CIO: How did you become convinced that IT could contribute strategically?
Tom Bowser: The epiphany kind of occurred back in 1997. Our company had problems well beyond our IT problems and because of delays and cost overruns, IT was looked on as a burden rather than a solution. The thing that has changed since then is that we have abandoned the philosophy of "We have to build everything ourselves". We have become happy to be wise purchasers of software from other companies. It was a philosophical hurdle for our IT shop and for our company, but it's a hurdle that we're glad we passed. [Today] our partners have financial incentives that are aligned with developing software to serve our [industry's] market needs and demands. Our IT team can integrate and configure the software to meet our [regional] market demands and stay focused on the needs of our customer base.
We're not big enough to make gambles, but we are smart enough and nimble enough to monitor what's going on and to adopt new technologies that work for us. We're proud of our track record for a company our size.
Last year Deloitte & Touche found that 25 percent of companies surveyed that had outsourced IT functions planned to bring those functions back in-house. Why do you view outsourcing so positively?
We think we have more control over our day-to-day destiny with those partnerships than we had with the do-it-yourself mentality. We collaborate with other Blues plans as well as our vendors to shape development requirements for the software they develop.
"Partnerships" connotes a strong business tie. Can you describe your relationships with your vendors? One is with the TriZetto Group, which has built our data warehouse. That [system] helps us retain existing groups and attract new ones. It also helps us set rates in the most practical way possible as we can take a longer view of trends across our business rather than in a [single] group.
Our company recently chaired an organization of Blue Cross Blue Shield plans called the Blues Strategy Group on TriZetto, or "BSGT". This group connects via conference calls once a month and meets face-to-face with TriZetto twice a year. The purpose of the group is strategic collaboration among the 14 Blues plans that utilize the TriZetto software. The group discusses items with respect to emerging market demands, software quality and design, and Blue specific needs.
In a second collaboration, we have [deployed] an electronic enrolment module, and we are now introducing an electronic billing module. Both of these things reduce cost for us as well as our customers but also represent substantial retention. Once we have our customers wired to us, we think it's less likely that they will leave us.
How does your CIO, Kevin Sparks, support your business strategy?
We have a very positive, very collaborative, very high energy kind of relationship. Kevin has that unique ability, which CEOs like, to talk about technology in very understandable terms, and in terms that help us know very quickly what the capital investment in IT will do in terms of reducing expense, growing service or enhancing [our] products. We have, like most companies our size, an investment information technology committee. Kevin is the technical chair of that and helps decide who gets what piece of the technology investment pie.
In the next 10 years, you plan to employ more data mining, as you have begun to test with the wellness program. What other roles does IT play in BCBSKC's future?
Statistics show that 50 percent of health care costs are affected by lifestyle choices. Do people buckle up? Do they exercise? Do they eat right? Do they drink too much? We think there's pay dirt in working with employers to create incentives for people to become more responsible for their own health. As time progresses, there may be other payroll deduction techniques or other financial incentives to get people to do what they know is instinctively right [using] a monthly reminder in their paycheque.
The role of IT in this is infinite. Being able to measure progress in a group across one of these disease problem areas like reduction in smoking, reduction in obesity levels; all of that comes through our data warehouse and through collaboration with our [customers]. It also enhances the reputation we have as a local service, hometown community partner, which our competitors can't match and which has IT at its foundation.
As a local, not-for-profit business, we do not answer to shareholders far removed from our customers. We have much more flexibility in serving our customers and determining our destiny because we don't answer to a larger corporate entity and we are not regionalizing or nationalizing our service standards. IT focuses on what our customers want or need in the greater Kansas City metropolitan area. This helps us differentiate our service and maintain our position as the leading health insurer in Kansas City.
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