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Inside and Out

Inside and Out

It's temptingly easy to manage change by honing internal processes, but leading change requires looking beyond the organisation's walls to rich, new opportunities "AMPlus will help strategically position AMP in the fast-changing financial services marketplace.

It provides AMP's businesses with an engine of transformation, bringing together processes, technologies and people both to capture new revenue opportunities and to improve efficiency."AMP is installing an "engine of transformation" - AMPlus - to propel it into the commercial, demutualised global arena, where old information technology, slow application development, the silver bullet mentality, and under-valued staff are last year's models. The engine is not from the garages of McLaren or Williams. It is from a unique partnership AMP managing director George Trumbull forged with Andersen Consulting.

The AMPlus partnership is a critical component of Trumbull's strategy to transform the organisation into an entity that is more efficient, more competitive, more able to respond to changing market demands. It is a wholly owned business unit of AMP and integrates the IT resources of AMP's retail financial services, general insurance, and superannuation. Initially, its charter of designing and implementing technologically sophisticated business initiatives and change programs covers Australia and New Zealand.

Labelled by some industry observers as just another example of AMP's ability to establish effective outsourcing arrangements, AMP maintains that the engine has a much greater role than merely relieving AMP of highly-repetitive, non-strategic IT functions.

"AMP can achieve its strategy, re-engineering and technology initiatives even faster and with less risk by partnering with Andersen Consulting," says Trumbull. "Our goal for AMPlus is to create a world class organisation capable of truly outstanding performance, to maximise the value created by our planned $750 million technology-related spend in Australia and New Zealand over the next five years," he says.

The new organisation will combine many of AMP's best business and technology people with specialist Andersen Consulting professionals drawn from around the world. It will be responsible for delivering against a focused agenda of major change initiatives which will - the company hopes - make a material difference to AMP's bottom line performance.

Trumbull searched the world for the most capable driver for AMPlus. Eventually, he found David Hoffman, Andersen Consulting's worldwide insurance industry managing partner (and general manager of AMPlus). Hoffman has relocated, with family, from Chicago to Sydney. He is a seasoned financial services campaigner with 20 years experience.

The "engine of transformation" is his vision; so it's little wonder that he's keen for his "engine" to become the envy of every other driver in the business.

The prototype comes from years of examining the IT and business issues of enterprises around the world and discovering that the standard models warrant challenge and change. The model is destined to become the blueprint for AMP's worldwide operations after demutualisation at the end of 1997.

"The model AMPlus is implementing will be looked on and evaluated worldwide whether we do it right or wrong. Everyone involved, myself particularly, is committed to making AMPlus work come hell or high water," says Hoffman. "In Latin AMPlus means great, powerful, abundant. That's what AMPlus is, it is adding value to AMP and addresses the challenge of accelerating our capacity to deliver business solutions.

"Traditionally, the financial services market relies on very old technology platforms which are expensive to maintain, slow to respond to very dynamic market forces, and promoted by people who have career issues involved with their perpetual use," he says. "We often hear of businesses being constrained by their IT capability and management who still feel their business' short-comings are an IT problem.

"It sounds derogatory, but while what we are doing appears ambitious in this market, successful examples of this type of -transitional exercise' abound in other parts of the world," Hoffman notes. "To the initiated what, at first, appears ambitious can become routine."Throwing out conventionBut why change, and why attempt changing to a "concept" car; why not opt for one of the conventional models?Trumbull knows the lap-times of the standard financial services models and wants improvements. He's made use of abundant market analysis and is very aware of the advantages, and disadvantages, the other models have to offer. After an extensive search for the best solution, AMP recognised it required something more than the meek, often poorly resourced solutions ubiquitously employed throughout the financial services marketplace.

"We are moving into an era where there is going to be significant competition.

AMP is going to be competing with bigger, global companies. The technology base that AMP has is going to be germane to even being in the ball game let alone competing," Trumbull says. "We [senior management] came to the decision that we needed to do things differently to solve our IT and business problems if we are to be globally competitive.

"We were making sup-optimal decisions in the business units from a corporate perspective," says Trumbull. "One of the examples is that we have more than half a dozen general ledger systems around the company. We only need one general ledger system in the company."AMPlus will address AMP's system surfeits and where possible ensure each piece of technology delivers a corporate advantage. Trumbull's vision requires that all the components of the business are working for the common good of the corporation. He says running six general ledger systems, implemented by individual companies or business units within the organisation, may have delivered some benefits but AMPlus brings a broader perspective.

