengths that Benmosche brought to AIG is his experience running IT during his years at MetLife. Benmosche immediately recognized that consolidating IT would not only reduce costs, but it would allow AIG to deliver insurance services on a global scale.
At the core of the IT consolidation strategy that Benmosche charged Martinez to deliver is the BPM software that serves as the foundation of the OneClaim system. That system now shares a common IT backbone that enables AIG to ingest data on a global scale and essentially function as a “factory of decision makers,” says Martinez.
What makes the OneClaim system different, says Martinez, is that it was developed with the expertise of AIG subject matter experts in AIG, and the system was able to leverage the Pegasystem platform’s BPM capabilities to visually model the business and its operations. Once that core set of functions are developed, each business unit can extend them without having to reinvent each wheel of the process.
Pegasystems CEO Alan Trefler says it’s the ability to visually model business processes that will ultimately eliminate the traditional divide between IT and the rest of the business. Instead of building applications using arcane programming languages, BPM platforms will allow business users to model a process and then generate a Java application which brings that process to digital life, Trefler says.
“We’re talking about a fundamental change in the way people think about becoming a digital business,” says Trefler.
The challenge, of course, is that it often takes a near-death experience to bring about meaningful lasting change. Without such a monumental or extreme event, corporate inertia combined with an aversion to risk prevents most organizations from engaging in a meaningful transformation process.
“People assume that change requires some sort of Big Bang approach,” says Chuck Johnston, an industry analyst with Celent, a division of Oliver Wyman, Inc. “When it comes to BPM, it is more effective to fill in the gaps and try an coexist with the legacy applications.”
For IT to drive such organization-wide transformations inevitably involves winning a series of challenging victories to establish credibility, but also becoming familiar with the different business processes so your department can ultimately accomplish more good than harm, even if the harm is unintentional.