As finance keeps its watchful eye on spending and digital demands increase, it falls to the CIO to push transformation forward without blowing the budget.
Sales and marketing need faster access to data, sophisticated analytics insights and better CX platforms. HR could use new automation tools. An ERP upgrade would be nice. And everyone wants more cloud.
“All industries are depending more and more on technology leaders to deliver more,” Monica Caldas, EVP and global CIO, said Wednesday during a virtual event hosted by CIO Dive.
“While we have a turbulent economy, a macro set of events that create this cocktail of complexity, IT spending remains strong because there’s so much demand and need and opportunities and possibilities that technology can deliver,” said Caldas.
Maintaining core IT remains central to the role of the CIO, a position Caldas rose to in January, after less than a year serving as deputy CIO at the 110-year-old property and casualty insurer. But, as technology becomes more deeply and broadly embedded in the business, the CIO’s portfolio grows in size and complexity, reaching far beyond backend operations.
“There are many tables that technology sits at, and we need to move beyond making suggestions,” said Caldas. “Instead, we need to use our perspective, which is really wide, and we need to use that to offer guidance, advocate for change and champion transformation.”
Adding offense to IT’s defensive playbook
A key leverage point of influence for tech strategy is the CEO. Communicating strategy in language that emphasizes business objectives remains a holy grail for tech leaders.
“My conversation with my CEO has really centered around achieving what I call equilibrium between defensive and offensive priorities, especially in the economy that we’re in,” Caldas said.
Investments that enable faster decision-making and accelerate innovation are examples of offense, according to Caldas. Scaling digital transformation to encompass more than one business goal is also central to the playbook.
“A couple of years ago, we talked a lot about digital transformation in terms of the experience, the mobile app and how you reached your customers that way,” Caldas said. “Today we know that digital transformation at scale is about modernizing every core corner of our business operation.”
The defensive playbook extends across cybersecurity and operational resilience and the traditional IT function of maintaining stable, secure platforms.
“We talk about technical debt, how to prioritize modernizing our legacy systems, how we deploy new technologies and how we select third-party suppliers — that’s the defensive equilibrium piece,” Caldas said.
Cloud cost controls
Modernization doesn’t translate solely to cloud, but migration is a critical component.
Liberty Mutual began its cloud journey a decade ago, when it deployed its first resources to AWS. The company is far along on its journey and now has roughly 70% of its IT assets in the cloud, according to Caldas.
While some on-prem legacy systems remain, Liberty Mutual is well beyond the early stages of modernization, Caldas said.
Reaping the benefits of cloud means making storage and compute available across the enterprise and loosening IT’s grip on spending. A business-as-usual approach to budgeting wasn’t feasible.
A new way of thinking about cost control was required.
“When you're migrating and you're not doing any kind of process simplification, rationalization of your systems, and all you're doing is lifting and shifting, I think you're going to find yourself in a tough spot,” Caldas said.
Costs increased with migration, Caldas said. But the company saw savings emerge on the other side.
“When we talked about cloud, we talked about a combination of lifting and shifting, but also rationalizing,” said Caldas. “We actually have a rationalization strategy where we're shutting down 100 to 200 systems a year. And we're keeping that close and monitoring it to make sure that we actually do the stewardship part.”
Through a variety of FinOps practices, Liberty Mutual has shaved an estimated 20% off projected cloud spending. The company is aiming to up that to 25% next year, Angela “AJ” Wasserman, product owner of cloud financial operations at Liberty Mutual, told CIO Dive in November.
Cost optimization creates a virtuous circle for IT, advancing business goals while creating additional room for innovation.
“It creates a flywheel effect in the run part of the budget, which creates space for us to use that additional capital for differentiation capabilities to make and deliver more value for our business,” Caldas said.
Editor's note: CIO Dive hosted this discussion live on March 15. Register here to watch a replay of the full event on demand.