A Case Studyin

Brian GillVice President and Chief Information Officer

ClaricaFebruary 8, 2001

• Corporate Profile• IS Profile• The Issue As We Faced It• Discussion• The Solution We Took• Discussion

Session Outline

•Corporate Profile•IS Profile•The Issue As We Faced

It•Discussion•The Solution We Took

•Discussion

• Corporate Profile• IS Profile• The Issue As We Faced It• Discussion• The Solution We Took• Discussion

Session Outline

•Corporate Profile•IS Profile•The Issue As We Faced

It•Discussion•The Solution We Took

•Discussion

• New, since 1870– Formerly the Mutual Group– First large Canadian company

to Demutualize

• Full range of financialproducts– life insurance– savings and retirement– employee benefits– corporate lending

• 7,500 staff, agents, managers– 3,000 career sales

representatives

• Offices across Canada

• Total assets (billions)• Strong corporate growth

over recent time period• Includes

– corporate assets– segregated funds– mutual funds– other

• Growth accelerated withacquisition of MetLife’sCanadian operations in1998

05

1015202530354045

Bill

ions

97 98 99

Assets under Management

Market Share RankingRetail Insurance in Force 14.0% 1Retail Insurance Premiums 14.7% 2Group Insurance Premiums 9.3% 4Savings and Retirement 2.7% 12

• Mature and competitive business, with aconsolidating market

• New non-traditional competitors entering themarket

• Customer expectations gethigher each day

• Customers expect broadchoice in product featureand flexibility

• Customers expect leadingedge service alternatives– demand innovative use of

technology– demand any where, any

time

• Very large national organization• Rich in traditions and values• Growing at a rapid rate• Operates in competitive and mature markets• Client expectations “on the rise”

• Corporate Profile• IS Profile• The Issue As We Faced It• Discussion• The Solution We Took• Discussion

Session Outline

•Corporate Profile•IS Profile•The Issue As We Faced

It•Discussion•The Solution We Took

•Discussion

(Jan 2001)

• Technology for all business operations• Centralized team in partnership with business

areas• Clarica has had an IS department

for more than 43 years!• $120 million annual budget

• 775 people– 4 sites in Canada– 1 in the US– 175 in technology support

• Federated model– shared common services– business aligned solution

teams

InformationTechnologyServices &

Support

ApplicationsDelivery Team

Business Technology

I.S. B.U.

• 3 data centres• 2 S/390 mainframes

– 7 logical mainframes

• 8 midrange systems• > 200 LAN, File and

Notes servers• Network connections to

140 offices• > 10,000 PCs• and the list keeps growing

every day!

• 2 years for new recruits tobecome fully productive

• Steadily increasing appetite forIT– financial services is technology

intensive– high appetite for new technology– large legacy to carry forward

• Increasing local competitionfor resources– traditional competitors– hi-tech start ups

• Geographical challenge!– difficult to attract to the Waterloo

• Problem: Cannot attract sufficient ISprofessionals to KW to meet Cdn business needs

• Solution: Establish a remote delivery office thatallows access to Toronto skills base

• Location: Mississauga, allowing easy access toWaterloo

• Focus: Mainframe skills• Timeframe: Operational in Sep 1997• Size: 25 resources, scalable to 50

• Big business IT!• Rapid growth in business demands and technology

requirements• Increasingly diverse technologies to be supported• Challenges in providing sufficient staffing• Increasingly looking to non-traditional solutions• Growing legacy

• Corporate Profile• IS Profile• The Issue As We Faced It• Discussion• The Solution We Took• Discussion

Session Outline

•Corporate Profile•IS Profile•The Issue As We Faced

It•Discussion•The Solution We Took

•Discussion

• A year of challenge and change!• Largest IT agenda to date• Year 2000 project in full swing

– 17,000 day project

• Embarked on several critical corporatemega-initiatives– Announced intent to Demutualize

• New name and brand• Several thousand day project

– Acquisition of Met Life’s CDN Operations• 24,000 day project

• $1.2 billion• Closed March 12, 98• 1195 agents & managers• 300 IS professionals in Ottawa

– now TMG had 3 IT delivery centres!

• 24,000 days of IT work• Target for integration completion - Sept 99

• What is a reasonable IT turn over rate for internalIT services organizations?

