Q&A: Edward Miller, CEO of AXA Financial Inc.

Edward Miller, CEO of AXA Financial Inc. (formerly The Equitable Companies, Inc.) oversees an operation with revenues of $10.9 billion last year and managed assets of $290 billion. The firm, which changed its name to signal its intention to be known for full-service financial services, includes the insurance operation, Equitable Life, as well as Alliance Capital Management L.P. and Donaldson, Lufkin & Jenrette (DLJ). Miller, who has held his current post for about two years, is also the senior executive for global IT for the French parent, AXA Group.

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InternetWeek: Why the name change?

Miller: We're transforming this company, from an insurance company, where we were selling product, to really a financial-planning company that's focusing on relationships. Naturally [there are issues] of brand and scale. But probably more important than either of those, in this day and age, is good information-based management systems.

InternetWeek: How big is the universe of your customers?

Miller: For AXA on a global basis is 40 million customers. What we're really trying to do here, is to wind up transforming, to the point where we really understand that relationship, and can effectively enhance our knowledge of the customer, to be able to provide better capablities to enhance the service levels that we have, and three to ensure that the customer the option of distribution.

Whether they want to interact with our agents, which are really probably the critical element on the AXA Financial side; but be able to access information, tutorials, and so they're better equipped when they do interact with their financial advisor.

InternetWeek: Where is AXA obtaining its Internet technology?

Miller: We've taken Internet technology, which is really the front-end of our DLJ direct, from a subsidiary of DLJ, to leapfrog what we had in the financial planning area. Bottom line: In the old insurance company, we have of legacy systems. So if we want to move to give clients ability to access through the Internet their unit values of their various policies, we're using that kind of technology to get us there. We're coming out with combined statement capability....We've done it in eight months.

InternetWeek: When did it occur to management, or you personally, that the Internet would be an important channel to reach customers?

Miller: It was obvious to me the day that I came. I headed up the e-commerce effort for the banking industry, the bankers roundtable, and was part of the BITS group. I also come out of a background many years ago, which started the whole process of information-based management for the credit card area. That's where it emanated from, from the credit card arena. The notion of having the kind of diagnostics you need to better understand the customer, their behavior and their needs.

We felt the strength that we had in this company was that field force that we had-a very upscale field force-and we also felt that we're dealing with an entity that is focusing on the affluent and emerging market, not a mass market. And we needed a tremendous leapfrog in terms of technology, and the Internet and the capabilities of the Internet were vehicle for us to do that.

InternetWeek: Are you moving as quickly as your customer want you to move? Can you move this ship as quickly as some of the new technology companies.

Miller: Absolutely. We have major strategic work that we're doing taking the look at e-commerce and the impact it has on all our businesses. We're taking a look at what are the priorities in terms of the elements we need, that are consistent with our strategy. Keep in mind, our focus is really on affluence and emerging affluence. It is very advice-driven, the complexity associated with the value-proposition is reasonably complex when you take a look at financial planning, especially when look at the people were' talking about.

Our strategy is much more how do we use e-commerce and the Internet capability to enhance the implementably of our financial planning strategy.

InternetWeek: But several years ago, didn't the traditional brokerage companies say the same thing? They said whatever may happen with online trading is going to be a commodity business, and we don't have to worry about it. They were absolutely wrong.

Miller: The reason they were wrong. When they answered that question, they answered it in terms, "Is there going be another distribution vehicle that will replace the exiting one that I have with face-to-face contact with the client."

That's one piece of e-commerce, the distribution model. The other piece is can they afford not to take advantage of the opportunity of the Internet, A) to enhance their service capability, B) to be able to provide additional information to the customer, so can be more effective in the context of how they interact with the face-to-face strategy.

InternetWeek: Where then is AXA's asset, from a systems standpoint?

Miller: When you look at those legacy systems and legacy databases and being to extract what we need and wind up making our front end, wind up making our services capability, as good as anybody else's.

