HP Tools Aid Insurance Leader AIG in Driving Business Transformation and Service Performance Through a Center of Excellence, Says AIG's Abe Naguib
HP Tools Aid Insurance Leader AIG in Driving BusinessTransformation and Service Performance Through a Centerof Excellence, Says AIGs Abe NaguibTranscript of a a BrieﬁngsDirect podcast with AIG and HP on the challenges and solutionsinvolved in managing a global franchise.Listen to the podcast. Find it on iTunes. Sponsor: HPDana Gardner: Hello, and welcome to the next edition of the HP Discover PerformancePodcast Series. Im Dana Gardner, Principal Analyst at Interarbor Solutions, your moderator forthis ongoing discussion of IT innovation and how it’s making an impact on people’s lives. Once again, were focusing on how IT leaders are improving performance of their services to deliver better experiences and payoffs for businesses and end- users alike. [Disclosure: HP is a sponsor of BrieﬁngsDirect podcasts.] Were now joined by our co-host and moderator, Chief Software Evangelist at HP, Paul Muller. Welcome, Paul, how are you?Paul Muller: Im great Dana. How are you doing?Gardner: Im excellent. Where are you coming from today?Muller: Im coming from sunny San Francisco. It’s unseasonably warmer this year, and Imreally looking forward to today’s discussions. It should be fun.Gardner: We have a fascinating show. Were going to be learning about global insurance leaderAmerican International Group, or AIG, and how their Global Performance Architecture Grouphas leveraged a performance center of excellence (COE) to help drive business transformation.So let me introduce our guest from AIG. Were here with Abe Naguib. He is the Senior Directorof AIG’s Global Performance Architecture Group. Welcome back, Abe.Abe Naguib: Hi, Dana. Hi, Paul. How are you?Gardner: Were excellent. Weve talked before, Abe, and Im really delighted to have you back. Iwant to start at a high level. Many organizations are now focusing more on the user experienceand the business beneﬁts and less on pure technology, and for many, its a challenge. From a veryhigh level, how do you perceive the best way to go about a cultural shift, or an organizationalshift, from a technology focus more towards this end-user experience focus?
Naguib: Well, Paul and Dana, there are several paradigms involved from the COO and CFO’s push on innovation and efﬁciency. A lot of the tooling that we use, a lot of the products we use help to fully diversify and resolve some of the challenges we have. That’s to keep change running. The CIO has to keep his eye forward to periodically change tracks, ensuring that the customers are getting the best value for their money. That’s a tall order and, he has to predict beneﬁt, gauge value, maintain integrity, socialize, and evolve the strategy of business ideas on how technology should run.We have to manage quite a few challenges from the demand of operating a global franchise. OurCOE looks at various levels of optimization and one key target is customer service, and factorsthat drive the value chain.That’s aligning DevOps to business, reducing data-center sprawl, validating and making sense ofvendors, products, and services, increasing the return on investment (ROI) and total cost ofownership (TCO) of emerging technologies, economy of scale, improving services and hybridcloud systems, as we isolate and identify the cascading impacts on systems. These efforts help toderive value across the chain and eventually help improve customer value.Gardner: Paul Muller, does this jibe with what youre seeing in the ﬁeld? Do you see anemphasis that’s more on this sort of process level, when it comes to IT with of course more inputfrom folks like the COO and the chief ﬁnancial ofﬁcer?Level of initiativesMuller: As I was listening to Abes description I was thinking that you really can tell the culture of an organization by the level of initiatives and thinking that it has. In fact, you cant change one without changing the other. What Ive just described is a very high level of cultural maturity. We do see it, but we see it in maybe 10 to 15 percent of organization that have gone through the early stages of understanding the performance and quality of applications, optimizing it for cost and performance, but then moving through tothe next stage, reevaluating the entire chain, and looking to take a broader perspective with lotsof user experience. So its not unique, but its certainly used among the more mature in terms ofobservational thinking.Gardner: For the beneﬁt of our audience, Abe, tell us a little bit about AIG, its breadth, andparticularly the business requirements that your Global Performance Architecture Group istasked with meeting?Naguib: Sure, Dana. AIG is a leading international insurance organization, across 130 countries.AIG’s companies serving commercial, institutional, individual customers, through one of the
