Mike Keller has had one of the longest tenures as CIO of one company, as he has surpassed 16 years as CIO of Nationwide. The long tenure has had a number of significant advantages. It has helped him build rapport from the board to the executive team to his entire IT team to the company’s customers. It has also allowed him to play an influential role in the technology and business communities in Columbus, Ohio, where Nationwide is headquartered. He also makes the point that the transformational programs he has led have taken longer than the average tenure of CIOs in some cases. Having the long-term view in mind has been beneficial for Keller and for the company.
Keller has recently been a leader in Nationwide’s “One Company, One Brand” mission. As IT reaches across the entire enterprise, it is especially well suited to be the glue of this mission. Along the way, he has built an unusually strong leadership team, and a culture of collaboration inside and outside of IT.
Peter High: Mike, can you describe the diverse array of experiences that led you to your current position as chief information officer at Nationwide, as well as your responsibilities in that role?
Mike Keller: I began my career at IBM where I worked in customer facing roles that focused on technology oriented consulting and systems integration. My final position at IBM was running a P&L in their global services area before joining Bank One as their chief technology officer for technology infrastructure. I joined Nationwide as CIO in 2001, during that time I have run Sourcing and Procurement, internet, and several other areas. We have moved toward a functional organizational alignment, so I run the IT operation which is an approximately $1.3 billion a year expense operation, with over 5,000 associates and over 3,000 contractors. It is a large-scale operation in traditional areas like application development, application maintenance, infrastructure, and operations.
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High: What are some of the items on your current strategic roadmap?
Keller: Our core mission remains stable. We are an insurance and financial services organization dedicated to helping protect consumers and businesses, empowering them to build a secure financial future. However, several years ago when we considered what we want Nationwide to look like in 2020 and beyond, we decided to make several fundamental changes as part of our “One Company, One Brand” strategy. Nationwide grew, in part, through acquisitions, and in many instances left those companies, their brands, and their products intact with a fair degree of independence and autonomy. The One Company, One Brand strategy involves not only a considerable amount of work at the superficial or branding level such as building signage, updating websites, and redesigning printing outputs, but also includes significant strategic initiatives. These more substantial changes are part of what we call Tier 1 Business Transformation Programs that are designed to both bring us together as one company and to simplify products, processes, and technologies.
High: What is IT’s role in the strategic business transformation? Is technology seen as the glue that holds together a One Company, One Brand mentality and mission?
Keller: Around 2007, when we started making large bets on business transformation we recognized that there was a technology component to most of the changes. As a result of this we created a Business Transformation and Technology Committee on the board of directors to help prioritize and oversee our large-scale technology investments, and we created a committee within the management team made up of the business unit heads of Marketing, Finance, and IT to set the priorities and funding and oversee the delivery of our large transformational programs. With the transformational programs, we are simplifying and modernizing the business and basically redoing our core systems at the same time. For instance, prior to the One Company, One Brand initiative, we went to market under four different brands, Nationwide Insurance, Harleysville Insurance, Allied insurance, and Titan Insurance. Not only did each of those companies go to market through different distribution channels, which meant exclusive agents, independent agents, and a direct operation, each company had their own products with various legal constructs, coverage, and coverage limitations. With the One Company, One Brand strategy we will have a single suite of products with the same legal, underwriting, and pricing constructs. They will all be branded Nationwide and have omnichannel capabilities supporting exclusive agents, independent agents, direct phone, and direct internet.
The One Company initiative is a large-scale change affecting almost every part of our business. We spend over $500 million per year for an extended number of years to simplify, modernize, and reinvent almost all of our core businesses by overhauling our products, business processes, and technology. These steps will improve efficiency, help us to deliver a better customer experience, and provide us with speed and agility in areas like IT.
High: How did you plan for and manage such a large transformation as you shifted from traditional IT infrastructure and technology to a more modern footprint? To what extent was this an opportunity to leverage more modern technology?
