Anthem’s New AMS Approach Proves You Don’t Need to Pick One or the Other: Learn how a new approach to AMS sourcing can enable the modernization of core IT systems and maintenance of applications in parallel. See Anthem’s playbook and methodology for this innovative sourcing delivery model. Learn how to stratify which suppliers can truly help you transform core systems, and which ones that may only be able to handle tasks. See the evaluation criteria that Anthem leveraged in assessing its suppliers for transformational work. Understand the potential for running modernization and maintenance in an integrated effort, as opposed to separate initiatives.

1. JW Marriott Hill Country
San Antonio, Texas
February 19-22, 2017
Leveraging Outsourcing to
Modernize While Maintaining
Applications
Anthem’s New AMS Approach Proves You
Don’t Need to Pick One or the Other

2. © 2017 IAOP. All Rights Reserved.
Speaker Introduction
Chief Marketing Officer
WGroup
Managing Principal
WGroup
President and CEO
WGroup

3. © 2017 IAOP. All Rights Reserved.
Session Objectives
Learn how a new approach to AMS sourcing can enable the modernization of
core IT systems and maintenance of applications in parallel. See Anthem’s
playbook and methodology for this innovative sourcing delivery model.
1
Learn how to stratify which suppliers can truly help you transform core systems,
and which ones that may only be able to handle tasks. See the evaluation criteria
that Anthem leveraged in assessing its suppliers for transformational work.
2
Understand the potential for running modernization and maintenance in an
integrated effort, as opposed to separate initiatives.
3

4. © 2017 IAOP. All Rights Reserved.
IT Transformation
Advisory
IT Strategy Service Delivery Transformation “Digital” Transformation
Goal(s):
Align IT to the business. Shift from run to
grow.
Improve service to the business and
users and reduce cost.
Speed and competitive differentiation.
Specific
Service:
 Technology Enabled Business Strategy
 Mergers, Acquisitions, & Divestitures
 Cost Optimization
 IT Assessments / Remediating Complex IT
Issues
 IT Governance & Demand Mgmt.
 Interim IT Executive / Interim CIO
 Sourcing Advisory
 Strategy
 RFP to Contract
 Renewals
 Transition
 Governance
 Vendor Management
 ITSM / Process Optimization
 Organizational Design
 Cloud Strategy & Roadmap
 Application Portfolio Transformation &
Rationalization
 Exploratory Investment / Innovation Lab
Competency
 Automation
 Cognitive / Autonomics
Staff Augmentation (via upGrow Service Business) Interim | Contract and Contract to Hire | Permanent Placement
About WGroup
Helping IT and Sourcing Leaders Drive Transformation Since 2004.

5. © 2017 IAOP. All Rights Reserved.
Do these challenges have a familiar ring?
Business agility, innovation and value creation are key to Anthem’s success, but are hindered by organizational challenges
Rapid growth and acquisitions have resulted in multiple operating models, inefficiencies and higher costs
Level of complexity across the organization makes managing the business of IT difficult and expensive
Opportunities for improving operating effectiveness via standardization, rationalization, modernization, and process improvement
App. Development teams, are overwhelmed with demand for services and forced to operate in a reactive mode
Need to establish sustaining IT capabilities:
 Business engagement and creation of a strategic IT roadmap & governance model
 Clearly articulated target application architecture
 Application portfolio rationalization to simplify the application landscape
 Demand management and execution must align with target application architecture
 Continued focus on rapid innovation to exploit technology capabilities and opportunities
Anthem is working to transform health care with trusted and caring solutions. Our health
plan companies deliver quality products and services that give their members access to
the care they need. With over 73 million people served by its affiliated companies,
including nearly 40 million enrolled in its family of health plans, Anthem is one of the
nation’s leading health benefits companies. Additional detail http://www.anthem.com
About Anthem, Inc.

