Transcript of a a BriefingsDirect podcast with AIG and HP on the challenges and solutions involved in managing a global franchise.

1. HP Tools Aid Insurance Leader AIG in Driving Business
Transformation and Service Performance Through a Center
of Excellence, Says AIG's Abe Naguib
Transcript of a a BriefingsDirect podcast with AIG and HP on the challenges and solutions
involved in managing a global franchise.
Listen to the podcast. Find it on iTunes. Sponsor: HP
Dana Gardner: Hello, and welcome to the next edition of the HP Discover Performance
Podcast Series. I'm Dana Gardner, Principal Analyst at Interarbor Solutions, your moderator for
this ongoing discussion of IT innovation and how it’s making an impact on people’s lives.
Once again, we're focusing on how IT leaders are improving performance of
their services to deliver better experiences and payoffs for businesses and end-
users alike. [Disclosure: HP is a sponsor of BriefingsDirect podcasts.]
We're now joined by our co-host and moderator, Chief Software Evangelist at
HP, Paul Muller. Welcome, Paul, how are you?
Paul Muller: I'm great Dana. How are you doing?
Gardner: I'm excellent. Where are you coming from today?
Muller: I'm coming from sunny San Francisco. It’s unseasonably warmer this year, and I'm
really looking forward to today’s discussions. It should be fun.
Gardner: We have a fascinating show. We're going to be learning about global insurance leader
American International Group, or AIG, and how their Global Performance Architecture Group
has leveraged a performance center of excellence (COE) to help drive business transformation.
So let me introduce our guest from AIG. We're here with Abe Naguib. He is the Senior Director
of AIG’s Global Performance Architecture Group. Welcome back, Abe.
Abe Naguib: Hi, Dana. Hi, Paul. How are you?
Gardner: We're excellent. We've talked before, Abe, and I'm really delighted to have you back. I
want to start at a high level. Many organizations are now focusing more on the user experience
and the business benefits and less on pure technology, and for many, it's a challenge. From a very
high level, how do you perceive the best way to go about a cultural shift, or an organizational
shift, from a technology focus more towards this end-user experience focus?

2. Naguib: Well, Paul and Dana, there are several paradigms involved from the COO and CFO’s
push on innovation and efficiency. A lot of the tooling that we use, a lot of the
products we use help to fully diversify and resolve some of the challenges we
have. That’s to keep change running.
The CIO has to keep his eye forward to periodically change tracks, ensuring
that the customers are getting the best value for their money. That’s a tall
order and, he has to predict benefit, gauge value, maintain integrity, socialize,
and evolve the strategy of business ideas on how technology should run.
We have to manage quite a few challenges from the demand of operating a global franchise. Our
COE looks at various levels of optimization and one key target is customer service, and factors
that drive the value chain.
That’s aligning DevOps to business, reducing data-center sprawl, validating and making sense of
vendors, products, and services, increasing the return on investment (ROI) and total cost of
ownership (TCO) of emerging technologies, economy of scale, improving services and hybrid
cloud systems, as we isolate and identify the cascading impacts on systems. These efforts help to
derive value across the chain and eventually help improve customer value.
Gardner: Paul Muller, does this jibe with what you're seeing in the field? Do you see an
emphasis that’s more on this sort of process level, when it comes to IT with of course more input
from folks like the COO and the chief financial officer?
Level of initiatives
Muller: As I was listening to Abe's description I was thinking that you really can tell the
culture of an organization by the level of initiatives and thinking that it has. In
fact, you can't change one without changing the other. What I've just described is a
very high level of cultural maturity.
We do see it, but we see it in maybe 10 to 15 percent of organization that have
gone through the early stages of understanding the performance and quality of
applications, optimizing it for cost and performance, but then moving through to
the next stage, reevaluating the entire chain, and looking to take a broader perspective with lots
of user experience. So it's not unique, but it's certainly used among the more mature in terms of
observational thinking.
Gardner: For the benefit of our audience, Abe, tell us a little bit about AIG, its breadth, and
particularly the business requirements that your Global Performance Architecture Group is
tasked with meeting?
Naguib: Sure, Dana. AIG is a leading international insurance organization, across 130 countries.
AIG’s companies serving commercial, institutional, individual customers, through one of the