Keller: In the insurance business, there are fewer off-the-shelf packages available so we have a higher degree of historical legacy and internally developed systems than what you would find in other industries. We are working with Guidewire in the core business areas for claims and for both personal and commercial lines, which are the two big ERP engines for our Property & Casualty business. Similarly, in our Life Insurance business we are moving to Oracle’s insurance platform. There were some cases within our retirement plans business where we could not find anything in the market so we had to do custom development.
There were packages available for many of the corporate functions; we are increasingly moving those to a software-as-a-service model. For example, we are moving HR systems from PeopleSoft to Workday. In IT, we have moved off legacy packages to solutions like ServiceNow, and we have transitioned CRM to Salesforce. The long and short of it is, our preference is SaaS first, package second, and custom develop third. However, due to the state of the market, we have a combination of them all in play.
High: You have a massive team. How have the changes that you discussed influenced how you build and develop your team?
Keller: Several years ago when we started looking at big technology trends and legacy replacements, it was clear that the size and mix of skills in our workforce would need to change dramatically. We figured that this was a common problem in IT organizations so we visited a number of different technology companies. We did a West Coast swing and an East Coast swing and talked to outside consultants. What we discovered is there is not a lot of maturity or consistency in the way organizations manage this problem. A surprising number of companies use the model of if I need it today, I will hire it, and if I don’t need that talent anymore tomorrow, I will lay it off. We go about it differently at Nationwide. At the enterprise level, we use multi-year workforce planning to figure out how many people we will need, and with what skill sets, by utilizing a model that includes internal to external ratios and historical attrition rates. Then, we recruit and develop based on that plan.
In the specific areas where we are running the transformation programs, we conduct more detailed planning. For example, with our personal lines, we are currently still supporting the legacy systems, running a massive program to build out and configure the Guidewire platform, and performing the integration and data work required to convert our systems. This means that not only do we have a large program team and a legacy support team, but we are building the run support organization that will be necessary when we are all on the new platform. Since we recognize that during this bubble we have much higher numbers than we will ultimately need, and that our future teams will require different skill sets, we have given our workforce as many options as possible. Associates who want to stay in their current departments, and are willing to learn, have been trained on new programs and platforms. We have helped people migrate their skills and land other internal jobs, and we have leveraged suppliers at both the consulting and at the systems integration levels to assist with the transition. Given that many of these strategies are multiyear journeys, we have had the time to ensure that not only does the company have the right number of people with the right skills at the right time, but that whenever and wherever possible, people can maintain and progress their career at Nationwide.
High: Given the number of vendors that you engage, and the scale of those relationships, how do you think about vendor governance?
Keller: It is a complicated topic. We have a strong partnership with our Sourcing and Procurement organization. We run joint teams that consist of technology leaders and our sourcing partners that examine what we need to do across all of the areas including traditional infrastructure, telecom, computer storage, cloud, platform as a service base, and SaaS in the consulting and services space. Through this work, the supply base has been rationalized to not only support the implementation of our transformational programs, but also to drive efficiency. At Nationwide, we work with three global service providers that we have both onshore and offshore development integration and maintenance partnerships with. There is healthy competition among them, which results in substantially better service levels for us, at better costs. Our thinking has evolved and matured around the type of contracting vehicles that make the most sense: When should it be statement of work project based? When should it be managed service? When should it be staff augmentation? By having a governance team in place, rationalizing our global suppliers, and rationalizing and reducing our local supply base we are getting the right skills, the right resources, and the right quality outcomes at lower costs than in the past. We are proud of the partnerships that we have developed. Our track record for delivering on multiple, large, complex programs is above the industry standard, our partners have been integral to this success.
High: What role does your team play in in customer facing technology? Additionally, to what extent does the IT team have contact with customers to glean and understand their needs or impressions of technology?
