Massachusetts Mutual Transforms Its Information Systems
Founded in 1851, Massachusetts Mutual Life Insurance Company (MassMutual; www.massmutual.com) is a leading mutual life insurance company with 1,800 offices and 13 million clients located throughout the world. Although MassMutual does not guarantee dividends, it has paid them to eligible participating policyholders every year since the 1860s. The company provides products to help meet its clients' financial needs, including life insurance, disability income insurance, long-term care insurance, retirement/401(k) plan services, and annuities. In 2008, MassMutual undertook a complete transformation of its 1,200-person information technology department. At that time, the firm's IT infrastructure consisted of 60 years of legacy information systems (old systems that had been in use for many years). The company realized that these outdated systems seriously jeopardized its ability to successfully compete, much less gain competitive advantage, in an increasingly dynamic marketplace.
As a result, MassMutual initiated the massive project to change IT into a more innovative, flexible organization that focused on company growth, market agility, seizing opportunities, and enabling innovation in the company as a whole. The project required the right people, the right processes, and the right technology-in that order. The mandate was that the project was a business initiative, and anything it accomplished had to benefit the entire company, not just the IT group. To emphasize this point, the project included MassMutual business units as partners. In the project's first phase, the IT organization, along with PricewaterhouseCoopers (www.pwc.com) as consultants, conducted a comprehensive assessment of itself against its peers in the insurance industry and against best-in-class organizations in other industries. It then shared its fi ndings with the entire organization. As a result of this assessment, MassMutual redefi ned every job in the IT organization, and it reduced more than 100 existing job descriptions to 35 industry-standard roles. This reclassifi cation also created new career opportunities in IT.
Extensive training helped make the reclassifi cation successful. The fi rm also used virtual reality training, as well as off-site "boot camps" that featured interactive activities. MassMutual has created a culture in its IT group that values sharing ideas and making those ideas better. The company began rewarding people for sharing information rather than hoarding it. IT personnel were encouraged to take risks and make mistakes, as long as they learned from those mistakes and shared the lessons they learned with the entire organization. To make sharing information an ongoing process, MassMutual developed a knowledge management system. The system is a collaborative effort, and employees from IT and the business units continually add information to it. This knowledge base has enabled the fi rm to capture knowledge and to share ideas throughout the organization. The IT organization also implemented standard processes. As part of this standardization process, IT created "Communities of Practice."
These are teams that share stories and ideas and determine whether the existing processes are working. If they are not, then the teams devise strategies to improve them. The teams also institutionalize those processes that are working effectively. Interestingly, all Communities of Practice include people from the company's business units.
And the end results? In 2013, MassMutual was in the fi nal year of the transformation project, and the IT organization had made significant improvements. For instance, it had achieved an 18 percent reduction in IT costs and a 9 percent improvement in the ability to deliver projects on time and within budget, while giving internal customers (other MassMutual employees) exactly what they require. The IT department had also achieved a 10 percent reduction in legacy applications.
For the company's core Universal Life Products, IT was able to reduce the product development life cycle by 9 months while reducing costs by an impressive 84 percent. Sources: Compiled from E. Feretic, "MassMutual Reinvents Its IT Organization," Baseline Magazine, March 21, 2013; L. Malone, "Highly Regulated Companies Tiptoe into Social Media," Computerworld, February 11, 2013; "MassMutual: Improved Customer Service Experience by 50% While Consolidating 17 Systems Down to 1," Pega.com case study, 2013; J. Rooney, "How MassMutual Is Breathing New Life into Life Insurance," Forbes, January 9, 2012; www.massmutual.com, accessed April 10, 2013
Questions
1. Explain why the MassMutual IT transformation project requires the right people, the right processes, and the right technology, in that particular order.
2. Describe the benefi ts of the knowledge management system implemented at MassMutual.
3. Why are people from the business units included in IT Communities of Practice?
4. What should MassMutual's IT organization do next?