CIOs are meant to challenge their companies to do things differently, and every now and then they challenge the editorial team at CIO to think differently too.

Unless you’ve been trapped in a server room for the first half of this year you cannot help but be aware of the latest gadget from Apple, the iPad. Here at CIO, even though we’re big fans of the iPhone, we initally considered the iPad a dubious offering. After all, wasn’t it just an oversized iPhone?

“Being a big iPhone is a good thing, it is on a scale that I can actually read without going blind,” says Jeff Smith, group CIO for specialists insurance specialists Torus in the City of London. Smith is one of a select number of CIOs around the world who has unearthed the business case for the iPhone and his infectious enthusiasm for reinventing the business using technology is engaging.

“Torus is a specialist global insurance company, underwriting a diverse range of insurance and reinsurance products,” Smith explains in the modern Cool Britainia-inspired office just down from Leadenhall’s famous markets. “Torus specialises in insuring things that are heterogeneous; with oil refineries one is not the same as the next.”

Diversifying risk
Founded by First Reserve, a private equity company that specialises in investments in the energy industry, Torus was originally an energy insurer that has since vastly diversified and can boast a heritage in obtaining deep levels of information. It saw that a similar information-led approach could work for other insurance lines. The company was put to the test during the recent US Gulf oil spill debacle. Smith explained that Torus was one of the first companies to pay out following the Deepwater Horizon disaster: “We wrote the cheque the next day”.

Torus analyses risk at a granular level (a ‘risk’ being the subject of the insurance policy, such as an oil rig for example) and assesses each risk on its individual merits.

Torus has a capital base of £1bn behind it, which is backed up by what Smith calls “a very analytical approach”.

“Having a deep analytical approach means everything is information-efficient. I call it friction-free. We are running risk analyses of 10,000 buildings through a catastrophe model and using that model to ask: ‘if a hurricane hits, what will it do to our business?’ In this world you are putting real money onto these buildings and you have to pay out fast if something happens. So you have to be a lot more sure that you are putting your money on the right thing.

“In this business you need an awful lot more information than most. We are collecting terabytes of data all the time. We need to know the inner workings of a refinery, a field of rigs, or perhaps a set of directors and officers in minute detail if we are going to insure that company at the right price, or insure it at all,” Smith says of the varied insurance services Torus offers.

“A risk can be the entire package. For example, for a tyre manufacturer, we would cover the tyres, workers, manufacturing, chemicals, supply chain and the fleet of vehicles,” he says.

Although not a publically listed company, Torus set out to act like a Financial Services Authority (FSA) regulated organisation, with a high degree of transparency.

“We took an early decision to act as if we are already a public company and we submit documents to the... ...FSA as a result.”

Torus is backed by two large private equity companies (Corsair Capital as well as First Reserve). As a result the board meetings are critical to steer the company in a direction that all the investors are comfortable with and they take between two and three days. As with most boards the group sat around the table are a mix of executives who, in Smith’s words, “live and breathe the business and are here every day and then there are the non-executive members and the investors,” which means a lot of detail has to be shared, explained and decided upon.

“The board here is a decision-making strategic body, so everything has to be extraordinarily well documented.” All this documentation creates “massive packs that then go into the back of a delivery van”, and it is immediately clear that as a CIO, the risk for Smith is that the packs, which detail every facet of the Torus business could accidentally go missing. This risk was one of the factors behind Smith seeing the business case for the iPad, storing, sharing, distributing and editing critical business documents without having to place your critical business information into a courier system that could be open to accidental loss.

Paper myth
“There is a myth that paper is the best way to digest information. It [paper] is great for linear information – you start at the beginning on page one and read to the end at page 51. But with a lot of business documents people only want to read a section. So put that document into an electronic format and you can jump around the information pack and make it digestible. With tablet computers like the iPad it is the same as looking at paper, but you can move around the document, so it naturally suits board-level usage.

“Paper savings are immaterial, for me it is the ability to give information in a manner that helps them make decisions better. On top of the board documents, you can give them access to the internet, email, RSS and videos, all from the same device, which means you don’t have to stop the discussions.

“At an IT team meeting we plugged in a VGA adapter so we could all see a video presentation. I have also connected the iPads to the underwriting system, so our critical application can be brought into the meetings.”