world’s most extensive property/casualty networks, are leading providers of life insurance andretirement services in the US.Among the brand pillars that we focused on are integrity, innovation, and market agility acrossthe variety of products that we offer, as well as customer service.Gardner: And how about the Global Performance Architecture Group? How do you ﬁt into that?Naguib: With AIG’s mantra of "better, faster, cheaper," my organization’s people, strategy, and comprehensive tools help us to bridge these gaps that a global ﬁrm faces today. There are many technology objectives across different organizations that we align, and we utilize various HP solutions to drive our objectives, which is getting the various IT delivery pistons ﬁring in the same direction and at the right time. These include performance, application lifecycle management (ALM), and business service management (BSM), as well as project and portfolio management (PPM). Overtime our Global Performance organization has evolved, and our senior manager realized ourstrategic beneﬁt and capability to reduce cost, risk, and mitigate production and risk.Our role eventually moved out of quality assurances QA’s functional testing area to focus onemphasizing application performance, architecture design patterns, emerging technologies,infrastructure and consolidation strategies, and risk mitigation, as well increasing ROI andeconomy of scale. With the right people, process, and tools, our organization enabled ITtransparency and application tuning, reduced infrastructure consumption, and acceleratedresolution of any system performances in dev and production.The key is bringing together our business-critical and strategic drivers across IT’s varioussegments, fosters alignment, agility, and eventually unity. Now, our leaders seek our guidance tohelp tune IT at some degree of ﬁnancial performance to unlock optimal business value.Culture of ITGardner: Whats interesting to me, Paul, about what Abe just said is the evolution of this fromtest and dev in QA to a broader set of ﬁrst IT, then operations, and then ultimately even throughthat culture of IT generally. Is that a pattern youre seeing that the people in QA are in the sensebreaking out of just an application performance level and moving more into what we could callIT performance level?Muller: As I was listening to Abe talk through that, there were a couple of keywords that jumpedout that are indicators of maturity. One of them is the recognition that, rather than being a group-sized task, things like application, quality performance, and user experience actually are adiscipline that can be leveraged consistently across multiple organizational units and, whetheryou centralize it or make it uniform across the organization is an important part of what you justdescribed.
Maturity of operational and strategic alignment is something that requires a signiﬁcantinvestment on business’s and IT’s behalf to prove early returns by doing a good job on some ofthe smaller projects. This shows a proven return on investment before the organization istypically going to be willing to invest in creating a centralized and an uniform architecture group.Gardner: Abe, do you have some response to that?Naguib: Yes, more-and-more, in the last six or seven years, theres less focus on just basicperformance optimization. The focus is now on business strategy impact on infrastructureCAPEX, and OPEX. Correlating business use cases to impact on infrastructure is the goldengrail.Once you start communicating to CIOs the impact of a system and the cost of hosting, licensing,headcount, service sprawl, branding, and services that depend on each other, were more aligningDevOps with business.Muller: You can compare the discussion that I just had with a conversation I had not three weeksago with a ﬁnancial institution in another part of the world. I asked who is responsible for yourend-to-end business process -- in this case I think it was mortgage origination -- and the entireroom looked at each other, laughed, and said "We dont know."So youve really got this massive gap in terms of not just IT process maturity, but you also havebusiness-process maturity, and its very challenging, in my experience, to have one withouthaving the other.Gardner: I think we have to recognize too that most businesses now realize that software is suchan integral part of their business success. Being adept at software, whether its writing it,customizing it, implementation and integration, or just overall lifecycle has become kind of thelifeblood of business, not just an element of IT. Do you sense that, Abe, that software is givenmore clout in your organization?Naguib: Absolutely Dana. I truly believe that. Ive been kind of an internal evangelist on this, butI always say that software drives the hardware. Whether I communicate with the enterprisearchitects, the dev teams, the infrastructure teams, software frankly does drive the hardware.Thats really the key point here. If you start managing your root cost and performance from asoftware perspective and then work your way out, you’ve got the key to unlocking everythingfrom efﬁciencies to optimizing your ROI and to addressing TCO over time. Its all businessdriven. Know your use cases. Know how it impacts your software, which impacts yourinfrastructure.
