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It was 2003, and chief executive John Sullivan had reached his boiling point. He was about to shutter his second claims processing system in four years, fire his top IT guy and get somebody in there who knew how to go about choosing the right technology.
For Majestic Insurance Co. of San Francisco, a workers' compensation insurance firm, that somebody was James Woolwine, a former PricewaterhouseCoopers consultant who was brought in to assess the IT mess wrought by years of rushed technology decisions and ineffective leadership. Woolwine was so deft at bridging the rift between the technology and business sides that in less than a year he set the company on an appropriate technology course -- and made great strides in repairing IT's reputation throughout the company. His approach to solving Majestic's woes: establish a strict governance model, involve business people at every stage of the IT decision-making process, and nurture mutual respect among IT folks and business line managers.
In a word: communicate. "James has a very positive personality, gives great advice with no pressure, talks plainly," Sullivan says. "He's just a great communicator."
Here's how he led his rescue mission.
Inside Majestic's offices in San Francisco's financial district, 85 employees write $100 million in workers' comp premiums annually. Majestic prides itself on strong customer service. But when it came to technology, Majestic made some missteps.
The paper-heavy workers' comp industry began racing toward IT automation in the early 1990s, putting in systems to process, issue and track claims, and support underwriting. That put enormous pressure on small IT departments like Majestic's, which tried to keep up with larger competitors and chose technology without a lot of due diligence. At Majestic, that happened three times.
First, IT built a system from scratch that had very limited functionality and couldn't keep up with Majestic's rapid growth; the company was expanding its federal coverage to state coverage, its claims processing to underwriting. In the late 1990s, Majestic tried again, buying Oracle Corp. software. This system handled California workers' comp claims and underwriting very well, but it wasn't easy to add in rules to expand operations in other states, Sullivan says. For instance, Majestic had grown its operations to include Hawaii, Alaska and Oregon and faced conversion issues in getting the new information into the system.
In 2000, when Oracle wanted Majestic to spend another million dollars to upgrade to the next software release, Sullivan told IT to pull the plug on the system. The IT department found an alternative solution, called CompSupport, developed by Support Systems International Inc., which it touted as the company's software savior. Majestic spent $1.5 million for CompSupport software and related hardware and integration services.
Converting to CompSupport was a struggle. The system required a massive change in the way Majestic conducted business -- more so than the vendor had made it seem, Sullivan says. Frantic to make the system work after two failures, the IT department passed edicts: Claims adjusters had to enter claims information in a new and cumbersome way; underwriters had to perform manually intensive tasks to enter a policy into the system. And when IT went to fix bugs, other parts of the system would go down. Over the next couple of years, business employees slowly lost faith in the reliability of the system.
Then came the last straw: Faulty data turned up in CompSupport. The problem stemmed from data definition issues between CompSupport and Majestic's data warehouse; many data fields potentially had more than one meaning, depending on how users viewed the data. This meant Majestic business employees had to manually cross-check all the data that spewed out of the system. The potential for erroneous numbers rattled top executives and private shareholders. "An incorrect decimal point can be a very serious thing for a small company like ours," Sullivan says. "Private shareholders were pounding the tables wanting to know why we couldn't get this data integrity issue resolved."
With pressure mounting, a frustrated Sullivan wanted to replace CompSupport and perhaps outsource some technology functions. He approached the IT director with these new mandates, but the meeting didn't go well. "The leadership of IT resisted and said he could make the system work, bring in more people and reprogram this thing," Sullivan says. "I heard that one time too many."
Sullivan dropped the axe last year and fired the CIO. "We wrote a paper a couple of years ago about the reasons CIOs fail," says Marc Cecere, research director at Cambridge, Mass.-based Forrester Research Inc. and a former CIO. "It's not so much about systems failure -- although a big enough one will get you fired -- but more because of CIOs' relationships with their bosses and peers."
Then, Sullivan hired Woolwine, a former high school computer sciences teacher whom Sullivan had brought in as a consultant to evaluate the situation. Woolwine quickly told Sullivan that "business has to drive IT." This single sentence hit a cord with Sullivan in that it summed up all of Majestic's woes. He offered Woolwine a job on the spot.
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