3. world’s most extensive property/casualty networks, are leading providers of life insurance and
retirement services in the US.
Among the brand pillars that we focused on are integrity, innovation, and market agility across
the variety of products that we offer, as well as customer service.
Gardner: And how about the Global Performance Architecture Group? How do you fit into that?
Naguib: With AIG’s mantra of "better, faster, cheaper," my organization’s people, strategy, and
comprehensive tools help us to bridge these gaps that a global firm faces today. There
are many technology objectives across different organizations that we align, and we
utilize various HP solutions to drive our objectives, which is getting the various
IT delivery pistons firing in the same direction and at the right time.
These include performance, application lifecycle management (ALM), and business
service management (BSM), as well as project and portfolio management (PPM). Over
time our Global Performance organization has evolved, and our senior manager realized our
strategic benefit and capability to reduce cost, risk, and mitigate production and risk.
Our role eventually moved out of quality assurance's QA’s functional testing area to focus on
emphasizing application performance, architecture design patterns, emerging technologies,
infrastructure and consolidation strategies, and risk mitigation, as well increasing ROI and
economy of scale. With the right people, process, and tools, our organization enabled IT
transparency and application tuning, reduced infrastructure consumption, and accelerated
resolution of any system performances in dev and production.
The key is bringing together our business-critical and strategic drivers across IT’s various
segments, fosters alignment, agility, and eventually unity. Now, our leaders seek our guidance to
help tune IT at some degree of financial performance to unlock optimal business value.
Culture of IT
Gardner: What's interesting to me, Paul, about what Abe just said is the evolution of this from
test and dev in QA to a broader set of first IT, then operations, and then ultimately even through
that culture of IT generally. Is that a pattern you're seeing that the people in QA are in the sense
breaking out of just an application performance level and moving more into what we could call
IT performance level?
Muller: As I was listening to Abe talk through that, there were a couple of keywords that jumped
out that are indicators of maturity. One of them is the recognition that, rather than being a group-
sized task, things like application, quality performance, and user experience actually are a
discipline that can be leveraged consistently across multiple organizational units and, whether
you centralize it or make it uniform across the organization is an important part of what you just
described.

4. Maturity of operational and strategic alignment is something that requires a significant
investment on business’s and IT’s behalf to prove early returns by doing a good job on some of
the smaller projects. This shows a proven return on investment before the organization is
typically going to be willing to invest in creating a centralized and an uniform architecture group.
Gardner: Abe, do you have some response to that?
Naguib: Yes, more-and-more, in the last six or seven years, there's less focus on just basic
performance optimization. The focus is now on business strategy impact on infrastructure
CAPEX, and OPEX. Correlating business use cases to impact on infrastructure is the golden
grail.
Once you start communicating to CIOs the impact of a system and the cost of hosting, licensing,
headcount, service sprawl, branding, and services that depend on each other, we're more aligning
DevOps with business.
Muller: You can compare the discussion that I just had with a conversation I had not three weeks
ago with a financial institution in another part of the world. I asked who is responsible for your
end-to-end business process -- in this case I think it was mortgage origination -- and the entire
room looked at each other, laughed, and said "We don't know."
So you've really got this massive gap in terms of not just IT process maturity, but you also have
business-process maturity, and it's very challenging, in my experience, to have one without
having the other.
Gardner: I think we have to recognize too that most businesses now realize that software is such
an integral part of their business success. Being adept at software, whether it's writing it,
customizing it, implementation and integration, or just overall lifecycle has become kind of the
lifeblood of business, not just an element of IT. Do you sense that, Abe, that software is given
more clout in your organization?
Naguib: Absolutely Dana. I truly believe that. I've been kind of an internal evangelist on this, but
I always say that software drives the hardware. Whether I communicate with the enterprise
architects, the dev teams, the infrastructure teams, software frankly does drive the hardware.
That's really the key point here. If you start managing your root cost and performance from a
software perspective and then work your way out, you’ve got the key to unlocking everything
from efficiencies to optimizing your ROI and to addressing TCO over time. It's all business
driven. Know your use cases. Know how it impacts your software, which impacts your
infrastructure.