Converged infrastructureGardner: Of course, these days we’re hearing more about software-deﬁned networking,software-deﬁned data centers, and converged infrastructure. It really does start to come together,so that you can control, manage, and have a data-driven approach to IT, and that ﬁts into ITILand some of the other methodologies. It really does seem to be kind of a golden age for how ITcan improve as performance, as productivity, and of course as a key element to the overallbusiness. Is that what you’re ﬁnding too, Abe?Naguib: Absolutely. Its targeting software performance, and software-as-a-service (SaaS)applications that depend on each other.More and more, its a domino effect. If you dont identify the root cause, isolate it, and resolve it,the impact does have a cascading effect, on optimization, delivery, and even cost, as we’ve seenrepeatedly in the last couple of years. That’s how we communicate to our C-level community.Gardner: Of course we have to recognize it. Just being performant, optimized, and productivefor its own sake isn’t good enough in this economy. We have to show real beneﬁts, and you haveto measure those beneﬁts. Maybe you have some way to translate how this actually does beneﬁtyour customers. Any metrics of success you can share with us, Abe?Naguib: Yes, during our initial requirements-gathering phase with our business leaders, we startdeﬁning appropriate test-modeling strategy, including volumetrics, and managing andunderstanding the deployment pattern with subscriber demographics and user roles. We startaligning DevOps organizations with business targets which improves delivery expectations, ROI,TCO, and capacity models.Then, before production, our Application Performance Engineering (APE) team identiﬁes weakspots to provide the production team with a reusable script setting thresholds on exact hotspots ina system, so that eventually in production, they can take appropriate productive measures. Now,this is value add.Gardner: Paul, do you have any thoughts in terms of how that relates to the larger softwareﬁeld, the larger enterprise performance ﬁeld?Muller: As we’re seeing across the planet at the moment, theres a recognition that to bring greatsoftware and information is really a function of getting Layers 1 through 7 in the technologystack working, but its also about getting Layer 8 working. Layer 8, in this case, is the people.Unfortunately, being technologists, we often forget about the people in this process.What Abe just described is a great representation of the importance of getting not just afunctional part of IT, in this case quality and performance working well, but its about
recognizing the software will one day be delivered to operational staff to internally monitor andmanage it in a production setting.The big transformation taking place right now is that our organization is connecting differentsilos of IT delivery, in particular development, quality, and operations, to help them acceleratethe release of quality applications, and to automate things like threshold setting, and optimizemonitoring of metrics ahead of time. Rather than discovering that an application might fail toperform in a production setting, where youve got users screaming at you, you get all of thatwork done ahead of time.Sharing and trustYou create a culture of sharing and trust between development, quality, and operations thatfrankly doesn’t exist in a lot of process where the relationship between development andoperations is pretty strained.Gardner: Abe, how do you measure this? We recognized the importance of the metrics, but isthere a new coin of the realm in terms of measurement? How do you put this into a standardizedformat that you’re going to take to your CFO and your COO and say here’s whats reallyhappening?Naguib: Thats a good question. Tying into what Paul was saying, nobody cared about whetherwe improved performance by three seconds or two seconds. You care at the front end, when youhear users grumbling. The bottom line is how the application behaves, translating that intobusiness impact as well as IT impact.Business impact is what are the dollar values to make key use cases and transactions that dontscale. Again, software drives the hardware. If an application consumes more hardware, thehardware is cheap now-a-days, but licenses aren’t. You have database and you have middlewareproducts running in that environment, whether its on-premise or in the cloud.The point is that impact should be measured, and thats how we started communicating resultsthrough our organization. Thats when we started seeing C-level ofﬁcers tuning in and realizingthe impact of performance of both to the bottom line, even to the top line.Gardner: It strikes me, Abe, that this is going to set you up to be in a better position to move tocloud models, consume more SaaS services, as you mentioned earlier, and to become more of ahybrid services delivery shop or have that capability. Does that make sense? Do you feel moreprepared for what this next level of compute architecture you seem to be heading toward as aresult of the investments youve made?Naguib: Absolutely Dana. Our role is to provide more insight earlier and quicker to the rightpeople at the right time.