• Situation: IT projects andresourcing becomeabsolutely critical to theoverall success of Clarica!

• Problem: IT turn overhits an all time high

• Complication: Learningcurve for Claricatechnologies and systemsmakes staff replacementdifficult if not impossible

• What would you do?

• Corporate Profile• IS Profile• The Issue As We Faced It• Discussion• The Solution We Took• Discussion

Session Outline

•Corporate Profile•IS Profile•The Issue As We Faced

It•Discussion•The Solution We Took

•Discussion

• Corporate Profile• IS Profile• The Issue As We Faced It• Discussion• The Solution We Took• Discussion

Session Outline

•Corporate Profile•IS Profile•The Issue As We Faced

It•Discussion•The Solution We Took

•Discussion

• Develop deep understanding of– what is causing people to leave

Clarica– the IT job market and underlying

trends– the costs/risks of “riding it out”– what IT professionals are looking

for in careers

• Develop a comprehensiveprogram based on findings

• All staff who leave areinterviewed

• No one overwhelmingreason for leaving cited

• 30% choose companiesmuch like Clarica

• 50% stay in the same area• Conclusion: Opportunity

to retain a significantnumber of those wholeave!

0 20 40 60

SameLocation

NewLocation

LeaveCanada

Contract

SoftwareCompany

Manu Life

Cooperators

• Global IT market demand accelerating faster thansupply

• Global increased strategic reliance on IT• Trends expected to continue beyond 2003

– “20,000 vacant Hi-tech positions in Canada, an increaseof 33% over the last 4 months” (Software Human ResourceCouncil)

– “100 of 240 computer grads from U of W this springwill be going south of the border” (Globe and Mail)

– “Technology firms plan to hire 10,000 ComputerScience graduates in Canada, but only 5,000 will beavailable (William M. Mercer)

• Impact of increasing demand & decreasing supply:– increasing retention and recruiting challenges– escalating prices– increasing contractor market

• Conclusion: Things will not get better on theirown!

???

• What does it cost to replace an IT professional?

Turnover%

Cost -$ Cost –Days

1997 Actual 10.4% $3.7 M 8,600

1998 Target 12.5% $4.5 M 10,200

1998 “Proj” 21% $7.5 M 17,200

* Annualized Basis* Based on Gartner cost of turnover of $87,500. This includes recruiting, training, productivity loss , increased new salary, mgmt time etc.

• Not delivering on criticaldeadlines

• Decreased human capital– loss of business/systems

knowledge

• Decreased quality due toloss of experience

• Increased stress onremaining staff decreasingmorale

• Risk of snowball effect -people leave simplybecause others areleaving!

• Conclusion: Hard andsoft costs of not acting arevery high!

• What do IT professionals look for in makingcareer choices?

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Information Week Research National Survey

External Survey - Findings

• What matters most to you about your job?

Interestingand

ChallengingWork

CompensationEnvironment

• Conclusion: Need toconstruct a balancedprogram thataddresses threebroad areas

Creating the Future Together

The goal of IS HR strategy is to:

“create an environment that will attract and retainthe best IT professionals in the market and thatwill ensure the appropriate alignment of IT staffskills and behaviours with the new IT vision andprinciples”

consistentwith

internalresearch

Interesting &Challenging Work

CompensationEnvironment

Initiatives• R1: Partnered Innovation• R2: Technology

Revitalization• R3: Project Management• R4: Software Quality

Assurance• R5: Workforce Planning

Initiatives• R6: Leadership Development• R7: Career Counseling and Support• R8: Integration of New People• R9: Coaching & Mentoring• R10: IS Learning• R11: Online MBA Program• R12: Portable PC Technology

Program• R13: Work and Personal Balance

Initiatives• R14: Market Assessment• R15: Critical High

Demand Skills

We will

Create the Future Togetherto ensure

IT's Better at Clarica!

• Corporate Profile• IS Profile• The Issue As We Faced It• Discussion• The Solution We Took• Discussion

Session Outline

•Corporate Profile•IS Profile•The Issue As We Faced

It•Discussion•The Solution We Took

•Discussion

• Turn over leveled off through the end of the year– 85.4%

• Turn over reduced substantially through 1999• Key business imperatives proceeding exceedingly

well• IT contribution to projects

a recognized success factor

75%

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