6. © 2017 IAOP. All Rights Reserved. - 6 -
Health plans are continually evolving to find the right mix of capabilities that will help them win and retain customers in a
increasingly competitive marketplace
Change in Market Dynamics
Health plans need to increasingly make
compelling features available to consumers,
and faster time to market is becoming a critical
factor to acquiring and retaining customers.
Changes in Market Dynamics
Faster Time To Market
New entrants such as Oscar are changing the
way that technology is viewed by health plans.
With the emergence of the $5 PMPM model,
larger health plans need to manage costs while
delivering cutting edge features to their member
base.
Technology Enabled Lower PMPM Alternatives
Simple and Convenient
Customer Loyalty Through Advocacy
The target consumer base places a greater
emphasis on usability, convenience and
productivity. Improved consumer experience
when leveraged for support staff will enable the
solving of customer problems the “first” time.
To deliver the “retail” mindset, health plans
need to adopt a consumer-centric approach
and analytics to enable the right outcomes
across the consumer journey.

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Initial State & Implications
 Six business units contract for ADM services independently: Commercial, Government, Infrastructure, Information Security, Corporate Applications, and the Office
of the CIO
 A significant number of applications contracts in the portfolio to expire at the end of 2015: Poor alignment of supplier / contract with Anthem needs
 Current applications sourcing approach is fragmented and contributes to increased cost and complexity while limiting agility, quality and overall business value: No
application strategy defined with the business leadership
Initial State and Problem:
Overall Strategy
Supplier & Contract
Strategy
Why Now?
 Modernize Enterprise Application
architecture while absorbing legacy
functionality
 Optimize support model for effectiveness and
efficiency across the ecosystem
 Commercial IT systems are highly complex,
require strong quality control, significant
modernization, and partners with a product
mindset
 Explore cognitive compute platforms
 Modernization approach, experience,
capabilities, commitment, costs, etc. – key
evaluation parameters
 Major consideration by Supplier tier:
 Task Takers: How big of a hurdle is it to
invest and change their model?
 Engineers: Do they have the domain
expertize to define, govern and deliver on
modernization?
 Transformers: Do they have the execution
capability to drive operating efficiency?
 Restructuring operating model and
partnerships today enables future savings
 Drive substantial transformation in the next 2-
3 years with the right partners (uplift in skills,
capabilities, tools, and repeatable processes)
 Leverage supplier investments for enterprise
services
 Accelerate transition to end state
architecture; jumpstart application
rationalization and significant savings

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As the core of Anthem’s operations, the WGS platform exhibits a number of challenges prevalent in most health plan systems
Why Modernize WGS?
Area Current Challenge(s) Future Opportunity
Data Model
Group-Centric
Core administrative assets are currently focused on employer businesses
Consumer-Centric
Build out new capabilities to address marketplace shifts towards
consumerism
Usability
Transactional
Focused on integrating native datasets to process claims
Experiential
Shift to contextual, user-focused transactions for areas such as member
self-service
Platforms
Large Mainframe Footprint
Rely on mainframes resulting in high fixed infrastructure and talent
acquisition/management costs
Hybrid-Technologies
Shift to newer platforms, reducing costs, increasing quality and
improving speed-to-market
Release
Times
Long Release Cycles
Current release cycles range between 8 and 20 weeks
Continuous Integration
Employ automation and CI/CD capabilities to reduce time-to-market
(typically 20%)
Development
Philosophy
Custom Development
Large custom-built with opportunistic integrations with packaged software
Cloud/XaaS-First
Consider Cloud/XaaS before custom build, wherever appropriate
Talent
Legacy Talent Model
Focused on issue resolution, production incidents and “lights on” activities
DevOps Talent Model
Retrained to deliver value added services and solutions using cutting
edge technology
Cost
Focused on “Lights On”
Largely driven by capital expenditures such as data center maintenance
etc.
Focused on Value Delivered
Shift to operating expenditures and focus budget on value added
capabilities
Why Modernize?