Leveraging HP’s partnership and solutions helped us to address technologies, whether Web 2.0,client-server, legacy systems, Web, cloud-based, or hybrid models. We were able to leverageconsistent dashboards across different IT solutions internally, then target weak spots and helpdrive optimization, whether on premise or cloud.Gardner: Paul Muller, thoughts about how this is working more generally in the market, howpeople who get a grasp on global performance architecture issues like AIG are then in a betterposition to leverage and exploit the newer and far more productive types of computing models?Muller: In the enterprise today, its all about getting your ideas out of your head and makingthem a reality. As Abe just described, most of the best ideas today that are on their way intobusiness processes you can ultimately turn into software. So success is really all about having thebest applications and information possible.Understand maturityThe challenge is understanding how the technology, the business process and the beneﬁts cometogether and then orchestrating that the delivery of that beneﬁt to your organization. Its notsomething that can be done without a deliberate focus on process. Again, the challenge is alwaysunderstanding your organizations maturity, not just from an IT standpoint, but importantly froma broader standpoint.Naguib: Whats the common driver for all? Money talks. Translating things into a dollar valuestarted to bring groups together to understand what we can do better to improve our process.Gardner: Abe, it strikes me that you guys are really fulﬁlling this value epicenter role there andexpanding the value of that role outside the four walls of IT into the larger organization. Tell mehow HP is joining you in a partnership to do that? What is it that youre bringing to the table toimprove that value for the epicenter of value beneﬁt?Naguib: Dana, what were seeing more is that its not just internal dev and ops that were aligningwith, or even our business service level expectations. Its also partnerships with key vendors thathave opened up the roadmap to align our technologies, requirements, and our challenges intothose solutions.The gains we make are simple. They can be boiled down into three key beneﬁts: savings,performance, and business agility. Leveraging HPs ALM solutions helps us drive IT andbusiness transformation and unlock resources and efﬁciencies. That helps streamline deliveryand an increased reliability of our mission critical systems.My favorite has always been HPs LoadRunner & Performance Center. It’s basically our SwissArmy Knife to support diverse platform technologies and align business use cases to the impacton IT and infrastructure via SiteScope, HP SiteScope.
Were able to deep dive into the diagnostics, if needed. And the best part is, after weve dealt withtuning, we can help activate post-production monitoring using the same script, understandingwhere the weak spots are.So the tools are there. The best part is integrated, and actually work together very well.Gardner: It really sounds like youve grabbed onto this system-of-record concept for IT, almostenterprise resource planning (ERP) for IT. Is that fair?Naguib: Thats a good way to put it.Muller: One of the questions I get a lot from organizations is how we measure and reﬂect thebeneﬁt. What hard data have you managed to get?Three-month studyNaguib: IDC came in and did an extensive three-month study, and it was interesting what theyhave found. Weve realized a saving of more than $11 million annually for the past ﬁve years byincreasing our economy of scale. Scale on a system allows more applications on the same host.Its an efﬁciency from both hardware and software. They also found that our using solutions fromHP increased staff productivity by over $300,000 a year. Instead of ﬁghting ﬁres, were actuallynow focusing on innovation, and improving business reliability by over $600,000 a year.So all that together shows a recoup, a ﬁve-year ROI, about 577 percent. I was very excited aboutthat study. They also showed that we resolved mean time resolution over 70 percent throughproduction debugging, root cause, and resolution efforts.So what we found, and technologists would agree with me, is that today, with hardware beingcheaper than software, there is a hidden cost associated with hosting an application. The bottomline, if we don’t test and tune our applications holistically, either the architecture, code,infrastructure, and shared services, these performance issues can quickly degrade quality ofservice, uptime, and eventually IT value.Muller: I have a saying, which is that quality costs money but bad quality costs more. There yougo.Gardner: Abe, any recommendations that you might have for other organizations that arethinking of moving in this direction and that want to get more mature, as Paul would say. Whatare some good things to keep in mind as you start down this path?Naguib: Besides software drives the hardware -- and I cant stress that enough -- are all the waysto understand business impact and translate whatever youre testing into the business model.
