HDFC Standard Life Insurance boosts insight into market trends and customer behavior with IBM and SAP

Published on 08-Jan-2013

"IBM Global Business Services has helped us to build an SAP solution that truly picks up on the pulse of our customers and the industry." - Sukalyan Fouzdarat, Associate Vice President of Business Systems and Technology, HDFC Standard Life Insurance

Customer:
HDFC Standard Life Insurance

Industry:
Insurance

Deployment country:
India

Solution:
Business Integration, Enterprise Resource Planning, High Availability , Information Integration, Information Management Foundation, Transforming Business

Overview

HDFC Standard Life Insurance Co. Ltd. is one of India’s leading private life insurance companies, operating a network of 481 branches and employing some 13,827 people. The company was established in 2000 as a joint venture between the Housing Development Finance Corp. Ltd. of India and Standard Life plc, a financial services provider based in the United Kingdom.

Business need:
For HDFC Standard Life Insurance to maintain its leading edge in a competitive and fast-growing market, it must work to continually sharpen its value proposition and increase its relevance for customers by offering products and services that are targeted to individual customer needs. As the company amassed a wealth of operational and customer information over the years, it found it increasingly difficult to perform timely, accurate analysis of this data, and make it available to key decision makers in the business.

Solution:
HDFC Standard Life Insurance joined forces with IBM Global Business Services to extend its SAP application landscape, deploying a platform for business analytics and reporting, based on SAP NetWeaver Business Warehouse, SAP BusinessObjects Business Intelligence and SAP Business Planning and Consolidation.

Benefits:
Improved quality of MIS reports by 60 to 70 percent, and reduced the rate of reporting errors by 80 percent. Slashed time taken to generate month-end reports from five days to one day, an 80 percent improvement. Cut the number of FTEs involved in the planning and budgeting cycle from 15 to five, a reduction of more than 65 percent.

Case Study

HDFC Standard Life Insurance Co. Ltd. is one of India’s leading private life insurance companies, operating a network of 481 branches and employing some 13,827 people. The company was established in 2000 as a joint venture between the Housing Development Finance Corp. Ltd. of India and Standard Life plc, a financial services provider based in the United Kingdom.

The HDFC Standard Life Insurance portfolio comprises 32 retail and four group products, including protection, pension, savings, investment and health plans. The company reported profits of more than $5 million for the 2011 financial year, with the total value of premiums reaching more than $189 million.

Staying on top of a fast-growing market
Following its liberalization in 1999, the insurance sector in India has grown to become a $41 billion industry, expanding at an annual rate of more than 30 percent. For HDFC Standard Life Insurance to maintain its leading edge in this competitive market, it must work to continually sharpen its value proposition and increase its relevance for customers by offering products and services that are targeted to individual customer needs.

In such a dynamic environment, agility is a key differentiator: HDFC Standard Life Insurance needs the ability to identify and react quickly to changing consumption patterns if it is to capitalize on opportunities for extending its market share.

Sukalyan Fouzdar, Associate Vice President of Business Systems and Technology at HDFC Standard Life Insurance explains: “The difficulty with selling life insurance is that it is a low engagement product – customers only make purchase decisions infrequently, so we really have a very small window for capturing more business. This makes it extremely important for us to find out exactly what products customers want and to market them at the right time. Once we have captured these customers, we also need to ensure that they remain loyal to us and continue to renew their policies. Offering superb customer service is the key to our sustainability as a business.”

Improving insight
To maintain its success, HDFC Standard Life Insurance requires deep insight into all aspects of its own operations, customer behavior and competitor activity. As the company amassed a wealth of operational and customer information over the years, it found it increasingly difficult to perform timely, accurate analysis of this data, and make it available to key decision makers in the business.

Sukalyan Fouzdar remarks: “Our analytics and reporting capabilities were very limited. Generating management information system [MIS] reports relied on manual processes, which caused considerable delays and high error rates. The result was a lack of insight into our operations, meaning that we could not identify areas that were underperforming and we were unable to take action to run the business more efficiently and profitably. We also could not see how certain products were performing across different customer segments, and could not pick up on potential market trends. This lack of information put us at a serious disadvantage, and we ran the risk of losing out on valuable opportunities to capitalize on emerging opportunities and to make smart long-term strategic plans.”

Solid analytics and reporting
HDFC Standard Life Insurance sought to tackle these challenges by creating a robust analytics framework that could take its strategic business performance and customer analysis to the next level. The company wanted to enable users to drill down to the last level of transactional data, generate trend and impact analysis, and compare business performance year on year. It also aimed to improve reporting capabilities, providing on-time information to key decision makers and reducing dependency on manual tasks.

HDFC Standard Life Insurance has been using a comprehensive suite of SAP® ERP applications for several years to integrate its operations. Encouraged by the success of the SAP solutions in streamlining process flows and improving efficiencies, the company turned to IBM Global Business Services to help extend its SAP ERP application landscape. The team decided to implement a platform for business analytics and reporting, based on SAP NetWeaver® Business Warehouse (SAP NetWeaver BW), SAP BusinessObjects™ Business Intelligence (BI) and SAP Business Planning and Consolidation.

“We wanted a consulting partner that had proven expertise in designing and developing systems that brought added value to the business,” notes Sukalyan Fouzdar. “IBM® Global Business Services® demonstrated an excellent mix of technical and commercial knowledge, and spent a lot of time studying our processes and goals for the new solution. This inspired a great deal of confidence in us – we knew that IBM would be able to see the project through to a successful conclusion.”