Keller: We have created a delivery model, which is our business model for how we do IT in Nationwide, that I am proud of and that works well. Our organizational structure and governance optimize for both business intimacy and economies of scale. In my experience, companies will use a decentralized approach to get business intimacy; but then they do not leverage their economies of scale, they do not have consistent standards, and have real challenges in areas like data security — but they are closer to business. Companies that use a highly centralized model end up with good standards and good economies of scale, but may not feel connected to the business. With our delivery model we keep plan, build, and run accountability in groups that are close to the businesses, co-located with them whenever possible. We use almost exclusively agile development practices and my teams are close to both their business partners and the end-users of the technology, whether that is agents, distribution partners, or consumers. Increasingly, our strategy of modernizing and simplifying the core business and core systems of record enables us to work in the data space or the digital space. This increases our speed and helps us to create the digital experiences that we want for both our end customers and our distribution partners.
High: You have had an unusually long tenure as CIO at Nationwide, nearly 16 years. As you reflect on your time with the organization and how technology and IT have evolved, what are some of the advantages of having been with the organization for this period of time?
Keller: My tenure has given me the opportunity to know both the business and IT environments deeply, to build relationships from the board of directors down, to grow a team, to influence the culture, and to develop a set of consistent strategies. More specifically, first, I sponsored, championed, and then delivered on large scale, difficult transformational programs. Second, I led the transformation of the IT function. When I joined IT at Nationwide, itwas decentralized and highly inconsistent. We centralized it and have gone through several different evolutions to get where we are today. Both qualitative feedback and quantifiable benchmarks indicate that substantial progress has been made; we recently won a prestigious award for software process achievement and we are leaders in lean, agile, and virtualization. When I joined Nationwide, IT was considered an inhibitor to business success. Today, it is an enabler. A third accomplishment that I am proud of is my team. I have mentored and groomed team members to ensure that we have the right variety of skills and experiences on the leadership team, while also creating a culture of collaboration. My team works better together than it ever has, but also better than any IT leadership team that I have been a part of. Fourth, being based in our headquarters’ city of Columbus for this many years has given me the opportunity to sit on several external boards. Using these connections, I have helped to create a community based, for-profit company that focuses on analytics and cybersecurity. This organization supports the individual companies in the area and drives economic development for the region. It is unlikely I would have had a significant impact outside of Nationwide if my tenure had been short.
High: Based on my conversations with a great number of your peers, oftentimes they are asked to join a company or replace a leader when the perception is that the path ahead is sufficiently different from the path paved to this point that it requires new leadership or fresh thinking. How do you challenge yourself and your team, and make change part of the core competencies when so often people resist it?
Keller: People’s resistance to change depends on how the change is executed. One of my favorite sayings is, “People hate change but they love progress.” Most IT teams and IT leaders are lifelong learners. They are open to learning and change if you create a healthy environment in which it is safe to learn, it is safe to experiment and innovate, and you deal with both success and failure in an appropriate way.
To create this kind of culture I stay connected not only inside the organization but outside as well. I am on a number of advisory boards that give me visibility within the insurance industry and the technology industry. For example, I serve on a McKinsey board that focuses on the insurance industry and on an IBM board of advisers that brings in CIOs from multiple industries all over the world. I am active with a number of executive development programs and I spend time with consultants and thought leaders. I also strategically bring in outside talent to challenge our thinking; I have hired many bright, creative, and capable people. Our culture is collaborative and innovative and our goal is to have the right debates and not get stuck in one way of thinking. We also have a commitment as a company to diversity, not only in the traditional sense, but also in terms of thought diversity.
A long tenure can be a risk for an organization. I understand that people worry that someone will not get the new thinking or will not be adaptable. I have worked hard to mitigate these potential pitfalls. I do not know what the right tipping point is, but when I hear average tenures of three or four years for a CIO, I do know that many of the programs that I have delivered could barely have been started, let alone finished, in that amount of time. Based on my discussions with our CEO and board of directors, they are confident in my team and me and do not feel the need to go outside and change it up.