What happens to the scenarios such as outages? What happens when things are delayed? What isthe impact on business operability, productivity, liability, customer branding. There are so manydetails that stem from performance. We used to be dealing with the "Google factor" of two-second response time, but now, were getting more like millisecond response, because there areso many interdependencies between our systems and services.Another fact is that a lot of products come into our doors on a daily basis. Modern technologiescome in with a lot of promises and a lot of commitments.Identify what worksSo its being able to weed through the chaff, identify what works, how the interdependencieswork, and then, being able to partner with vendors of those solutions and services. Having toolsthat add transparency into their products and align with our environment helps bring thingstogether more. Treating IT like a business by translating the impact into dollar value, helps to getlined up and responsive.Gardner: Very good. Last word to you, Paul. Any thoughts about getting started? Are thereprinciples that you are seeing in common, threads or themes for organizations, as they begin toget the maturity model in place and extend quality and process performance assuranceimprovements even more generally into their business?Muller: It might be a little controversial here, but the ﬁrst step is look in the mirror andunderstand your organization and its level of maturity. You really need to assess that very self-critically before you start. Otherwise, youre going to burn a lot of capital, a lot of time, and a lotof credibility trying to make a change to an organization from state A to state B. If you don’tunderstand the level of maturity of your present state before you start working on the desiredstate, you can waste a lot of time and money. Its best to look in the mirror.The second step is to make sure that, before you even begin that process, you create thatalignment and that desired state in the construct of the business. Make sure that your maturityaligns to the businesss maturity and their goal. I just described the ability to measure thebusiness impact in terms of revenue of IT services. Many companies can’t even do something asfundamental as that. It can be really hard to drive alignment, unless you’ve got business-ITalignment ahead of time.I have said this so many times. The technology is a manageable problem, Layers 1 through 7,including management software to a certain degree, have solved problems the most time. Solvingthe problem of Layer 8 is tough. You can reboot the server, but you can’t reboot a person.I always recommend bringing along some sort of management of organizational change function.In our case, we actually have a number of trained organizational psychologists working for uswho understand what it takes to get several hundred, sometimes several thousand, people to
change the way they behave, and that’s really important. You’ve got to bring the people alongwith it.Dana Garner: Well we have to take a hint from you, Paul. Maybe our next topic will be ThePsychology of IT, but we won’t be able to get to that today. I am afraid well have to leave itthere and I have to thank our co-host Paul Muller, the Chief Software Evangelist at HP. Thanksso much for joining us.Muller: Always a pleasure.Dana Garner: And like to thank our supporter for this series, HP Software, and remind ouraudience to carry on the dialogue with Paul and other experts there at HP through the DiscoverPerformance Group on LinkedIn.You can gain more insights and information on the best of IT performance management atwww.hp.com/go/discoverperformance. And you can always access this in other episodes of ourHP Discover Performance podcast series at hp.com and on iTunes under BrieﬁngsDirect.Of course, we also extend a big thank you to our guest. Abe Naguib. Hes the Senior Director ofAIG’s Global Performance Architecture Group. Thanks so much, Abe.Naguib: Thank you, Dana, thank you, Paul. I really appreciate the opportunity.Gardner: Again, a last thank you to our audience for joining us for this special HP DiscoverPerformance podcast discussion. Im Dana Gardner, Principal Analyst at Interarbor Solutions,your co-host for this ongoing series of HP-sponsored business success story. Thanks again forjoining and come back next time.Listen to the podcast. Find it on iTunes. Sponsor: HPTranscript of a a BrieﬁngsDirect podcast with AIG and HP on the challenges and solutionsinvolved in managing a global franchise. Copyright Interarbor Solutions, LLC, 2005-2012. Allrights reserved.You may also be interested in: • HP Discover Performance Podcast: McKesson Redirects IT to Become a Services Provider That Delivers Fuller Business Solutions • Investing Well in IT With Emphasis on KPIs Separates Business Leaders from Business Laggards, Survey Results Show • Expert Chat with HP on How Better Understanding Security Makes it an Enabler, Rather than Inhibitor, of Cloud Adoption • Expert Chat with HP on How IT Can Enable Cloud While Maintaining Control and Governance
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