"We have so many general ledger systems because from a limited perspective (that is, a specific business unit's) a particular system was deemed more appropriate. That is sub optimal. It may have saved a little money over the one that was in place, but may have produced inefficiencies elsewhere," he says.

Part of AMPlus' charter is to eliminate such narrow perspectives and, according to Trumbull, reduce unnecessary duplication. Instead of having up to five systems for networking, voice mail, or e-mail, the goal is to have one superior system for each function.

"There is significant benefit in pulling all our technical resources together.

There is significant benefit in having tools that are used across all of the business units. There is significant benefit in having the discipline to look at the corporate justification of doing major projects. AMPlus is the best solution we could find for making expeditious progress in these strategic areas, says Trumbull.

According to Hoffman, AMP will benefit from the "engine of transformation" because it will deliver:1/. Greater flexibility, productivity and ingenuity for IT2/. The ability to leverage advantage from faster application development and more efficient application maintenance3/. Reinvestment of savings into staff development and the creation of a preferred work environment for IT professionals4/. Design and implementation of business case-oriented, major change programs5/. Greater customer focus and serviceRecasting IT is one of the "engine of transformation's" design principles. Both Hoffman and Trumbull concur on the premise that IT should not be the scapegoat when the business has problems in fulfilling its objectives.

Instead, they are banking on changing the culture so every element in the business serves the strategy of a global organisation. No longer will there be cultures fighting cultures, or the notion that IT is constraining the business, rather the business must work so as to not constrain IT.

"In many cases the paradigm has been on funding IT solutions, on a needs basis, to satisfy short-term tactical requirements," says Hoffman. "There are many examples of very huge, expensive, IT silver bullets which have just not been the superb solutions they were supposed to be and the life insurance industry is littered with examples of big systems that don't work.

"To be a global player you must have an energetic, dynamic environment. You must ensure your business is empowered with long-term, strategic IT solutions and it must have suitable career structures for its people," he says.

"Committing to growing the capabilities of every staff member, so they can more effectively work to serve the business, creates exciting opportunities for all concerned."According to Hoffman, Andersen Consulting spends 7 per cent of its worldwide revenues on staff training and development and does not underestimate the power of the people.

"People respond very well to the concept that their employer is putting plans in place that will grow their career and their employability. Of course that may mean the bar is raised. People will have to rise to the challenge and some people who don't wish to buy into the change environment may feel threatened," he acknowledges. "But our experience is that people are very positive when they are in a highly visible part of the business, and are given the opportunity to influence the business and make a difference."Still in the LoopAMP will still work with its various suppliers such as long-term outsourcers Computer Sciences Corporation (CSC), Indian-based Tata, and EDS. But AMP will have much greater control over the external suppliers, their services and in some cases the labour they supply. CSC's director of Outsourcing, Bob Scheier, expects that in the short term the significant business his organisation has with AMP will continue as usual.

"I don't expect too much to change quickly. We will continue to fulfil our contracts with AMP and work with AMPlus as that organisation takes shape," he says. "AMPlus will focus on achieving benefits in application maintenance and development, and enhance the delivery of new products for AMP, but it's going to require time to do so.

"The AMPlus initiative has the IT strategy as a tactic which supports the business strategy. The business will be driving IT. I think it will help AMP as it grows its international business, particularly in the Asia region. But it is a great challenge for Hoffman. How fast and cost-effective AMPlus really is will be how successful Hoffman is," says Scheier.

Trumbull and his team are confident it will win the race, that the engine will power the organisation past the competition, but like any astute driver, Hoffman is aware of his engine's redline.

"We are going to be travelling a lot faster than we have been. A lot faster.

It's critical that AMPlus is perceived by everyone in the organisation as being in full partnership with the business," he says. "If we are viewed as an isolated IT silver bullet AMPlus' chances for success will be greatly diminished and it could fail. But that's not going to happen."And, although still in its infancy AMPlus already has points on the board, according to Trumbull. It is delivering positives to the organisation, even while it's still scoping the bigger projects.