5. Converged infrastructure
Gardner: Of course, these days we’re hearing more about software-defined networking,
software-defined data centers, and converged infrastructure. It really does start to come together,
so that you can control, manage, and have a data-driven approach to IT, and that fits into ITIL
and some of the other methodologies. It really does seem to be kind of a golden age for how IT
can improve as performance, as productivity, and of course as a key element to the overall
business. Is that what you’re finding too, Abe?
Naguib: Absolutely. It's targeting software performance, and software-as-a-service (SaaS)
applications that depend on each other.
More and more, it's a domino effect. If you don't identify the root cause, isolate it, and resolve it,
the impact does have a cascading effect, on optimization, delivery, and even cost, as we’ve seen
repeatedly in the last couple of years. That’s how we communicate to our C-level community.
Gardner: Of course we have to recognize it. Just being performant, optimized, and productive
for its own sake isn’t good enough in this economy. We have to show real benefits, and you have
to measure those benefits. Maybe you have some way to translate how this actually does benefit
your customers. Any metrics of success you can share with us, Abe?
Naguib: Yes, during our initial requirements-gathering phase with our business leaders, we start
defining appropriate test-modeling strategy, including volumetrics, and managing and
understanding the deployment pattern with subscriber demographics and user roles. We start
aligning DevOps organizations with business targets which improves delivery expectations, ROI,
TCO, and capacity models.
Then, before production, our Application Performance Engineering (APE) team identifies weak
spots to provide the production team with a reusable script setting thresholds on exact hotspots in
a system, so that eventually in production, they can take appropriate productive measures. Now,
this is value add.
Gardner: Paul, do you have any thoughts in terms of how that relates to the larger software
field, the larger enterprise performance field?
Muller: As we’re seeing across the planet at the moment, there's a recognition that to bring great
software and information is really a function of getting Layers 1 through 7 in the technology
stack working, but it's also about getting Layer 8 working. Layer 8, in this case, is the people.
Unfortunately, being technologists, we often forget about the people in this process.
What Abe just described is a great representation of the importance of getting not just a
functional part of IT, in this case quality and performance working well, but it's about

6. recognizing the software will one day be delivered to operational staff to internally monitor and
manage it in a production setting.
The big transformation taking place right now is that our organization is connecting different
silos of IT delivery, in particular development, quality, and operations, to help them accelerate
the release of quality applications, and to automate things like threshold setting, and optimize
monitoring of metrics ahead of time. Rather than discovering that an application might fail to
perform in a production setting, where you've got users screaming at you, you get all of that
work done ahead of time.
Sharing and trust
You create a culture of sharing and trust between development, quality, and operations that
frankly doesn’t exist in a lot of process where the relationship between development and
operations is pretty strained.
Gardner: Abe, how do you measure this? We recognized the importance of the metrics, but is
there a new coin of the realm in terms of measurement? How do you put this into a standardized
format that you’re going to take to your CFO and your COO and say here’s what's really
happening?
Naguib: That's a good question. Tying into what Paul was saying, nobody cared about whether
we improved performance by three seconds or two seconds. You care at the front end, when you
hear users grumbling. The bottom line is how the application behaves, translating that into
business impact as well as IT impact.
Business impact is what are the dollar values to make key use cases and transactions that don't
scale. Again, software drives the hardware. If an application consumes more hardware, the
hardware is cheap now-a-days, but licenses aren’t. You have database and you have middleware
products running in that environment, whether it's on-premise or in the cloud.
The point is that impact should be measured, and that's how we started communicating results
through our organization. That's when we started seeing C-level officers tuning in and realizing
the impact of performance of both to the bottom line, even to the top line.
Gardner: It strikes me, Abe, that this is going to set you up to be in a better position to move to
cloud models, consume more SaaS services, as you mentioned earlier, and to become more of a
hybrid services delivery shop or have that capability. Does that make sense? Do you feel more
prepared for what this next level of compute architecture you seem to be heading toward as a
result of the investments you've made?
Naguib: Absolutely Dana. Our role is to provide more insight earlier and quicker to the right
people at the right time.