The way the world is moving right now-faster than it ever has in the past-and if think you really understood something six months ago, and haven't spent anytime with it since then, you don't.

We have been trained, strategic thinkers, tends to be somewhat linear. What do we need for sustainable competitive advantage; what are the business systems we need to support that strategy; then look at what is the organization you need to support that business system; then get the right people and the right boxes, identify the key initiatives and you create a process, and you implement. In e-commerce world, it's very different: You try this, and if it doesn't work, you throw it away. Or you try this, and out of that come five different options, you don't build it yourself, you're going to wind up with alliances.

InternetWeek: What about cost-justification for these projects? Or is it a leap of faith?

Miller: I don't think it's a leap-of-faith issue at all. You look at the investment in e-commerce and how that investment will enhance your ability to implement your strategy, you got a basis for the returns.

InternetWeek: What about the level of IT spending?

Miller: Anybody in the services business that isn't looking at technology as a major factor, has the wrong leadership....Tremendous amount of money has gone into the whole Y2K scenario. If you have a bullish scenario...make an assumption that the investment that's going into Y2K isn't going to go away, it's going to stay.

InternetWeek: So companies may redirect this spending level to these Internet projects?

Miller: Absolutely. And as people went into the whole Y2K thing, here's the revelation: It's damn legacy systems. And that makes people have a much better appreciation, especially people on the business side. Because the legacy systems are inhibiting factor....It's why middleware is important, and why developing good Customer Relationship Management systems is important, why the capability of the Internet is important.

InternetWeek: How do you retain good people, either business-line or IT people? Miller: We've been reasonably fortunate in the sense that we've been able to attract some good people. Your database programmers are still a challenge.

InternetWeek: But as a practical matter, how do you keep these people?

Miller: In the case of AXA Financial, we'll be able to keep business people because they're on a very senior level and compensated very well. When you get down into applications development, you are going to form alliances. Networking with others.

InternetWeek: How do you organize for e-commerce?

Miller: There are couple of options. Do you take the e-commerce piece and totally integrate that or do you wind up having it as a separate business? In our case, there will be a high degree of integration. And as we start joint-ventures, those will out to the side, linked into us.

InternetWeek: We've seen that-spin-outs in order to get an IPO.

Miller: We did that. DLJdirect. Two very simple reasons: One , having the added money we needed for advertising; and two, to provide a kind of incentive for the people within the organization. No more complex than that.

InternetWeek: Internet Week's survey finds 59 percent are not yet selling over the Internet. Is it too late for those guys?

Miller: Depends on the industry. The insurance industry has been very slow. If someone says to you, "I'm not selling annuity products over the Internet yet, that doesn't mean they don't get it." That means it's a very complex product. Hartford tried to do that, and they closed the business down. Others, if going to sell an annuity product, it has to be a very uncomplex product.

There's a lot of people who fit in the category that have not yet begun to sell on the Internet. That's not necessarily people who don't get it. Those same people could be spending a lot of money on enhancing their service level because of the Internet capability, and enhancing their information capability.

InternetWeek: But what could change to make AXA sell this way?

Miller: Got to understand. I'm not focusing on mass-market clientele. If I was focusing on a mass market clientele, I would be working very diligently right now to make sure had distribution capabilities, e-commerce capablities. First of all, let me say, whatever we do in e-commerce, we should always be prepared to pull the switch.

InternetWeek: But that begs the question: At what point do you have to lead in e-commerce?

Miller: The companies that will ultimately win... are the companies that recognize there going to have attack themselves over the long haul, attack their distribution, and have to in some respects erode the potential revenue they had in existing distribution and move into that new platform to be more competitive.

InternetWeek: What are you worried about, relative to Internet commerce?

Miller: Always questions about security...but I really think we're getting there in terms of standards. The other issue, we are very responsible entities in financial services, we're regulated. All of a sudden, you have the Wild West. We're regulated by the SEC, by the insurance department, etc., etc. I'm worried about the entities that come outside that framework that credibility diminish the credibility [of the industry].