"You just can't stop everything and say we are going to take 90 days for assessment. We don't want to knee jerk things. There is a need to ensure the structure is right, but on the other hand there are certain things which can be addressed more quickly, such as AMP's 23 help desks - that is getting dealt with very quickly.

"AMPlus will enable us to bring our costs down, bring products to market more quickly, provide better service, help us get new business and more effectively service our existing customer base. It will bring enormous value to AMP," says Trumbull.

Put your money where your IT is.

AMP's managing director George Trumbull is driving Australia's largest insurer into an era of IT-enabled change. AMP will demutualise, list and enter global competition in the next six to 12 months. To service these critical business initiatives, Trumbull has sponsored AMPlus as a comprehensive organisation-wide mechanism to ensure AMP competes with world class companies.

AMP and AMPlus' success is, according to Trumbull, co-dependant. AMPlus must accelerate the design and delivery of IT-enabled change geared to vital business solutions programs. These programs will comprise, with equal priority, excellent business practices, people and IT. Trumbull's goal is to create a preferred workplace for IT practitioners, eliminate duplicated, disparate systems, and save money in application development and maintenance.

"I think most of the people within AMP knew we had to do something different if were to be a true global competitor," says Trumbull. "AMPlus will bring the organisation a greater degree of professionalism with professional career tracks in place for IT practitioners and staff generally. We will put more money against training and ensure the training is tested and valuable. This kind of professional function is like the investment management function.

"Your people are your assets and they walk out the door every night. We are not like a manufacturing facility where the hard assets stay put," he says. "Not making AMPlus an employer of choice seems pretty short-sighted," says Trumbull, adding that capitalising on the organisation's human resources was as critical to global competition as was improving IT."Still, Trumbull is a realist. He says AMPlus has been enthusiastically received by the majority of AMP and Andersen people, but some will be fearful.

"It means a whole variety of things for staff. For some, it means their jobs are going to change. For all it means they are part of a different organisation, a virtual company. It should say to them , that as chief executive I have made a real commitment to the IT function, to building it and growing it and creating real opportunities for their careers.

"Naturally, some are very excited about it," he says. "Does it mean that in the short term people are going to have some trepidation about the changes? Absolutely.

That is normal.

"I think that as we progress and AMPlus delivers more and more positive benefits the fears will dissipate. The people basically have three options.

They can sit on the side lines and watch and wait. They actively work against it - which is counter productive for all. Or, they can look at AMPlus and see that it's got some real positives and help make it work - which benefits everybody."Partnerships,smartnershipsEveryone in information technology knows how hackneyed the partnership phrase has become. What is different about AMP and Andersen Consulting's latest convergence? A major difference is that it is virtually cost neutral. AMP managing director George Trumbull has structured the association so each participant must invest in creating the most successful IT model for financial services.

For virtually zero layout AMP gets a complete partnership with Andersen Consulting worldwide for the development and implementation of the "engine of transformation", which Trumbull views as the pivotal component of the company's drive towards commercialisation. In return Andersen Consulting gets a real-time, working model which it expects to be a real dollar earner as the Asia-Pacific region grows into the repository of 50 per cent of the world's insurance premiums in the next five to 10 years. (Figures according to Andersen Consulting predictions.)If the AMPlus partnership sounds incredibly one-sided, with AMP gaining all the benefits at virtually no cost, that's not necessarily the case. Andersen Consulting is determined that the arrangement will pay for itself by attracting additional business.

"Andersen Consulting has no equity stake in AMPlus. Our investment lies in providing the services to make AMPlus work. Already it has aroused enormous interest among clients throughout Australasia who are keen to adopt similar strategies," says David Hoffman, Andersen Consulting's worldwide insurance industry managing partner (and general manager of AMPlus). "We see AMPlus as the ideal opportunity to get in on the ground floor in this region, which is set to become one of the world's biggest insurance markets."He admits that if AMPlus was a conventional start-up it would be difficult to make it cost neutral. Because it's grown from within AMP, and remains a wholly owned business unit of the organisation, many costs are eliminated and those that remain are self-funding. "Typical outsourcing arrange-ments save the host organisation about 20 per cent of its IT costs. We will take the savings AMPlus delivers and reinvest them into additional training and career restructuring as part of our commitment to making the site a preferred work place," he says.

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