High: Having developed many strong team members during your tenure, when direct reports of yours have been great leaders, are there creative ways or interesting methods that you have used to help people advance their careers?
Keller: We put a lot of energy into executive development and internal rotational development. People on my direct report team have had multiple promotions and team members have spent time in cybersecurity, infrastructure, application development, and have faced off with multiple internal businesses to learn the various businesses and industries [represented] within Nationwide. We use a mix of approaches, but to the greatest degree possible we try to keep talented people happy and grow and develop them internally.
High: You are on the board of Columbus 2020, a private-public partnership that brings together research companies, academic institutions, and a variety of companies from the Columbus area to help grow economic development and attract businesses to the area. As someone who has lived in the area for a considerable amount of time, what are some of the advantages to living or starting a business in Columbus today?
Keller: Columbus 2020 is part of a network of regional economic development groups called Jobs Ohio that was formed when the state of Ohio, under Governor John Kasich, privatized economic development. This partnership between the region and the state has been instrumental and resulted in all of the regions upping their game. Our chief economic officer of Columbus 2020, Kenny McDonald, is one of the best in the country and we have made amazing progress on measures like attracting new businesses, growing the number of jobs, increasing the average pay of those jobs, and attracting capital investment to the region.
Public-private partnerships are essential to the program’s success. Ohio State University has been actively involved, as have many other universities and community colleges. The business leadership in Columbus is unique because we have a lot of large companies that are not competitive with one another. The CEOs of the companies work together cooperatively, which is unusual.
We see this type of cooperation across the program. As part of my Columbus 2020 role, I brought together the CIOs of the biggest Central Ohio based companies to explore ways to help our companies and to grow technology jobs in the region. We created a for-profit company called the Columbus Collaboratory that builds out advanced capabilities in cybersecurity and analytics, and creates intellectual capital, products, and services for the broader market. I chair the board, my peer CIOs are on the board, and we hired a capable CEO and leadership team. This type of program would be difficult in many other cities because there might not be enough big companies, or they might not work well together, or they might be competitors. The diversity of businesses and the partnership between the private, public, and academic centers are what makes the enterprise successful.
High: You have mentioned a number of critical trends that you are riding to great success. Are there others that we have not discussed that you see as points of curiosity or that you are adding to your strategic roadmap?
Keller: The trends that I look at are consistent with those of most CIOs: data and analytics, artificial intelligence, the Internet of Things, the cloud, mobile, digital, and blockchain. I am watching them all, but they get interesting when they come together and allow innovation or disruption to happen. I look at these trends for both opportunities and for threats.
As a large insurer of vehicles, one-third of our revenue comes from vehicle related insurance so all transportation related trends interest us. If you consider trends like smart vehicles, new safety features on vehicles, connected vehicles that let us collect data, vehicles that are semi-autonomous to fully autonomous, and car and ride sharing, these are big changes that will affect our business. The nature of transportation is shifting significantly and that will affect the nature of risks, what is insured, and how it is insured. We have to look at the holistic set of trends and how they may affect our business.
Related to these ideas, through Columbus 2020, I have joined the executive committee of Smart Columbus. The city of Columbus beat out seventy other cities and won a grant from the U.S. Department of Transportation to drive the development of smart mobility. The public-private-academic partnership that I talked about with the Columbus Collaboratory has also been brought to bear with Smart Columbus. We explore the future of mobility and how the city, academic researchers, and private companies can come together to create higher accessibility and more cost effective mobility. There is a lot of exciting work going on in this area.
Peter High is President of Metis Strategy, a business and IT advisory firm. His latest book is Implementing World Class IT Strategy. He is also the author of World Class IT: Why Businesses Succeed When IT Triumphs. Peter moderates the Forum on World Class IT podcast series. He speaks at conferences around the world.
Date:May 01, 2017