Anthem Saves Millions of Dollars by Analyzing App Portfolios
Anthem is perhaps as well known for its acquisitive nature as its health insurance offerings. Like many in its industry, Anthem grows partially through consolidation, purchasing both national and regional players to increase its marketshare. And each time the company buys another business, its IT department must audit, assess, discard, and integrate thousands of duplicate, complementary, or unnecessary applications.
"We have purchased company after company over the past 15 years. With each new company, a new environment of technology comes with it," said Ben Baum, senior manager of technology at Anthem, in an interview.
All that unneeded software adds up to millions of dollars in licenses, maintenance, upgrades – and increased potential for security breaches. Indeed, Anthem did suffer a breach in 2014, a breach largely blamed on phishing and social engineering.
Too often, IT departments or business units didn't know which software they owned, Baum said. Business departments sometimes downloaded their own applications or cloud-based services, and Anthem's list of "permanent security exceptions" was growing too unwieldy for the IT department's comfort level, Baum said. But without a centralized, real-time repository to track the ever-growing portfolio, the health insurance provider could not determine what it owned, never mind figure out what it didn't need, he said.
As a result, IT was over-tasked on support, budgets were unnecessarily stretched, security was taxed, and integration issues never seemed to end. For example, at one point Anthem used seven different applications for paying claims, he said. Some departments tried to monitor their app inventories but this typically meant one individual occasionally updating a spreadsheet for his or her department, said Baum.
"We needed to make informed decisions to limit the amount of IT stuff we have in the future," he said.
To accomplish this, Anthem created a group dedicated with the "rationalization of apps," said Baum. The company discovered a local developer, barometerIT – recently acquired by Changepoint – and worked closely with the young company on its creation of a SaaS-based portfolio analysis tool, he said. The application helps companies track IT spend across the entire enterprise, their technology priorities, and how they can leverage those assets against business goals, Changepoint President Mark Upson told Enterprise Technology. It also allows organizations to catalog internal expertise, he said.
"We jokingly call it LinkedIn for applications," said Upson. "If a company is spending $30 million on IT and they've got a lot of new things they want to go do, they want to repurpose that $30 million if they could because a lot of that is going to sustaining apps, not building apps. They can free up, say, $5 million for renovation. Changing from a sustaining dollar to an innovation dollar is a driver."
Anthem has saved much more than that already and it has more ambitious plans for the future. Over the next three years, the rationalization team will review several hundred applications. Each month, the group submits a report to senior leadership on the number of apps leaving and entering the company, Baum said. Whereas previously many more apps came in, today that number is flat and in the future, the volume of apps will substantially drop – and savings will grow, he said.
"We've seen tens of millions of dollars in savings. Next year we expect to be in hundreds of millions of dollars," Baum said. "We document all these pieces of technology Anthem has and put them in a single repository. We have documented about 840 or so root applications, 1,240 root systems – 2.5 million pieces of information."
In addition to cutting costs simply by removing apps, Anthem uses barometerIT to monitor billing and could do the same for service level agreements (SLAs). The company has found "hundreds of dollars" of inaccurate billing. And the tool improves the insurer's security, in part by helping Anthem locate and remove unapproved programs, by ensuring all software is patched and current, and by abbreviating the list of applications with permanent exceptions due to cross-over, said Baum.
One less measurable benefit empowers IT staff to share their technical abilities so they can find projects that interest them, especially in large organizations, said Upson.
"To be proactive you have to have a handle on what you have available, what skills you have available in an organization. Most companies do not have a skills directory on their employees unless they're a consulting firm," he said. "Employees want to know their skills are valued."