Insurance companies are under intense pressure these days. They're expected to deliver better care at lower costs. They're required to meet the mandates of the new federal healthcare law. And they're expected to continue supporting corporate initiatives. As vice president and CIO in the commercial business unit of health benefits provider WellPoint, Darren Ghanayem says he's keenly aware that technology is key to his company's ability to meet all those demands. "Everything we do from a business perspective has IT down at the core," says Ghanayem, who oversees an IT organization with 2,235 employees and an annual budget of $600 million. Here, he shares his views on what it takes to deliver IT in today's environment.
How does technology fit into the changing healthcare landscape? We don't manage or make a tangible asset. We manage information, so we are core to the fabric of everything this company wants to do, whether it's to get into a new market or become compliant with a regulation. There is virtually nothing that our business does that doesn't involve IT.
What's your IT strategy for WellPoint? We've got five sections of our IT strategy. No. 1 is to grow and support our business initiatives, whether they be maximizing our member health or modifying our provider reimbursement. No. 2: to stay compliant with our regulations, whether it's state, federal or local. No. 3 is to innovate with new solutions, new ways to allow [our members] to access healthcare or deliver new technologies to empower consumers to make better choices. No. 4 is to consolidate and simplify our environment. We have grown through acquisition over the years, and as we acquire, our infrastructure becomes more complex. And No. 5 is to stabilize and improve our operational environment to support our business in a global marketplace, in operations that could run a 24-hour shop across the globe.
How do you achieve these five strategic points? Our annual budget cycle is not an event, it's a process. We go through months of activities that involve prioritizing. That goes from marketing dynamics -- where are we competitive, where are we winning, where are we lagging behind -- and we [look at] where we want to go, what we want to become, and so we invest in ourselves.
How do you prioritize IT needs at your company? It's on a return-on-investment model. It requires each one of the ideas we generate to create a business plan. The business plan is actually a preliminary IT deployment strategy, and it has to account for the cost. The costs are in the form of labor, infrastructure or software. And so when you look at the entire investment of resources, then you look at what you're going to return on the back end -- lower cost of care, lower cost of business, improved health, which will ultimately have a material impact on our members, and then we look at it not just from a financial perspective but how quickly the return on investment will be achieved.
What's the biggest technical project for your IT team now? The healthcare exchange. It creates marketplaces for our products. We had to conform to the rules and regulations for participating in all 14 marketplaces -- [that is] the states we're operating in. And each state has local nuances. The 15th marketplace, if you will, is the federal one. That's a big challenge. The target of success has been very volatile, because it's something that's been developed on the fly.
What's the biggest challenge with this project? We've got a very disciplined process for how we manage IT projects. We go through a step-by-step waterfall. But because the definition of success has changed so frequently through this exchange project, we had to get more agile, lean and iterative.
Your team is consolidating multiple complex methodologies and systems as a result of acquisitions. What were the challenges with that? The problem with having multiple systems is that those systems we've acquired over time were built through years and years of business processes. So the system really mirrors the process.
But we want to have consistency through markets. When we're dealing with systems that were built on processes unique for a market, it really challenges us to say: "Is the system correct or incorrect based on what we want to become?" That's where disagreements occur between the business units, with an IT delivery deadline looming over our head. We have to understand the impact on business and what we want to become versus what we are. A lot of companies that want to consolidate after acquisition run into the same challenge.
Is IT the moderator when there are disagreements? That's the role we play, because we've learned the hard way that if we don't moderate and bring solutions to the table, we'll find ourselves in an unsuccessful project with all the best intentions.
We sit shoulder to shoulder with the business, and when you're in a project team, you don't know who is IT or business. We really do sit together. That's how we basically moderate those debates. And we recommend solutions. It's much more than writing code or managing infrastructure; we're helping our business partners with their challenges. A successful IT employee is not just a coder -- we actually understand our business. That's the role we've made for ourselves.