9. © 2017 IAOP. All Rights Reserved.
Governance &
Vendor Management
 “The Most Important Part of
Value Realization”
 New skills, processes,
behaviors, and objectives.
 Root Cause Analysis
 Business SLA & OLA mgmt.
 Change Management
Business Outcomes
What You Want,
in Business Terms
Realization of Your
Expected Outcomes
Delivery of
Business Value
Transformation Program
 Business Strategy Alignment
 Define key Business Metrics and
Translated to IT Outcomes
 Integrate Infra. and Apps Strategy
 Cloud Modernization Program
 ITSM-Enabled Service Delivery
Model
 Re-Solution Service Delivery
Reference Architecture
 Embed Automation and
Autonomics
 Relentless focus on Security
Non-Prescriptive
Solutioning
 With or without a formal RFP
 Flexible for Providers to solution
against core competencies.
 Iterative Solution Enhancement
 Encourage Innovation
Contracting
 New Contract Terms
 New SLA & OLA Models
 Gain Sharing Clauses
 Flexibility (limit MRCs)
 Modernize while Maintaining
Realization Management
Agile Approach
to Sourcing
Win-win, risk-mitigated agreement(s) with the best-fit
service provider(s) to meet short and long term business
objectives, at the right price.
Transition Management
Sourcing Toward Outcomes with Speed

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Evaluation Criteria
Process Overview
1. Rank most important to least important
(as a % of total = 100%)
2. Detailed criteria within each category
3. Score 0-5
4. Normalize to account for “outliers”
Blank Not Scored
0 Unacceptable / does not meet requirements or non-responsive
1 Weak / could meet requirements with major improvement(s)
2 Marginal / could meet requirements with minor improvement(s)
3 Acceptable / meets requirements
4 Very Good / meets / exceeds requirements
5 Excellent / meets / exceeds requirements with significant value
Category Description
Ability to Meet Anthem Objectives
Agreement Terms
Business Continuity Planning (BCP) Disaster Recovery and Avoidance
Client Reference
Contract Flexibility
Corporate Profile
Cultural Fit
Delivery Locations
Financial
Investments
Human Capital and Staff Development and Retention
Management Commitment
Modernization
Oral Presentation
Risk Management and Governance
Security and Compliance
Service Delivery
Technical and technology Management Competence
Technical Demonstration Workshop
Termination
Transition
Evaluation Categories

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Process & Scope
RFP Towers
Claims EB&C Provider Product TP&E
Incumbent(s) Vendor 1, Vendor 2 Vendor 3, Vendor 4, Vendor 5 Vendor 6, Vendor 7, Vendor 8 Vendor 9, Vendor 10 Vendor 11, Vendor 12
Scope: 149+ SOWs @ $118M+ in Annual Spend
Strategy
Development
RFP Preparation
Supplier Q&A/
Proposal Dev
Due Diligence /
Hackathons / Best & Final
Contract
Negotiations
Proposal
Evaluation
August 2015 September November January 2016 February March April / May
Initiated RFP
Engaged WGroup
Released RFI to
13 Suppliers
Released RFP
Invited 9 Suppliers
Proposals Received
Down Selected to
Tower Finalists
BAFOs Received Award Notice
Process
 True partnership between WGroup and Anthem IT, Procurement, and Legal
 Experienced consultants who each had extensive technology, architecture and sourcing experience
 Clearly articulated outcome approach, allowing providers to innovate the solution
Keys to Success

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Technology Patterns – e.g.,
Data Fabric - API Integration - Micro services – Containers – Automation – Machine Learning - AI
Modernization & Strategic Project List
Modernization
Patterns – e.g.,
Re-platform -
Remediate -
Replace
Workforce
Competencies
Rewards &
Recognition
New Business Model & Requirements
Application Development
& Maintenance Delivery
Governance and Modernization Council
New Operating Model
 Business outcome focus
 Cohesive & integrated IT capability
 Modernization integrated with
delivery
 Continuous feedback

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Key Lessons Learned
 Involvement of IT Executives and Application Leaders
 “Modernization, business as usual” rather than “a Modernization Project”
 Business Model driven modernization Point-of-View provided as a baseline
 Evaluation criteria and criteria weights carefully developed to measure capabilities and fit
 Hackathons – Demonstrating what was being sold
 Pre-RFP Site visits to narrow supplier list
 Pre-Final Selection Supplier Site Visits – during Hackathon period
 Contract Highlights
 Risk-based pool – to fund modernization based on achievement of business outcomes/ROI
 Significant Application Development Productivity Improvements
 Subcontracting incumbent to reduce transition risk for specific applications
 SLAs supporting outcomes and clearly defined roles, responsibilities and SLA hand-offs

14. © 2017 IAOP. All Rights Reserved.
Panel Discussion
Chief Marketing Officer
WGroup
Managing Principal
WGroup
President and CEO
WGroup