Cigna Stumbles with a New Customer Service System
We help with your
Critically examine the relationship between Cigna's
Information Systems and its business processes and business strategy. Do you
think Cigna's Information Systems supported its business strategies and
objectives? Explain your answer.
is a global health service company that is dedicated in helping people to
improve their heal, well-being and security. Cigna is considered as one of the
largest health service providers in the world. With this, the company is facing
different problems that are related with the changes in the industry. Unlike
other service industries in the world, the
service industry is experiencing a slowdown in employment and wage growth in
the recent years, because it had become the major source of new jobs in
countries that is being affected by
global financial crisis. As a result, the
health care service of these countries underwent a major changes in the way
that health care is being financed, where care is being provided and how care is
being delivered (Family Economics and Nutrition Review 2001). Consequently,
Cigna, along with its competitors are focusing on the different strategic
actions which can help in order to prevent any negative effects of these
changes. This include the application of
Information Systems (ISs) that can help in order to strategically manage
information which is important in the overall management of the business.
Basically, information is the result of procesing raw data in order to reveal
its meaning (Rob & Coronel 2008, p. 7). Thus, information is the result of
processing, manipulating and organizing data which adds up to the knowledge of
the person that is receiving it. Therefore, in application of IS inside any
company, when the data undergone processes via the logical design of the system,
focusing on the front-end programming lagunge, it can help in order to process
the data into helpful and understandable information. This information can be
used in the decision-making process of the company, primarily focusing on the
customer relationship aspect.
This paper will focus on analyzing the relationship between the IS of Cigna and the company's business processes and strategies.
Information systems can be defined as the amalgam of
hardware, software, procedures and activities (Lyytinen & Hirschheim 1988 cited
in Stahl 2004, p. 1). It is consists of three important aspects - business,
information and technology. These aspects help to show what ISs are, and
primarily, why the theory of reflective responsibility is considered as a
promising apporach in addressing the normative problems that are being raised.
ISs find their meaning in organizations, commonly, businesses; they are based on IT; and they are all develop thei complexity because they are socio-technical systems. The reason why ISs are important in the business is because of the fact that businesses are dependent on information. Markets can be interpreted as the places where supply and demand meet, therefore, they are subject to functioning exchange of information, where in every step of value chain of a business is dependent on information. Furthermore, businesses are also connected to technology in direct manner. Modern ways of production all need technology, thus without technology the way companies do business would not be possible. With this, technology, indeed, plays vital role in the theory of economy, where it is used as a factor to explain growth (Stahl 2004, p. 6).
With this, and the fact that the health care and service industry is facing competition, different companies in the industries are exploring the different opportunities of IT in improving the quality, at the same time, reducing the cost of healthcare and health services (Beaver 2003).
Information Systems in Cigna
ISs play important roles in Cigna's overall business operations and performances. This is because, proper handling of different data and information enables company to focus on the different strategic actions and tasks to be done in Cigna. It is important to take note that Information systems can be computerized and manual.
Cigna began its operation by application and implementation of manual IS, this is the reason why, the company had suffered problems in its IS during the past, which resulted to the failure of the company to compete with other companies in the industries including United Health. With this experience, in 1998, the company, under the leadership of Andrea Anania, started to focus on application of modern information technology in order to reduce cost, improve the relationships among the 3,000 members of of the company's ISs, at the same time, modernize and consolidate the archaic ISs of the company. The company enable to focus on the integration of enrollment, eligibility and claims processing systems. Furthermore, Cigna focuses on two integrated systems for its: HMOs and indemnity products. The goals were to give the customers only one bill and the service representatives only one unified computer view for each customer so that the representatives would be able to deal with any problems of the customers. The said project was planned to be completed within 1999 t0 2002. The problem is that, the project did not able to meet the overall goals and objectives of the company, which resulted to some failure which affected many of the operations of the business, which later on affect all of the stakeholders, particularly the customers of the business. The problem that have been seen by the experts in the said situation is that the company failed to act after knowing about the problem, thus, the company started the project when the company is already experiencing immense pressure.
