CIGNA Property and Casualty ReengineeringIn 1988, CIGNA began their reengineering in projects in all nine divisionsin order

to cut cost, increase productivity and reduce headcount. TomValerio, the Senior Vice President for Reengineering soon discovered aproblem that most of CIGNA IT budget was allocated to legacy systemsmaintenance and enhancement. Up to this point, with the help of Geminiand Renaissance, The group decided to make significant structural changesand brought a new executive team to CIGNA, However, they were alsochallenged by constraining factors: a nine-month time frame for concept toproduction and the necessity to use the existing infrastructure. Finally theyuse the two-tiers systems, the balanced scorecard and desktops informationtechnology support to complete the structural changes and save thecompany.Haapaniemi(1996) use the idea of utilizing latest capabilities of IT toachieve entirely new objectives by giving the example of Alcoa, Inc. Alcoaannounced the largest IT project in its history, an overhaul of its basiccomputer infrastructure. The $150 million effort spanned 26 countries andtook several years to complete. The effort is ambitious and complicated, but the goal is elegantly simple and clear , Let employees around thecommunicate quickly and easily. Alcoas initiative reflects a basic fact life in the use of strategic IT. It is similar to the case of CIGNA, the newtools like twoties and balance scorecard are focused increasingly oncreating connections between employees, across functions, withand between data and decision-makers. A good system also neededcommunication between workers and information, at this aspect, CIGNAdid better as they worked closely with the internal team by insourcingbecause they believed that it helped to expedite the process and it wasthreatening than outsourcing. Whatever, strategic IT plays an importantrole in Reengineering of both companies.Supermarkets like Wall-Mart have used IT to drive their business. Thescanners that are used to check out commodities provide a huge benefitmaking it possible to track sales in real time. A strong IT solution wasdeveloped and then problem that it will solve was found. The use of ITreduced the customer check out times and reduced the cashier labor inaddition to tracking sales. Compared to the WallMart, CIGNA s desktopsinformation system linked the producer, underwriting, claims together toimprove the effectiveness and decision-making process. Although theydifferent systems, with the client architecture, the value delivered byinformation technology to knowledge workers could in turn beto customers as more efficient service.

CIGNA Property and Casualty Reengineering (A) Key Summary Lessons

1. Senior management must drive reengineering initiatives with a well-articulated vision that is appropriate for the situation. 2. IT is an undervalued asset that can be tapped through reengineering to transform a company from a makeand-sell-oriented enterprise to a sense-and-respondoriented enterprise. 3. Learning loops and the balanced scorecard are important mechanisms for incorporating continual learning and dynamically tracking the results of reengineering investments. 4. Successful implementation of reengineering projects requires the involvement and participation of the companys managers and employees. Consultants and outsourcing are important for various aspects of a reengineering project, but they are insufficient without the buy-in from managers and professionals in the organization. 5. Business process can be streamlined or reengineered, but to change the long-term economic picture, a transformation initiative needs to encompass the reevaluation of communication systems and the sharing of intellectual assets. Client/server unlocks this capability.

CIGNA Property and Casualty Reengineering (A) Eight Main Competencies The ability to:
Select and enter new markets with above average profit potential. Select and attract the right kinds of customers. Select and manage the producers for those businesses Better identify exposures and hazards. Drive pricing more accurately toward the right risk assessment. Form partnerships with customers in order to reduce claims frequency. Reduce claims severity Manage claims performance to the required service level of each business unit.