Managing Business Transformation: Michael Paravicini, Chief Information Technology Officer, Zurich Financial Services Group

A business transformation is probably the most complicated program any company will ever have to manage. The complications are magnified when the transformation is global in scope and the company in question is the first in its industry to attempt something so far-reaching.

This was the challenge that Zurich created when it decided to launch an ambitious program to transform itself from a collection of regional businesses into a unified global company. In May 2003, the firm announced a global strategy to consolidate and streamline its IT services.

As part of this global strategy, Zurich signed a seven-year applications outsourcing agreement with CSC in July 2004. Approximately 1,600 Zurich employees in the United Kingdom, the United States, Switzerland, and Germany transferred to CSC. Zurich also works with three other partners: Wipro, IBM, and Orange Business Services

The man who had to manage all this was Michael Paravicini, who is a member of Zurich’s Group Management Board as well as the firm’s chief information technology officer. He joined Zurich in January 2003, so the transformation was one of his first challenges. He’s a much busier man now than he was when we talked with him in 2005, but we did get some time to ask him how he managed the transformation and how the business has changed.

CSC World: What can Zurich do now that it could not do before the transformation?

Paravicini: From an IT point of view, Group IT is now aligned to the company’s strategic direction. It has increased flexibility, efficiency, and transparency, and today we can measure IT progress against business goals.

Let me explain this in more detail: Today, we can easily support pan-European initiatives, or other cross-border initiatives like a global ARIBA rollout, which simply would not have been possible a couple of years ago.

In addition, we have the ability to scale our IT organization to meet the huge demand on IT. We are able to manage hundreds of parallel projects by leveraging the expertise and scale of our sourcing partners. Finally, we all compete for the same scarce skills. Our sourcing contracts allow us not only to access our own specialists but also to have access to the key specialists from our different key partners.

From a business point of view, the transformations will lead to more innovative product creation and better distribution and servicing solutions, as well as better data and customer management. Today, Zurich can very quickly develop and implement new and creative products across borders — an advantage that will be very hard for our competitors to copy.

CSC World: What difference has the transformation made for you as the one who has to manage a global IT operation?

Paravicini: Three years ago, I was busy solving operational problems most of the time. Due to the transformation, GIT today is in a position to offer strategic guidance, expertise, and innovative technical ideas for future product developments and implementations to our partners from the business side. If IT and business work closely and successfully together, they can build a potential that will be very hard for our competitors to beat. Therefore, for me, my job has become even more interesting.

CSC World: What advice do you have for other CIOs who are thinking about outsourcing on this scale?

Paravicini: First, make sure you have the full commitment of top business management. It’s essential to get business buy-in early. Then, of course, you have to choose the right outsourcing partner, one who understands your philosophy. You should also provide a fair deal to your staff and start early to build and manage the retained IT organization.

CSC World: In this issue, we also have some articles on project management. What advice do you have there?

Paravicini: A common problem on large, complex projects — even if you have chosen the right partner — is for the scope of work to expand. It is necessary to build a strong sourcing team to minimize scope creep. On such projects, it’s also a good idea to use comprehensive master service agreements with briefer local ones. Establish a baseline productivity index using external parties. And prepare for the impact from exchange rates, VAT, and other taxes.

The other articles you mentioned probably emphasize the importance of communication. Robust communication is crucial to manage the expectations of users, IT staff, and business management. Good communication is essential to maintaining good relationships amidst so much change.