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CIO Leadership Series: Logothetis likes CIO's evolving role

Peter Logothetis
Madison, Wis. - Peter Logothetis pondered the multi-dimensional role of today's chief information officer, and he concluded that it's part of a natural - and necessary - evolution.

From enabling the business to meet corporate objectives, to building strong working relationships with the entire workforce (not just upper management), to understanding the business as well as information technology, the position has evolved to what he considers its rightful place - the executive team.

Since July of 2006, Logothetis has been senior vice president and CIO of QBE Regional Insurance, formerly Winterthur US Holdings. He has watched the evolution unfold over 30 years in IT management - mostly in the insurance industry with organizations like Kemper and Liberty Mutual.

Logothetis reports directly to the CEO and is a member of the executive team. He said the benefit of the reporting relationship - and the location of his office - is that it allows him to have constant access to all senior executives, and it builds the necessary teamwork at the top. “It's a crucial ingredient,” he said, “for the success of a CIO.”

With QBE Regional, he oversees an IT staff of 290 people and IT functions in multiple U.S. locations. As such, he loses sleep over the usual things: data security, network failure in the wee, small hours of the morning, and more importantly, keeping up with the competition.
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“I would say what keeps me up at night is the need to bring this company to the same level as some of our top-notch competitors, especially in terms of innovation,” he said. “I want our people to have a competitive advantage. Right now, we're not at the bottom, but we're not at the top, which is where we want to be.”

Corporate transition

For Logothetis, getting to the top will involve a change in ownership, developing new ways to achieve strategic goals, and transforming information technology.

Winterthur US was a holding company comprised of two property-casualty business units: the Madison-based General Casualty Insurance, and the Seattle-based Unigard Insurance Group, which now are part of QBE Regional Insurance. Seventy-five percent of their combined products are commercial lines of insurance, while 25 percent are personal lines. Altogether, they sell more than $1 billion in premiums annually.

QBE Insurance Group's recent acquisition of Winterthur means Logothetis has a sizeable corporate parent. QBE is the largest general insurance and reinsurance group in Australia, and one of the 25 largest insurers and reinsurers worldwide. The organization provides insurance services mainly to the Asia-Pacific region, has offices in 44 countries, has a market capitalization of AU$27 billion, and reported a 2006 profit of nearly $1.5 billion.

Amid this change, Logothetis is determined to pare information technology expenses and free up money to invest in the company's strategic goals, which include a more robust culture of innovation. He doesn't anticipate any major changes in IT as a result of the acquisition by QBE, especially in the short run.

Foremost among the company's strategic goals is the use of automation to accurately link the price of insurance products to the risk associated with them. Automation may include tools like multivariate analysis, predictive analytics, and data warehousing - whatever informatics tools are needed to give underwriters and actuaries the data they need to determine the best price for QBE's insurance products and to select products.

Logothetis is in charge of selecting the analytical tools that would enable such data aggregation, and it will require some detailed analysis of products available on the market. “Many insurance companies now view this [data] as proprietary knowledge,” Logothetis said.

On a separate but parallel track, the company is working to improve the ease of doing business in its product distribution channel, which happens to be the independent agent model. Logothetis will examine whether the company can accomplish this by automating the manual process and interventions used by underwriters, or whether it can more effectively select risk through improvements in workflow.

As he notes, the company's goal is not just growth, but the establishment of processes and enabling technology that lead to profitable growth.

IT visioning

While the company's strategic goals are pursued, Logothetis also has a strategic vision for information technology. The department is undergoing a system modernization project made necessary by Winterthur's acquisitions, which QBE has absorbed. Those transactions have not only added business units and agencies, they also have added multiple billing and claims systems and disparate technology products for a variety of other business functions.

Streamlining them will be a multi-year, multi-million dollar effort, but its successful completion will free more IT dollars for innovation. Logothetis is leading an assessment that could result in paring systems from 3 to 1 for some functions - for example, he's eager to create one billing “flavor” for the Madison, Seattle, and Montgomery, Ala. offices - or simplifying from 3 to 2 systems for other business functions.

Logothetis said most IT department dollars go into maintaining these disparate IT systems. It is the best place to look for economies that can free up dollars for other corporate goals.

In his view, the key to these and other IT implementations is having the right business sponsor, a person on the business side who champions the project throughout, and a hard-nosed project manager who can head off trouble and ensure that vendors toe the line.

Logothetis' experience tells him to beware of executive sponsors that cite an urgent need for automation and then are rarely heard from again. Business champions need to be actively engaged in every stage and aspect of the implementation, or the lack of executive sponsorship can undermine the project.

At QBE Regional Insurance, IT projects costing more than $100,000 are monitored by a Project Review Committee comprised of five executives. They include Logothetis, who reports directly to the CEO and is a member of the executive team.

The Project Review Committee reviews the cost-benefit analysis that is developed by the business sponsor, and it conducts the review of this component of project justification to determine if it's the right return on investment. The ROI usually is calculated over a five-year period so that maintenance, energy, and other operational costs are part of the equation.

The committee also evaluates whether the stated business need is aligned with the revamped business process and the company's strategic goals.

Then, and only then, does the company start looking at automated solutions, which is a particular challenge for insurance companies. Logothetis said existing vendor solutions are not as robust and end-to-end as he would prefer, and that poses a challenge to the company's desire to modernize technology.

With more mature software options still at least three to five years away, Logothetis says it's important to guard against over-customization. “I think the vendors are trying to work though that because an end-to-end solution would be profitable for them,” he said. “It takes some investment, but I'm not optimistic that anyone will find anything scalable in this area in the near future.”

Time to teach

Logothetis, who holds an MBA in information systems from DePaul University, was for 20 years an adjunct professor in the computer science department at DePaul. Now, he's interested in a teaching role in Madison, where he could help groom future technologists.

“I'm in discussions with the University of Wisconsin-Madison,” he mentioned, “to see if I can teach there part-time, or for me to help in some way. For example, to serve as a mentor to computer science students, where appropriate.”

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