Aviva, the insurance giant formerly known as Norwich Union, has undergone a radical transformation over the past two years.
Until 2008, the company had a number of brands across the world, including Hibernian in Ireland and Commercial Union in Poland. That year, it decided to converge under the Aviva moniker, partly because it would allow for global marketing and sponsorship campaigns.
Just as Aviva’s many global divisions had been operating under different names, they had also been operating in different ways. But the standardisation of the brand was accompanied by a standardisation of business practices.
Since his appointment in 2007, CEO Andrew Moss has instigated a ‘One Aviva’ strategy, which seeks to assert standard business processes across the group. Perhaps counter-intuitively, this is designed to allow regional divisions greater autonomy by liberating them from the burden of designing and operating their own individual systems.
Aviva’s European division, which does not include its UK business, has been at the forefront of this strategy – comprising 11 separate markets, it has the most pressing need for standardisation. And the HR department, unusually, has driven the technology component of the standardisation project.
As Aviva Europe’s HR director, Andy Moffat, explained as he spoke to Information Age, the search for a new platform for HR processes led the company to depart from its principal applications supplier (Oracle) in favour of an ‘untested’ software-as-a-service vendor (Workday). This decision was not taken lightly, though. Outlined below are the steps that Moffat and his team took to make sure it was the right one.
Information Age: What was the thinking behind the ‘One Aviva’ unification strategy?
Andy Moffat: It started when Andrew Moss came in as CEO in July 2007. His comment at the time was, “I don’t see how the fifth-largest insurance group in the world, operating in 27 different markets, can be run from a centre in London.”
He had two ideas; one was that we were under-leveraging our size because we were not joined up, and the second was to create a regional model for the business, which pushed decision-making closer to the customer.
How did this apply to the European division?
Until then, our European business had been 11 semi-autonomous business units. When Andrea Moneta arrived as our CEO for Europe in 2008, and he asked “Is this the best way to run our business?”, the answer was clearly “no”.
How did One Aviva impact the HR technology strategy?
We wanted our people in local markets to be focused on their customers, not worrying about what technology they use and whether their processes are efficient. Also, HR in Europe was historically just traditional personnel:
if a manager needed something, they would walk down the corridor and ask the HR department to sort it out. We wanted to migrate towards employee and manager self-service.
Your approach to standardising HR processes across Europe was to standardise HR software. Why was that?
There are two ways to do this. One is to say “These are our processes” and then go to technology providers and say “Can you make your system fit?” But because we had 11 different systems and 11 different versions of the truth, we decided that the quickest way to gain consistency was to work with the in-built processes of whichever tool we chose, unless there is a compelling reason not to.
You eventually selected an entirely new system. Why not expand one of your existing tools?
We asked ourselves “Do we have a single solution in a market that is easily scalable and transferable?” and the answer to that was “no”. If you take the instance of Oracle [Human Resources Management System] that we had in Ireland, for example, the way we had built it was bespoke to Ireland, while our instance of Oracle in France was configured very differently. So we would have had to reconfigure either system to deploy it in other markets, which would have meant starting from scratch.
How did you go about selecting an alternative system?
There were essentially only two options open to us. We use Oracle HRMS in Ireland, France and the UK, which covers 70% of Aviva’s global population, plus our finance system is Oracle. We know Oracle and they know us, so why wouldn’t we look at Oracle as a solution?
At the same time, we asked our colleagues in the group IT department to give us a view on what they saw in the emerging space of HR technology, and they introduced us to [software-as-a-service HR application supplier] Workday.
What attracted you to Workday’s software-as-a-service (SaaS) model?
In the UK, we have modified the core Oracle product to a huge extent to fit our processes, and every time there is an upgrade you have to do a lot of work around it. This is expensive and you need a whole host of in-house Oracle developers to do that.
That experience meant that the ability to make changes was a primary driver. The SaaS concept meant that we wouldn’t be fighting for resources internally: if finance were doing an upgrade on their Oracle general ledger, for example, we wouldn’t have to fight them to get the same developers to update our platform.
How did you pick between the two?
We felt we knew enough about Oracle that we could use a ‘request for tender’ process with them. We mapped out our business requirements in a lot of detail and we gave that to Oracle.
But we knew nothing about Workday at the time, and we wanted to establish what sort of track record they had, in particular whether their global experience mapped onto our footprint. The answer to that question was that they are very strong in North America, but in Europe their footprint didn’t match ours. Oracle’s did, however, so in that respect Workday was coming from behind.
