CASE

In a span of three short years, between 2000 and 2002, Nationwide Insurance got a new CEO, CIO, and CFO. Jerry Jurgensen, elected by Nationwide's board in 2000 to replace the retiring CEO, was hired for his financial acumen and his ability to transform a business's culture. Michael Keller was named the company's first enterprise wide CIO the following year. He had 25 years of IT experience managing big infrastructure and systems integration projects. In 2002, Robert Rosholt replaced the retiring CFO and joined the others in Nationwide's Columbus, Ohio headquarters, bringing along deep experience in all things financial. The three were old buddies who had worked together at financial giant Bank One.

Now they held the reins at Nationwide and their goal was to take its dozens of business units, selling a diverse set of insurance and financial products, to a higher level. But to get there, Jurgensen needed financial snapshots of how Nationwide was doing at any given moment. And getting them wasn't so easy; in fact, it was almost impossible. "When you're dealing with 14 general ledger platforms and over 50 applications," Rosholt says, "it was enormous work to get the financials out." The problem lay knotted in a tangle of systems and applications, and some 240 sources of financial data flowing in and around Nationwide's business units. The units had always run independently, and that's how financial reporting was handled.

"There was a variety of [financial reporting] languages," Rosholt says, which affected Nationwide's ability to forecast, budget, and report. "It was difficult," says Rosholt, "to ask 'How are we doing?'" Keller's situation was no better. "One of the first questions I was asked when I joined was, How much money do we spend, total, on IT?" Keller recalls. "The answer was, we didn't know. It took weeks to put that answer together." Jurgensen wanted to be able to run Nationwide as if it were one unified enterprise. He wanted, in Rosholt's words, "to do things that are common, and respect the things that are different. And that was a big change." Indeed, the transformation the company embarked upon in early 2004 was daunting-a master data management makeover that would alter how every Nationwide business reported its financials, how accounting personnel did their jobs, how data were governed and by whom, and how the company's information systems would pull all that together. The goal was simple: one platform; one version of the financial truth. Simple goal, but a difficult challenge. Good master data governance can happen only when the various constituencies that own the data sources agree on a common set of definitions, rules, and synchronized procedures, all of which requires a degree of political maneuvering that's not for the faint of heart. Nationwide began its finance transformation program, called Focus, with its eyes wide open. The executive troika of Jurgensen, Rosholt, and Keller had pulled off a similar project at Bank One and thought it knew how to avoid the big mistakes. That, in part, is why Rosholt, who had ultimate say on the project, would not budge on its 24-month time line.

"The most important aspect was sticking to discipline and not wavering," he recalls. And that's why the technology piece was, from the outset, the last question to be addressed. "It wasn't a technology project," insists Lynda Butler, whose position as vice president of performance management was created to oversee Focus (which stands for Faster, Online, Customer-driven, User-friendly, Streamlined). She says that Nationwide approached Focus first and foremost as a business and financial project. Nationwide considers the project, which made its deadline, a success, although everyone emphasizes that there's more work to be done. Says Keller, "There's a foundation to build on where there wasn't one before." "Fourteen general ledgers, 12 reporting tools, 17 financial data repositories and 300,000 spreadsheets were used in finance," says Butler. "That's not real conducive to 'one version of the truth.'" Early in his tenure as CEO, Jurgensen's concerns about the company's financials weren't limited to the timeliness of the data; he was also worried about its integrity and accuracy. For example, because Nationwide had such a variety of businesses, the company carried a lot of risk-some easily visible, some not. "So, if equity markets went down, we were exposed," notes Butler. "But we didn't realize that until the markets actually went down. We needed some enterprise view of the world."

Executives also knew that common data definitions among all the business units would provide comparable financial data for analysis-which was difficult, if not impossible, without those definitions. "We needed consistent data across the organization," Rosholt says. "We were looking for one book of record." CFO Rosholt went back to his Bank One roots and recruited Vikas Gopal, who had proven his mettle on similar projects, to lead the IT team. With no wiggle room on the time line, the team, with Rosholt's encouragement, followed what it refers to as the "80/20" rule. It knew that it wasn't going to get 100 percent of the desired functionality of the new system, so the team decided that if it could get roughly 80 percent of the project up and running in 24 months, it could fix the remaining 20 percent later. "If we went after perfection," says Rosholt, "we'd still be at it." Keeping in mind that no one would get everything he wanted, the Focus team interviewed key stakeholders in Nationwide's business units to understand where their pain points were. "We went back to basics," says Gopal. "We said, 'Let's talk about your financial systems, how they help your decision making.' " In other words, people were introduced to the concept of making trade-offs, which allowed the Focus team to target the system's core functionalities and keep control over the project's scope. It was only after the requirements, definitions, and parameters were mapped out that Gopal's group began to look at technologies. Gopal had two rules to guide them: First, all financial-related systems had to be subscribers to the central book of record. Second, none of the master data in any of the financial applications could ever be out of sync. So the Focus team's final step was to evaluate technologies that would follow and enforce those rules. His team sought out best-of-breed toolsets from vendors such as Kali do and Teradata that would be able to tie into their existing systems. Gopal wasn't overly "worried about [technology] execution" because he had assembled this type of system before and knew that the technology solutions on the market, even in the most vanilla forms, were robust enough for Nationwide's needs. What did worry him was Nationwide's legion of financial employees who didn't relish the idea of changing the way they went about their work. At the beginning of the program, Nationwide formed a "One Finance Family" program that tried to unify all the finance folks around Focus. Executives were also able to identify those employees who were most affected through weekly "change meetings" and provide support. The Focus team had to remain resolute. The overarching theme, that there would be no compromise in data quality and integrity, was repeated early and often, and executives made sure that the gravity of the change was communicated before anyone saw any new software. Finally, in March 2005, with three waves of planned deployments ahead of it, the team started rolling out the new Focus system. By fall 2005, there was light at the end of the tunnel. The team could see the new business processes and financial data governance mechanisms actually being used by Nation-wide employees, and it all was working. "They saw the value they were creating," recalls Butler. "The 'aha' moment came when we finally got a chance to look in the rear-view mirror." The first benefit of the transformation that Rosholt mentions is something that didn't happen. "You go through a project such as this, in a period of extreme regulatory and accounting oversight, and these things can cough up more issues, such as earnings restatements. We've avoided that," he says. "That doesn't mean we're perfect, but that's one thing everyone's amazed at. We went through all this change and nothing coughed up. Our balance sheet was right."

CASE STUDY QUESTIONS

1. The project that Nationwide undertook was quite clearly a success. What made this possible? Discuss three different practices that helped Nation-wide pull this off. Use examples from the case where necessary.

2. The case notes that Nationwide had in mind a simple goal, but faced a difficult challenge. Why was this so difficult?

3. What is the business value derived from the successful completion of this project? What can executives at Nation-wide do now that could not before? Provide some examples.