Smith, of course, uses an iPad himself as part of his daily working routine, which means he is daily pushing the iPad as a tool for the enterprise. “I subscribe to tons of RSS here so that I know everything about insurance and IT. So I should get both salaries,” he jokes. “So I have a virtual newspaper built out of my RSS feeds.”

Although fascinated by the information consumption opportunities the iPad offers C-level executives, it is the way the iPad opens up face-to-face communications that really excites Smith. “You can all sit around a table and have a proper grown up conversation that will affect the business with all the information you need. So you get to the real issues which is a bunch of smart people running the business,” he says.

Introducing the much vaunted Apple gadget into any organisation smacks of sending the IT budget into the stratosphere, with each device costing a minimum of £429, but for Smith the cost of the tablet device was the only major outlay from his capital expenditure budget. His only additional cost was for two pieces of software for £4.99.

A bit of IT was required as we set up a dedicated network just for the iPads to secure them. As to change management costs, I run a little innovation lab with some R&D budget.

“They come with free PDF readers and we already had the wireless networking in-place. A bit of IT was required as we set up a dedicated network just for the iPads to secure them. As to change management costs, I run a little innovation lab with some R&D budget.”

Smith didn’t just launch straight in, and using the innovation lab he ran a trial for a board meeting. “We bought a third of the board’s iPads, chose the most technically literate and most technically illiterate members and told them that for them, paper was banned from the meeting. At lunch time of this first meeting in New Jersey one of the board members sent one of my team out to the Manhattan Apple Store and bought two iPads. The next day another board member had bought one too.

“At the following board meeting only one person didn’t have an iPad and he thanked me for being allowed to take part in the paper trial! It paid for itself on its first day and the trial was cancelled because it was such a success.”

No Apple fan-boy
“Laptops are great devices, but they are clunky and are not a move away from paper. They are not great to have in a board meeting,” Smith says of the quantum leap straight from paper to iPad. Smith is not the archetypal Apple fan-boy, and it is the potential of tablet computing in improving communications that excites him.

“The iPad is flavour of the moment and it makes things so simple to do, so you can make them a part of the decision making process,” he says of the ability to edit documents in groups. “It is an incredibly game-changing device. My attraction is to the tablet. It was only a matter of time that someone said let’s build a big Smartphone and Apple got their first with some fundamentally great design,” he says of Apple taking the operating methods of a Smartphone for a tablet and not the OS of a laptop for example.

“I can’t run Microsoft Word on it, but I can get my email, it is everything I need to do 80 per cent of the time. So when you put that in a board they don’t have to learn applications, they don’t have to flip between Word, PDFs and messages.”

Smith doubts Apple will rule the roost for long. “This won’t be the only game in town and I don’t want to be beholden to one technology vendor.”

Although appreciative of the iPad’s abilities, Smith regrets that it was Apple that got to the market first. “This is the bad part of the story, because Apple are in a luxurious position; Apple can sell the entire stock because of all the hype. They are not like Microsoft which has to make a concerted effort to sell to the commercial market. To get 29 we went to a bunch of stores with friends and bought two per person, as limited by Apple. If you call Apple and ask for 50 for a major business opportunity, Apple will tell you it is just two per person. Apple is a retail media devices company. When HTC comes up with an Android-based device it will be simpler and cheaper for CIOs to adopt tablets.”

Download freedom
Smith has offered the iPad users in his organisation an open policy to download Apps. “If you lock down you are saying that all the thinking of what to do with this device will come from me. How arrogant is that?” he says confidently. “They are free to use the other apps for books and movies. We concentrate on the network security.

“There are 15 hurricane-tracking Apps for the iPad, that is a cool use, so the users will know how it will affect the business.” Smith also admits that one of his main inspirations for wanting to introduce the iPad was, quite simply, because: “I wanted one”.

“There is a lot more I want to do with it as a CIO. I want to run pricing systems. I brought my IT team in from investment banking, so they are good at watching the latest technology.”

But one thing is never far from Smith’s view, technology must improve human-to-human communications.

“Brokers and underwriters meet a lot, their job is about interaction, but interaction is really difficult in a meeting room full of paper or laptops. That’s not how two people talk to each other, but it is if they can pass things back and forth to each other. Big IT systems will not help people be that dynamic. When you sit down and watch how these people react with the iPad, that is when IT can be an enabler. To me there are too many people who want IT for IT's sake.”

As we leave Torus, Smith explains that he has now had to get an iPad for his wife. The adoption of this popular gadget is apace.