Build a secure data warehouse
The first stage of the project involved creating a single, trusted source of data for MIS reporting in the company’s planning, consolidation, purchasing and human resources departments. To enable this, the IBM Global Business Services team worked with HDFC Standard Life Insurance to stage, cleanse and store summarized data from the SAP ERP applications, including Finance, Materials Management, Compensation Management, Profitability Analysis and SAP ERP Human Capital Management, as well as the company’s system for insurance transactions, called Life Asia.

These applications serve as the main data source for SAP NetWeaver BW, where information is stored for analysis and reporting. In all, the company manages some 3.5 TB of SAP application data, which is growing at a rate of 35 to 40 GB each month. To guarantee the accuracy and security of the data held in this database, HDFC Standard Life Insurance has enforced a strict authorization-based access policy for SAP NetWeaver BW, which provides read-only access to most users.

“One of our top priorities is to keep the information in our SAP NetWeaver Business Warehouse as accurate and secure as possible,” explains Sukalyan Fouzdar. “Restricting access to a small group of trusted users helps to ensure that data quality and integrity remains high. The business does not have to second-guess the accuracy of the data, which has considerably boosted confidence in reporting figures.”

Boosting insight into SAP data
Once HDFC Standard Life Insurance had established a central, secure warehousing solution for its application data, the next step was to deliver faster and deeper insight into this wealth of information by deploying the SAP BusinessObjects BI platform.

The SAP solution uses SAP NetWeaver BW to provide a unified view of operational data, offering self-service access to key information for decision-making and enabling business users to make sense of large amounts of transaction data.

“In the past, company data was stored across multiple systems, and we had no central platform for accessing this information,” recalls Sukalyan Fouzdar. “With IBM Global Business Services, we have implemented a SAP BusinessObjects Business Intelligence platform that makes the data readily available in a format that business users can understand, allowing them to gain insight more quickly and easily, with less intervention from IT.”

Working with IBM Global Business Services, HDFC Standard Life Insurance has built a centralized platform that enables streamlined analysis and planning at multiple levels of the organization, all the way down to individual branches. The company can review and plan cost center expenses, fixed assets, capital expenditures, incentives and commissions, and budget for head count and remuneration all from a single tool.

“With our old systems, planning and budgeting were very inflexible, and it took a lot of effort to make any changes to our budgets,” states Sukalyan Fouzdar. “The new SAP solutions designed by IBM Global Business Services have introduced much more dynamic workflows – we can easily make adjustments based on updated information, which has improved the quality of budgets.”

Strong IBM hardware backbone
Ensuring optimum levels of performance and availability for the company’s SAP applications requires a robust hardware infrastructure. For this reason, HDFC Standard Life Insurance hosts its entire SAP environment on 20 IBM Power Systems® servers, running the IBM AIX® operating system and IBM DB2® databases. The company operates 12 additional Power Systems servers at a secondary data center for failover and disaster recovery purposes. This configuration helps to guarantee that the company’s systems are kept up and running at all times, and that vital business information is fully protected.

Faster reporting, reduced error rates
With the new SAP solution in place, HDFC Standard Life Insurance has greatly reduced the time taken to generate MIS reports, and decreased the risk of error, thanks to the elimination of manual processes.

“The SAP applications ensure that accurate data is made available to the business for analysis and reporting in a timely manner,” says Sukalyan Fouzdar.

“We have cut the time taken to complete month-end reports from five days to one day. The business is no longer held back by slow manual processes, and can concentrate on developing and launching new products.”

HDFC Standard Life Insurance has been able to reduce the resources dedicated to managing its reporting processes, cutting the number of FTEs involved in the planning and budgeting cycle from 15 to five, a reduction of more than 65 percent. Improvements to the speed and quality of business data have enabled also the company to ensure compliance with regulatory standards, which require insurers to submit frequent financial and operational reports. With SAP applications supporting fast, accurate reporting, HDFC Standard Life Insurance can easily meet tight reporting deadlines.

Error rates have been slashed – previously, the company would receive around ten queries a month from its regulatory body regarding reporting inaccuracies or errors; this figure has fallen to just two queries, a reduction of 80 percent.

Enhanced overview of behavior
HDFC Standard Life Insurance has obtained a much broader view of its customer base. The company can now track the number of new customers it captures every month and segment them according to the product line that they have purchased.

With insight into which products are attracting the most new customers, HDFC Standard Life Insurance can fine-tune its offerings and marketing campaigns to focus on products that are most relevant to customer needs and thereby win more new business.

The company can also track the behavior of its existing customers to determine which customers are renewing their plans or buying new products.

This information helps HDFC Standard Life Insurance to quickly identify where customers might be choosing to let their plans lapse, and take action to prevent further losses – a critical objective in a low-engagement industry such as life insurance.

Picking up on the pulse of the insurance market
The new SAP solution enables HDFC Standard Life Insurance to map customer buying trends more effectively and discover which products sell the best among which customer segments. It can also examine historical data to see which previous products failed or succeeded, and with what groups.

“By combining information on current purchasing patterns with historical data, we can work to design new products that are most likely to respond to customer desires,” comments Sukalyan Fouzdar. “For example, we were recently able to spot a gap in the market and launch an insurance plan specifically designed for women.”

With SAP applications providing insights such as this, the company is better placed to develop innovative offerings that are fine-tuned to current customer needs, winning more business and setting itself apart from the competition.

Sukalyan Fouzdar concludes: “IBM Global Business Services has helped us to build an SAP solution that truly picks up on the pulse of our customers and the industry. With deeper insight into customer behavior and market trends we can make smarter predictions and design more attractive products that will go a long way in boosting our value proposition, and ensure our continued success in an ever-changing industry.”

Products and services used

IBM products and services that were used in this case study.

Hardware:
Power Systems, Power Systems running AIX 6

Software:
AIX, DB2 for AIX

Operating system:
AIX

Service:
IBM-SAP Alliance

Legal Information

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