“In the end, we’re an insights-based business.”
Is the insurance business stodgy and staid? Not at Zurich Insurance Group (“Zurich”). The nearly 150-year-old provider of life, property and casualty, and commercial insurance is undergoing a radical transformation. Zurich’s chief executive officer recently told shareholders that Zurich is “embracing a customer-led, technology-enabled transformation that will redefine how we create value for our customers, shareholders, employees and society more broadly.”
This means Zurich is renewing its focus on customers, simplification and innovation. Zurich has some 55,000 employees working in more than 215 countries and territories. Total revenues (excluding net investment result on unit-linked investments) for Zurich’s most recent fiscal year totaled $52.3 billion, more than the gross national product of some midsize countries.
Sajeev Nair, head of Global Application Development & Maintenance (ADM) at Zurich, has worked at Zurich since 2009. Previously he was the company’s sourcing executive for IT.
Q: How are you supporting the three cornerstones of Zurich’s transformation strategy?
A: When we started our 2017 – 2019 strategy cycle, the major thrust was on greater customer centricity and simplification. We had made a specific commitment to reduce our expenses by $1.5 billion. IT was a material driver of the simplification effort. We have consolidated from more than 70 data centers to 13 and replaced more than 140 IT network providers with a single one. We have simplified our application landscape by decommissioning over 550 applications during this strategic cycle. We have also enhanced our IT capabilities through insourcing and selective crowdsourcing. On the innovation front, we have focused on embedding an innovation culture in the organization.
For our next strategic cycle, we’ll make some tweaks, but at the core we will continue our journey toward creating the leading customer-oriented insurer. Our focus will be on converting transactional buyers into long-term Zurich customers. We will focus more on product and process simplification, as well as accelerating innovation of products and delivery models.
Q: How do you handle such a massive data center consolidation?
A: We’ve been at it for a few years now. Of course, the more data centers we have, the bigger the target we need to protect. So, security by design is now embedded in the organization’s DNA.
Our consolidation program is massive, and it’s at its tail end. In fact, our target is to get down to about eight strategic data centers, and we’re well on track. For example, we’ve moved large parts of our data center in Switzerland to London, and it’s a much more modern and sustainable facility from an environmental perspective. This was our biggest move. We had to move mainframes and large parts of our infrastructure. But it also included consolidating a number of other data centers. Overall, it was quite a substantial exercise.
Q: To what extent does Zurich’s new data center strategy take advantage of the cloud?
A: Our cloud strategy is twofold: (1) looking at a private cloud with DXC Technology; and (2) considering the public cloud. Over the last 24 months, there has been a significant increase in usage of public cloud. Right now, about 35 percent of our applications are on either the public or a private cloud.
Some of this was also part of our simplification program portfolio, which included nearly 75 programs. One of these programs involved a data lake in North America that we moved to Azure.
In addition, we’ve set up a cloud-control plane, making sure we have guide rails so that when an application is hosted on one cloud, it’s also portable across other clouds, should the need arise. And, we’re making sure that all applications we put in the cloud are secure by design.
Q: You’ve eliminated ~600 applications. How?
A: It’s been an ongoing journey. Many of our major business units have been on this journey for a few years, demonstrating discipline and a structured approach toward decommissioning. To target some of the harder-to-get applications, we set up a simplification program with targeted funding to enable decommissioning of applications or movement to the cloud, thus reducing technical debt. We have to make sure that all our old and unused applications are eliminated. We don’t want any zombies in our landscape.
We’re down to about 2,300 applications, but that’s still a large number. Even as we continue to simplify that, we’ll need to introduce new applications as we go into more and more digital propositions. Zurich has also made some acquisitions, and those added applications, too. So, our aspiration as we move forward is of course to reduce applications in our landscape, but on an ongoing basis we want to ensure that the number of new, modern applications that we add is below or equal to the number of decommissioned legacy apps.
Q: In 2018 Zurich created a group, called Customer Active Management (CAM), to do data analytics. How’s that work going?
A: Actually, we already had an ongoing data and analytics program since 2015. We have an enterprise-level data organization in Europe and another one to do analytics for the North American region. On top of that, our local country business units have their own data organizations. That’s important, because the insurance business tends to be very local. It’s subject to local regulations, and to date the customers tend to have a local focus as well. So a data analytics capability is required at the local level.
We then established a company based in Ljubljana, Slovenia, that we call Zurich Customer Active Management (ZCAM). It has a simple, flexible, proprietary customer analytics platform. This enables our distribution network and underwriters to better understand customers’ needs and create personalized propositions.
The real-time platform takes advantage of advances in technology to make it easier to use data from structured or unstructured sources and legacy systems. This means we can create tailored, forward-looking and simple coverage solutions. In the end, we’re an insights-based business.
Q: Innovation is a key pillar of Zurich’s new strategy. But how do you foster innovation in such a large organization?
A: It’s challenging. We’ve gone after the most difficult element, which is culture. In the past, innovation was something that would happen in a corner office somewhere. Now we’ve enabled the growth of innovation, focusing on horizontal connections within the organization. For example, there are innovation champions in each business unit — people who drive innovation and champion the cause and, most importantly, are connected to one another. We also have a program called Make the Difference, which brings together employees from across the globe to cocreate and implement innovative ideas. Thus far we’ve had 2,000+ nominees and 1,250+ employees engaged from 28 countries across four regions. Over 700 ideas have been submitted, and 60 initiatives have been spawned across the group.
Looking forward, we’re asking ourselves: How do we scale innovation even further? How can we streamline, accelerate innovation and take innovations to market at speed? How do we incentivize people to innovate more, and how do we fund them sustainably? Those are the processes we’re looking to lock down.
For more on business transformation and progress, read “Connecting digital islands: Bridging the business transformation gap,” a global survey of business and technology executives. This Q&A appears in the survey report.