With this, it is important to focus on Karl Wieck's theory of information system. According to Weick, in order to understand information, the first reaction should be to act. This is because uncertainty means lack of information, this is important because confusion in an organization is one of the great factors which will cause failure. With this, it is vital to ensure that an interpersonal system is in place, even if no one understands what is happening around them. In connection, the theory also introduced a model, the double interact, which contains three important elements: act, response and adjustment (OAK n.d.). Cigna had waited too long before addressing the problem of its old systems. As a matter of fact, some activities and strategies of Cigna in the past shows its lack of interests in updating its old system, including its investing in buying back its own stocks. As a result, the application and implementation of the new system was somewhat too late. James Everett uses the theory of Weicks in order to show the involvement of the organization in the current world of business. He had been able to show that there are sets of revolution and changes in the current business environment which made theorists to try to understand and separates into different parts. With this, according to him, the double interact model can be broken into: ecology, evolution, adaptation, enactment, selection and retention. With this, Everett supported that action should always be the initial reaction of organizations in order to avoid problems (OAK n.d.). In addition, it was already late when the company realize that the competition in the industry is so intensive, that most of its competitors have been able to invest and do the necessary actions in order to implement and improve their new IS, with the application of new technologies, particularly the application of the Internet. With this, the company started to experience the negative impact of their lack of interests, because some of the company's customers already switched to the company's competitors. Aside from that, the company also faced pressures from thousands of doctors nationwide who were suing Cigna and other healthcare companies due to the delays in payments for their patient care. This issue affected in the company in two ways, first, the company have to pay $300,000 fine to the state of Georgia in 2001, at the same time, it had affected the overall image of the company. Again, this problem is caused by the old systems of the company. The old system failed to gather and process data in order to offer efficient and updated information which will help the entire operation of the company.
To make matter worse, in order to finance the improvement of IS, the company have to focus on saving money. This have been done by laying off 3,100 employees which amounted to $33 million. The problem is that, with too much laying off, the Cigna took for granted the service centers, because the new systems are not yet ready for the said step when the company began its layoffs, the company experienced lack of staff that will handle calls of the customers and the new staffs do not have that enough skills to handle their works. It is important to consider that training is important in any implementation of change, particularly regarding the implementation of new technologies, this is because, ignorance or lack of understanding can cause confusion, therefore, it can affect the performance of the staffs, that will consequently, affect the overall operation of the company. This is because of the fact that the customer relation centers are vital in the operation of the business, because it serves as the communication channel between the customers and the company. When the customers feel that the company can offer efficient customer service staffs, it can help to build strong relationship between the customers and the company. With this, the said actions of the company caused more problems, particularly in the customer relationship aspect. It is important to consider the fact that installing automation, just for the sake of having it will guarantees it will be just an ordinary possession for the company, however, grasping an understanding of the ways that it can be applied and used in the business is considered as the real value. Strategic planning in using and applying information systems is considered as the key to gain a competitive advantage (Goessl 2010).
In connection, the main objective of the system in to ensure that the customers will be able to connect to the systems, at the same time, ensure that all of the information to be received and give by the system are updated and consistent. The problem is that the application of new ISs affected the performance of the company. This is because of the lack of time to be spent in the implementation and testing of the system. One of the most common and major risks of the project is failure to start work on time. Very long delays can be caused by procrastination, legal or planing difficulties, shortage of information, lack of funds or other resources, and a host of other reasons. In the case of the Cigna's project, the project was not started on time, therefore, it can hardly be expected to finish on time with expected quality (Lock 2001, p. 21). In connection, because the company no longer have enough time to implement the system due to the pressures being faced from different stakeholders, the new systems were implemented without proper testing. As a result, the company faced lost because the data from the old system were not loaded into the new system properly, which cause lack of information that are needed to process the transactions of the customers. System testing is a vital process that comprises part of the development lifecycle. It is important to take note that companies that fail to implement quality control standards and adequately define the range of tests for an application can destroy brand credibility, sabotage the entire project and create a cost blowout (Winthorp n.d.).
Upon experiencing these problems, the Cigna HealthCare CIO and the IT manager in charge of transformation, both hired by Aniana were replaced. As a result of this actions, the company started to upgrade and introduced 80 systems, which had helped in order to reduce the company's medical claims systems from 15 to 2 and reduce its eligibility systems from 15 to 1. Furthermore, the company also enable to focus on the advantage of the Internet, with this, the company established its online portal, MyCigna.com, which enables the members of the company to do different transactions such as checking status of claims, selecting plans etc. This had helped in order to improve the customer relations of the company, which is one of the most important goals and objectives of the company, at the same time, helped to lessen the effort to be exerted by its customer relation staffs. With the help of computerized ISs, the company had been able to eliminate 3,900 positions, which helped in order to use the saved money to financed some of the important activities and strategies of the company.
Beaver, C 2003, Healthcare Information Systems, CRC Press.
'Changes in the Health Services Industry-Statistical Data Included" 2001, Family Economics and Nutrition Review, Winter.
Goessl, L 2010, Maximizing Information Systems to Gain a Competitive Advantage, http://www.helium.com/items/853154-maximizing-information-systems-to-gain-a-competitive-advantage [Accessed 01 March 2010].
Lock, D 2007, Project Management, Gower Publishing, Ltd.
OAK, Information Theory, http://oak.cats.ohiou.edu/ [Accessed 01 March 2010].
Rob, P, Coronel, C & Crockett, K 2008, Database Systems, Cengage Learning EMEA.
Stahl, B C 2004, Responsible Management of Information Systems, Idea Group Inc. (IGI).
Winthorp, A, The Importance of Software Testing Strategy, http://ezinearticles.com/ [Accessed 01 March 2010].