7. Leveraging HP’s partnership and solutions helped us to address technologies, whether Web 2.0,
client-server, legacy systems, Web, cloud-based, or hybrid models. We were able to leverage
consistent dashboards across different IT solutions internally, then target weak spots and help
drive optimization, whether on premise or cloud.
Gardner: Paul Muller, thoughts about how this is working more generally in the market, how
people who get a grasp on global performance architecture issues like AIG are then in a better
position to leverage and exploit the newer and far more productive types of computing models?
Muller: In the enterprise today, it's all about getting your ideas out of your head and making
them a reality. As Abe just described, most of the best ideas today that are on their way into
business processes you can ultimately turn into software. So success is really all about having the
best applications and information possible.
Understand maturity
The challenge is understanding how the technology, the business process and the benefits come
together and then orchestrating that the delivery of that benefit to your organization. It's not
something that can be done without a deliberate focus on process. Again, the challenge is always
understanding your organization's maturity, not just from an IT standpoint, but importantly from
a broader standpoint.
Naguib: What's the common driver for all? Money talks. Translating things into a dollar value
started to bring groups together to understand what we can do better to improve our process.
Gardner: Abe, it strikes me that you guys are really fulfilling this value epicenter role there and
expanding the value of that role outside the four walls of IT into the larger organization. Tell me
how HP is joining you in a partnership to do that? What is it that you're bringing to the table to
improve that value for the epicenter of value benefit?
Naguib: Dana, what we're seeing more is that it's not just internal dev and ops that we're aligning
with, or even our business service level expectations. It's also partnerships with key vendors that
have opened up the roadmap to align our technologies, requirements, and our challenges into
those solutions.
The gains we make are simple. They can be boiled down into three key benefits: savings,
performance, and business agility. Leveraging HP's ALM solutions helps us drive IT and
business transformation and unlock resources and efficiencies. That helps streamline delivery
and an increased reliability of our mission critical systems.
My favorite has always been HP's LoadRunner & Performance Center. It’s basically our Swiss
Army Knife to support diverse platform technologies and align business use cases to the impact
on IT and infrastructure via SiteScope, HP SiteScope.

8. We're able to deep dive into the diagnostics, if needed. And the best part is, after we've dealt with
tuning, we can help activate post-production monitoring using the same script, understanding
where the weak spots are.
So the tools are there. The best part is integrated, and actually work together very well.
Gardner: It really sounds like you've grabbed onto this system-of-record concept for IT, almost
enterprise resource planning (ERP) for IT. Is that fair?
Naguib: That's a good way to put it.
Muller: One of the questions I get a lot from organizations is how we measure and reflect the
benefit. What hard data have you managed to get?
Three-month study
Naguib: IDC came in and did an extensive three-month study, and it was interesting what they
have found. We've realized a saving of more than $11 million annually for the past five years by
increasing our economy of scale. Scale on a system allows more applications on the same host.
It's an efficiency from both hardware and software. They also found that our using solutions from
HP increased staff productivity by over $300,000 a year. Instead of fighting fires, we're actually
now focusing on innovation, and improving business reliability by over $600,000 a year.
So all that together shows a recoup, a five-year ROI, about 577 percent. I was very excited about
that study. They also showed that we resolved mean time resolution over 70 percent through
production debugging, root cause, and resolution efforts.
So what we found, and technologists would agree with me, is that today, with hardware being
cheaper than software, there is a hidden cost associated with hosting an application. The bottom
line, if we don’t test and tune our applications holistically, either the architecture, code,
infrastructure, and shared services, these performance issues can quickly degrade quality of
service, uptime, and eventually IT value.
Muller: I have a saying, which is that quality costs money but bad quality costs more. There you
go.
Gardner: Abe, any recommendations that you might have for other organizations that are
thinking of moving in this direction and that want to get more mature, as Paul would say. What
are some good things to keep in mind as you start down this path?
Naguib: Besides software drives the hardware -- and I can't stress that enough -- are all the ways
to understand business impact and translate whatever you're testing into the business model.

