With annual revenues of $1.5 billion and just 1,400 employees, PMI Group holds its own in the competitive business of writing private mortgage insurance to protect lenders if the borrower defaults. PMI Group insures about 50,000 homes per year. In fact, Daniel L. Roberts, PMI's executive vice president and chief information officer, thrives on finding ways to use IT to keep PMI ahead of larger competitors. He accomplished this goal by leveraging his knowledge of IT with experience running PMI operational units, such as claims, policy servicing, billing, and structured transaction operations. As a result, some of his IT initiatives have received awards such as Computerworld's 'Best Practices in Mobile and Wireless for 2005."

Enterpriseleadership.org recently spoke with Roberts about some of his IT initiatives, governance, and processes to align IT with operational objectives. Here's what he had to say.

EL: Can you provide an overview of your IT department?

DR: We've got about 180 full-time employees, and about 150 contractors who support operations in the United States and Europe. Our mix of servers includes about 24 AS400s, 75 Sun Solaris, and 400 Intel-based Window servers. Major applications include PeopleSoft for human resources and finance, Cognos for business intelligence, and corporate reporting, WebSphere from IBM, and a variety of Microsoft Office and Exchange products. FileNet provides the foundation for our image management system; we built the transaction part of this system.

EL: What technologies did you use to build your imaging  system?

DR: At one time, we used to receive documents such as a loan default via FAX or courier. Several years ago, we started to accept documents via the Web. Technology from Cyclone enabled our customers to securely transmit their documents and to receive a status report of their transactions. Transaction Director enables customers to log on to a secure Web site and check on the status of those transactions.

A piece of software from Pyramid Technology sits on top of FileNet and allows for intelligent workflow. For example, we enable our customers to electronically send us documents, such as W2 statements or credit reports, which make up the massive loan files. We used to require that customers send these documents either via FAX or courier, and Pyramid allowed us to set triggers to let us know when certain documents are due.

Now, we can image the loan file. Each one of our offices has an electronic scanner, which can feed documents into our imaging system. Software from Kofax allows us to take a FAX image and turn it into a Tiff, which then resides in the FileNet storage system. About 50 percent of our customers send us documents electronically.

EL: Can you talk a little about the award you received from  Computerworld?

DR: Instead of lugging around a laptop for email and to access the Web, we enabled our sales employees to do these things via their Blackberries. We integrated these devices with our Exchange servers so our sales people could get email wherever they are. By integrating the Blackberries with salesforce.com, the sales people can enter contact information or make notes in their Blackberries or view sales literature before ordering it. We got the award because the sales people became more productive by capturing pertinent information right away and responding immediately to customers' email messages.

EL: What forms of governance do you have in place?

DR: We've got both a tactical and strategic layer of governance. Our tactical IT steering committee consists of business unit heads. At our first monthly meeting of the year, we tentatively establish the projects for the year, their priority, and their budget. We typically handle 100 projects worth no more than $250,000. As we go along, we might eliminate a project, add new ones, or change the priorities of some projects.

The strategic layer or the resource allocation board consists of senior vice presidents. At our first quarterly meeting each year, we establish a capital budget for projects above $250,000. At each meeting, we rank the priority for each project, introduce new projects, or eliminate some.

EL: Do you use any quality initiatives, such as Six Sigma, Lean, or  the IT Infrastructure Library?

DR: We haven't adopted any of those specific programs. We've been intrigued with Balanced Scorecard from Cognos. When we establish both corporate and business unit objectives, we can use the Balanced Scorecard to identify key metrics that will tell us if we're on track or not for a particular objective. The Cognos Metrics Manager tool allows us to monitor monthly whether or not we achieve those particular metrics for those objectives. We are still in the process of refining this.

The process has enabled us to make some very clear and discrete decisions about what programs to offer which customers, what investments to make in IT, and to call out the six or seven key objectives. In turn, the CEO can provide all employees with a clear line of sight about the company's key strategies and level of profitability.

EL: What cost-cutting or cost-avoidance programs have you carried  out?

DR: Our imaging system has helped us reduce costs and provided us with a competitive advantage. It has provided a payback in hard dollars along with improving the quality of service we provide. For example, our field operations shrank their budgets while gaining some incredible performance and turnaround time. Some of the offices doubled the number of loan files they processed in a day.

EL: Are you looking at grid computing?

DR: We evaluated it and decided it wasn't for us now. Since we've got limited capacity, we're going to focus on those technologies that will give us the most payback. Blade servers and virtualization are two data center technologies at the top of our list. Each of our legacy applications runs on a separate server, which are underused. We'll move these applications to blades and use VMWare to virtualize some of the older application. This technique would enable us to eliminate 28 servers and provide more space in our data center.

EL: What is your cost structure for IT?

DR: We've borne all of our costs from cost centers. Each operational department assists me in presenting its approved budget to management. However, as we've become more global, we've started to allocate foreign operational costs, which we bear domestically for running their servers. Our group in Ireland is beginning to see a memo bill each year for those charges. We want to have a specific cost allocation for those business units. We won't eliminate cost centers; we'll get to a more discrete allocation of costs.

EL:What process do you use to make the alignment clear to the  business units?

DR: Governance aligns our business objectives with IT projects. To accomplish this, we use goal mapping, which is an embellishment of the Rational Rose. The goal maps provide the operational department with the business objective they're trying to achieve through technology and the value of achieving the objective. The value goes into their budget. For the imaging project, the operational department made a commitment to put the cost savings into their budget as soon as the goal line was achieved.

We had a clear vision in front of us. We had to deliver by a certain date, and the operational department counted on us to have a cost reduction in their budget. If they didn't get that cost reduction, both of us would talk it out. That level of clarity does achieve some alignment. Both the operational department and the IT folks have a clear mission of what to get done, when, and what is the budget.

EL: What types of human relationship techniques do you use to get  everyone on the same page?

DR: When you're a small business in a very competitive pool of big players, you need to make everyone feel like they're a major contributor. I educate myself about the business imperatives and try to help my counterparts understand how technology will play a roll in these imperatives.

After being with the company for three months, new employees have to go through a five-day training program called the Business of PMI. Employees' eyes start to open up as they delve deeper into the inner working of the company. They get to sit side-by-side with everyone from customer service representatives to senior executives. For example, they observe how a customer service representative handles tough questions from callers.

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Elizabeth Ferrarini is an IT consultant and writer from  Boston, Massachusetts. Reach her at mailto:elizabethferrarini@yahoo.com.