In 1987, the 42 separate insurance companies that comprised Factory Mutual Engineering & Research (FM), an industrial property insurer, and engineering-driven underwriter, consolidated their operations into three FM companies: Allendale Mutual Insurance Company, Arkwright Mutual Insurance Company and Protection Mutual Insurance Company. The three separate mutual insurance companies found it difficult to deliver reasonably priced, value-added engineering services in a marketplace driven by increasing competition and a demand for more challenging property protection. To reduce costs and to eliminate competition for the same customers, the three FM companies in 1999 merged to create one company, FM Global.

Today FM Global is an international property insurance and loss prevention engineering company with $4.7 billion in premiums and $9.7 billion in investments for 2007. The company's research group conducts tests in fire and explosion hazards, hazard detection and protection technology, natural disasters, and electrical hazards.

Enterpriseleadership.org spoke with Jeanne Lieb, senior vice president of information services (CIO) of FM Global at the MIT Sloan CIO Symposium 2008 where she spoke about managing a corporate business transformation. In this interview, Lieb talks about how executive commitment helped to make the merger go smoothly, and how standard processes, strong governance, effective leadership practices, and a good understanding of the business have helped IT deliver value to the business. Here's what she had to say:

EL. You can describe your organization's key responsibilities to  support the business? 

JL. We centrally manage all of our infrastructure, our systems development, and our enterprise architecture. Because our business model is unique in our marketplace, we had to build the majority of applications we require to run our business. These applications aren't available off the shelf. We're in the midst of a major six-year initiative to update our entire platform. 

On the infrastructure side, we're upgrading our internal voice network to voice over IP. From a server management, we're trying to gain efficiencies for using virtualization technology. 

EL. What other IT changes have you  made to operate both locally and globally? 

JL. Because of our presence in 50 countries, we had to standardize our global operations across the enterprise. As such, we use the same North American custom software in all of the countries where we operate. The software is centrally developed and centrally managed. This arrangement enables us to bring key information assets on the standard platform and use these assets in other parts of our business process. We drive economies of scale by doing that. 

Some of my CIO peers face the challenge of how to bring all of the financials together for doing business in several foreign countries. At FM Global, we don’t face this issue because we rely on this consistent platform. Because everything is centralized, we've been able to develop standardized business processes. As a result, we can focus on providing value back to the core business as opposed to worrying about how to handle financial reporting. 

EL. Can you describe why the merger went as well as  it did? 

JL. The three insurance companies that owned Factory Mutual were three equally matched companies. It was a merger of equals coming together to form a new company, namely, FM Global. This's important to understand. Because the merger didn't affect our clients, we quickly had to make some critical decisions at the beginning of the merger. For example, we had to decide which business-operating platform we wanted to use for FM Global. We didn't allow ourselves to say, 'Let's take a bit here and a bit there.' All of the insurance companies had valid platforms. Within three hours, four individuals, including me, made the decision to select one platform. We then worked with the executive committee on our rationale for our decision. During the 15-month merger period, the executive team continued to validate that we made the right decision for FM Global. No one challenged the platform decision. During this period, we also removed all of the system redundancy, and had all of the operations using a common platform. We couldn't have accomplished all of this if we didn't have full executive commitment. 

EL.  How are you providing value to the business units that translate to  profitability and to competitiveness? 

JL. I can approach that in several different ways. We've developed those business applications that run our business. Applications, such as engineering, underwriting, and claims, have an intrinsic value in ensuring that people have the tools, the technologies, and the infrastructure to respond efficiently and immediately to our clients' needs. 

As a developer of products for FM Global, we return a lot of value back to the company. As an insurance company with a foundation in engineering, we think of the information that comes from our visits to clients' facilities as the raw material for a manufacturing process. We have data management practices in place so that we then derive value from our product development, our underwriting, and other process supported by all of that information flow. 

EL. What initiatives have you  developed to become more customer centric? 

JL. We focused an important initiative on the core business roles, which include client-servicing departments, such as underwriting, claims, engineering, and sales. Using that portal technology, we knew we could provide ready access to all the client information and client content our employees needed, depending on their role. We then took a step forward by integrating our business applications into that portal. It presents employees with a list of their associated clients. After they've selected the client of interest, then all of the underlying applications then operate off that client. This streamlined interface helps employees to understand our working relationship with the client by providing information such as policies, terms and conditions, inspections completed, and other services. Essentially, we have one place where we go to find what we need. 

Sometimes business processes get lost; no one knows who owns what. We've worked to provide a clear understanding of which parts of the business own what components. It's important to know which sponsoring part of the organization drives any change or innovation. These things need to evolve over time. Because of our role and our integration of technology into our core business, we play a key role in every aspect of the business. Planning activities, for example, help us to ensure that we put together an annual plan we can respond to. 

EL. Can you  describe your governance process? 

JL. We have a cross-functional technology steering committee comprised of senior management, along with representatives from marketing, underwriting, and engineering. We ensure that we have the appropriate targets on the plan, and we deal with allocating resources appropriately. Our efficient process to resolve issues helps us to break down barriers as they arise. Usually, a team working on an initiative might have issues they can't resolve efficiently. Our resolution forum helps to resolve the team's issues. For example, we might try to resolve how far a certain application might go, or how the scope of a project needs to change. 

EL. How do you make investment decisions? 

JL. Working with the technology steering committee, we come up with a plan. Once the plan is agreed upon, I work with the CEO of on an appropriate budget to support the plan. The board gets involved as needed. Many of our decisions focus on defining the needs of the core business, and looking at what things are in our clients’ best interest.

EL. What steps do you take to address your clients' needs? 

JL. The business organization, not IT, talks with clients directly.  We call them our risk management executive councils, which foster a direct exchange between local management with clients. We also have advisory boards represented by CFOs at our clients’ organizations. 

EL. Do you assign IT people to be the liaison with the  business units? 

JL. I don't have people in the specific role of relationship manager. A good IT professional needs to understand the business. You're always going to need people who are good at coding or managing the infrastructure. Because our business model relies on technology, I require my entire management team, as well as business analysts, to connect directly with the business and have sound relationships with their business peers and understand the plan, the objectives, and the way we leverage technology to best meet those objectives. 

EL. Many people say there is often a disconnection between management and IT. So, when you hire someone, how do you know they speak the language of the business? 

JL. I can't point to a specific methodology we use to ensure that. I've seen many technologists who provide great value, but they do a mediocre job of speaking to business peers about solving business problems. In these cases, you need to have a liaison or a translator in the middle. This person could sit in the business unit or sit in IT.

EL. What are you doing to minimize the personal risk for employees to  understand and to embrace change?

JL. Management experts will say you need to layout and to articulate to an individual what success means to their organization. You need to communicate early in the relationship about your expectation for how employees can contribute and positively influence the changes they want to affect. When it comes to asking employees to accept major changes, you need to take a step back and to understand what obstacles would prevent employees from embracing the change. If you believe, as I do, that people want to do what's in the interest of the company, then you need to look at those other personal factors that define success for those employees.