9. What happens to the scenarios such as outages? What happens when things are delayed? What is
the impact on business operability, productivity, liability, customer branding. There are so many
details that stem from performance. We used to be dealing with the "Google factor" of two-
second response time, but now, we're getting more like millisecond response, because there are
so many interdependencies between our systems and services.
Another fact is that a lot of products come into our doors on a daily basis. Modern technologies
come in with a lot of promises and a lot of commitments.
Identify what works
So it's being able to weed through the chaff, identify what works, how the interdependencies
work, and then, being able to partner with vendors of those solutions and services. Having tools
that add transparency into their products and align with our environment helps bring things
together more. Treating IT like a business by translating the impact into dollar value, helps to get
lined up and responsive.
Gardner: Very good. Last word to you, Paul. Any thoughts about getting started? Are there
principles that you are seeing in common, threads or themes for organizations, as they begin to
get the maturity model in place and extend quality and process performance assurance
improvements even more generally into their business?
Muller: It might be a little controversial here, but the first step is look in the mirror and
understand your organization and its level of maturity. You really need to assess that very self-
critically before you start. Otherwise, you're going to burn a lot of capital, a lot of time, and a lot
of credibility trying to make a change to an organization from state A to state B. If you don’t
understand the level of maturity of your present state before you start working on the desired
state, you can waste a lot of time and money. It's best to look in the mirror.
The second step is to make sure that, before you even begin that process, you create that
alignment and that desired state in the construct of the business. Make sure that your maturity
aligns to the business's maturity and their goal. I just described the ability to measure the
business impact in terms of revenue of IT services. Many companies can’t even do something as
fundamental as that. It can be really hard to drive alignment, unless you’ve got business-IT
alignment ahead of time.
I have said this so many times. The technology is a manageable problem, Layers 1 through 7,
including management software to a certain degree, have solved problems the most time. Solving
the problem of Layer 8 is tough. You can reboot the server, but you can’t reboot a person.
I always recommend bringing along some sort of management of organizational change function.
In our case, we actually have a number of trained organizational psychologists working for us
who understand what it takes to get several hundred, sometimes several thousand, people to

10. change the way they behave, and that’s really important. You’ve got to bring the people along
with it.
Dana Garner: Well we have to take a hint from you, Paul. Maybe our next topic will be The
Psychology of IT, but we won’t be able to get to that today. I am afraid we'll have to leave it
there and I have to thank our co-host Paul Muller, the Chief Software Evangelist at HP. Thanks
so much for joining us.
Muller: Always a pleasure.
Dana Garner: And like to thank our supporter for this series, HP Software, and remind our
audience to carry on the dialogue with Paul and other experts there at HP through the Discover
Performance Group on LinkedIn.
You can gain more insights and information on the best of IT performance management at
www.hp.com/go/discoverperformance. And you can always access this in other episodes of our
HP Discover Performance podcast series at hp.com and on iTunes under BriefingsDirect.
Of course, we also extend a big thank you to our guest. Abe Naguib. He's the Senior Director of
AIG’s Global Performance Architecture Group. Thanks so much, Abe.
Naguib: Thank you, Dana, thank you, Paul. I really appreciate the opportunity.
Gardner: Again, a last thank you to our audience for joining us for this special HP Discover
Performance podcast discussion. I'm Dana Gardner, Principal Analyst at Interarbor Solutions,
your co-host for this ongoing series of HP-sponsored business success story. Thanks again for
joining and come back next time.
Listen to the podcast. Find it on iTunes. Sponsor: HP
Transcript of a a BriefingsDirect podcast with AIG and HP on the challenges and solutions
involved in managing a global franchise. Copyright Interarbor Solutions, LLC, 2005-2012. All
rights reserved.
You may also be interested in:
• HP Discover Performance Podcast: McKesson Redirects IT to Become a Services
Provider That Delivers Fuller Business Solutions
• Investing Well in IT With Emphasis on KPIs Separates Business Leaders from Business
Laggards, Survey Results Show
• Expert Chat with HP on How Better Understanding Security Makes it an Enabler, Rather
than Inhibitor, of Cloud Adoption
• Expert Chat with HP on How IT Can Enable Cloud While Maintaining Control and
Governance

11. • Expert Chat on How HP Ecosystem Provides Holistic Support for VMware Virtualized
IT Environments