You decided to run a pilot with Workday. Why was that?
In our eyes, Workday was untested in our markets. So we threw what you could construe as an unreasonable challenge at them – a controlled three-month pilot in Romania, the Czech Republic and Hungary, covering about 500 employees.
As it took place across three different markets, the pilot tested Workday’s ability to implement across different markets at the same time. Plus, it needed to be in local language, and those were three languages that were not on Workday’s critical path, so it was a test of their adaptability. We were really testing whether or not this was an organisation that could deliver what they said they could deliver.
What was Oracle’s offer at this time?
During the process, Oracle responded two or three times with different ideas. Their initial suggestion was that we upgrade our Oracle solution. We didn’t like that, because it didn’t give us the full software-as-a-service proposition. Their last suggestion was that we partner with [Oracle services provider] Titan, so fundamentally our contract would not be with Oracle, but with Titan.
I took up references on both Titan and Oracle through reference customers provided by Oracle. It was interesting, because the references said that Titan is a great organisation and a strong business partner but that doing business with Oracle was tough. These were references coming from Oracle.
How did the offers compare on price?
I was under no illusions; Oracle has deep enough pockets to compete financially with Workday. It might have been a loss leader for them, but they could have matched or undercut the price. But I was more interested in whether I would get the right solution.
So what was the final point of differentiation?
It came down to whether the products met our needs. Oracle’s core product has broader functionality today than the Workday product. For example, Workday doesn’t have a recruitment solution as it stands. We had to take all of that into account to determine whether the product that was flexible and gives us 80% of the functionality was better than a complete, enterprise-wide solution.
A prerequisite on the [Workday] pilot was that, even if it proved itself on a technical level, we would not adopt it unless we had the right end-user reaction. We surveyed the pilot user group and the feedback was 86% positive, which for a new technology going into a cynical group isn’t a bad achievement.
Having decided upon Workday, how did you ensure the necessary security procedures were in place?
As an insurer, we are trained in the evaluation of risk. When we bring any provider in, they go through extremely rigorous security control. The group IT department was involved in making sure that, from a technical standpoint, Workday satisfied all of our fairly stringent requirements. We didn’t just take the safe harbour agreement as an acceptance that everything was covered.
Were there any concerns from employees about their data being hosted in the US?
Data protection was clearly an important issue for people, especially in the Czech Republic. Part of the reason we ran the pilot in those countries was the cultural and social needs there.
The way we addressed it was to be open. We told staff that Workday has a safe harbour provision, and explained how access to the data would be limited to a very small number of people. We wrote an agreement between Aviva International Holdings, which is the shareholder entity of the Czech division, and the local management. On an employee level we communicated, communicated, communicated.
Even so, in the Czech Republic we had five people who at first did not sign the release form. We agreed that we would temporarily take their data out of the system, and we had individual discussions with them. We also talked the employee representative, who sat on the supervisory board in the Czech Republic, through it and allowed her to represent them. Eventually, the individuals signed.
How easy was the deployment, such as it has been so far?
We were pleasantly surprised at the ease with which we moved from requirements and concept into execution and fulfilment. We only needed one IT person in each region, on a part-time basis, to oversee the deployment. Based on the experience of our Danube region, we believe that we can deploy fully across Europe by the end of the year.
How has the Workday deployment been received?
The reception has been better than expected, and our managers and employees are becoming more familiar with the tool.
What do you expect some of the longer-term benefits to be?
When Andrea came in as CEO of the region [in 2008], the first question he asked me was, “How many people do we have in Europe, where are they and which function do they perform?” It’s a simple question, but it took three weeks of work, probably hundreds of phone calls and different interpretations of data along the way before eventually I gave him an answer in which I had about 80% confidence.
Now there is a common definition of job roles and a common language, we are already seeing our ability to capture management information improve.
The second benefit will be employees feeling that they own their own data. That shifts the culture towards managers being more empowered to resolve and access information. This means that the headcount of our HR function won’t change massively, but the skills we have will be more strategically involved. In future, I will have more organisational effectiveness resources than I will have transaction processing people. It shifts HR up the value curve, to use the jargon.
And when do you expect to get a return on investment?
Anything I wanted to change as part of this European transformation had to pay back in three years. Our Workday solution will pay back in less time than that.