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Improved Incentive and Commission Management
at HDFC Life Increasing the flexibility of your Sales Force Management Solution
October 2011
Doreen Koselowski, Virtusa
2 © Virtusa Corporation ● Confidential
Virtusa Service Offering
Incentive and Commission Management
(ICM) at HDFC Standard Life - Mumbai
3 © Virtusa Corporation ● Confidential
The largest US SAP for Insurance
Competency
90+ SAP Consultants
25+ US SAP Implementations
Full Service provider for SAP Implementations
Virtusa’s Financial Transformation Business Unit
Partnerships with Leading ISV
Business Unit Overview
• Main Focus on SAP Contract Accounting - Incentive and Commissions Mgmt, Tax and Revenue Mgmt, Collections and Disbursements, SAP Financials
• Unmatched combination of skilled resources, SAP for Industries expertise, and a global delivery model.
• Our US-based consultants have an average 6+ years of relevant SAP implementation experience.
Focus on High Value Consulting • Our people are the best people in the market
• Our projects are the most efficient in the market
• Our customers recognize Virtusa as the #1 in our Core SAP service offering
• SAP Consulting Services
• Technology
− SAP PS-CD,
− FS-CD,
− FS-CM,
− ICM,
− FS-PM,
− FI-GL
• SAP Application Management and Support Services
4 © Virtusa Corporation ● Confidential
Virtusa delivers high value SAP for Insurance consulting services at a competitive price…
1 Value provided to buyers through SAP for Insurance Transformations 2 Cost for buyers
High
Cost2
Low
High Low
Val
ue
1
IT suppliers
Large IT consulting Companies
Pure offshore suppliers
Virtusa’s ICM/CD/RI
Offering
Better
• Unmatched combination of skilled resources, SAP for Industries expertise, and a global delivery model.
• US FS-CD/ICM/FS-RI practice ensures high quality off-shore delivery.
• Preferred SAP Partner for SAP for Insurance.
Cost Effective
• With our hand-picked and highly-specialized consultants we will require fewer resources than other integrators in the market.
• Our projects are the most efficient in the market with the right on-site/off-shore mix.
• Product Expertise – many of Virtusa’s employees are former SAP developers and managers.
• The Virtusa SAP FS-CD/ICM/ FS-RI projects are the fastest in the market.
• We leverage project accelerators and code libraries to the maximum extent possible and do not ‘reinvent the wheel’ wherever possible.
Faster
5 © Virtusa Corporation ● Confidential
Virtusa Service Offering
Incentive and Commission Management
(ICM) at HDFC Standard Life - Mumbai
6 © Virtusa Corporation ● Confidential
HDFC Life’s Program: Maximizing the ICM value proposition by deploying a highly flexible and easily adaptable commission system
Internal
Employees
Distributors /
Broker Dealers
Agents/
Producers
Accommodates ALL compensation calculations requirements in a single solution / Single source for all information
Reduced TCO
Shared Services, Common
Platform, Reduced
Maintenance
Increase Speed to Market:
Quickly implement new / adapt
existing Incentive Schemes
Improved Reconciliation,
Faster Close
Reduction of manual adjustments of calculations due to system restrictions
ICM
Rel.1 Q2 2011 Primary
Compensation
3rd Party
Companies
Rel. 2 Q1 2012
Incentive and Bonus Compensation
LIVE
Rel. 3… Q2 2012
Rollout of additional Incentive Schemes
Virtusa’s HDFC ICM Implementation is the first SAP ICM implementation in Asia and one of the fastest SAP ICM implementations worldwide (7 ½ months)
7 © Virtusa Corporation ● Confidential
Primary Goal – Deploy Rel.1 in time, quality, within budget and flexible enough to adjust to ever changing business requirements
Agents/Brokers: 70.000 active Agents /Brokers/Corporations (300.000 terminated) Processing: average of 50.000 Policy Transactions per day
Data Migration: 2 years of compensation history
30 Mio transactions to migrate 370.000 Brokers/Agents and Corporations Timeline: 7 ½ month from start of Blueprint to Go-Live
Subsequent releases are slated to go-live during Q1 2012 and Q3 2012.
Release 1
Challenges:
• Highly aggressive timeline
• HDFC’s highly agile way of running their business requires easy adaptability of the System
• Large data volumes for both data migration and daily processing
• No prior SAP experience for most of the HDFC team
• Resource crunch from HDFC side due to ongoing operational issues with the legacy system
• High Resource fluctuation on the Client side
• No internal Change Management Process in place
• A multi-vendor environment (i.e. Hosting, Interfaces to Incoming and Outgoing Interfaces, Data Conversion, and Reporting all different)
• Project team spread out across 2 different countries and multiple time zones (US, India)
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Identified project specific approaches which helped deliver high quality results at a competitive price and accelerated timeline (1/2)
Global Delivery Agile Delivery
• Introduction of 2-3 person TAC- teams that work around the clock on the same deliverable – ensure smooth handovers daily
• Building up project specific ICM off-shore teams takes time – plan for it
• Spend the time on training the project team early on
• Start heavy loaded on-site and increase off-site % over time.
• Have 1-2 team members onsite at all times
• Do it right the first time, no short term solutions that will become long term solutions
• Ensure early and continuous delivery of functionality.
• Ensure reusability of code and ensure customizability instead of hard coding.
• Involve business during realization phase to avoid long periods without tangible results.
• Implementation of small building blocks that are re-usable over and over again.
• Gained invaluable flexibility and speed to market in developing new cutting edge commission schemes and new ways of managing the Sales Force.
• Automatisation of ALL manual workarounds and adjustment entries that needed to get passed on a daily basis (thousands of adjustment entries were passed manually per month)
• Built up a team of off-shore resources with deep ICM knowledge. Will benefit in upcoming releases. • Focus on core future functionalities rather than rebuild the present state, and make sure everyone shares the
vision
Results HDFC Transformation
Process Standardazation
• Focus on process standardization while keeping the business value proposition intact.
• Leverage ICM’s build in flexibility • Allow reasonable change due to
changing requirements, plan for changes and ensure the system is flexible enough.
• Standardize the reporting and enable users to individualize it
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Reusability Interface Development
Testing
• Latest Technology Trends (e.g.
Mobile, SOA) & real-time data processing add very limited value to financial transformation initiatives.
• Use batch interfaces which are optimized for mass data processing
• Enable manual data upload and data manipulation for testing/error handling purposes
• Developed one universal inbound pre-processing framework which is used by every feeding system as well as for data migration
• Parallelize the testing of data migration and ongoing interface saves a lot of time and waiting times were reduced • Defect fixes and ongoing changes after go-live are relatively easy as only one set of coding has to be changes due
to the modularization used. • Using the same concept over an over again reduces training and ramp up time significantly
Results HDFC Transformation
• Don’t wait for interfaces to be ready to simulate Legacy System feeds before the legacy system integration is ready for testing, build test tools.
• Do diligent unit testing throughout the development phase
• Insist on scenario based testing documentation and monitor the progress closely
• Ensure efficient and complete regression testing
• Define one global interface and re-use for all Source systems
• Use the same concepts across the system so users can adapt easier (Reports, transaction processing, Master Data)
• Focus on re-using code (not configuration) across the system, build small functions of code that do only ONE thing and that are just assembled differently over and over again for different functionalities
Identified project specific approaches which helped deliver high quality results at a competitive price and accelerated timeline (2/2)
10 © Virtusa Corporation ● Confidential
Release 2 Highlights
• Most Incentive Schemes are calculated manually based on hundreds of Excel sheets – highly manual, time intensive and error prone process
• New Incentive Schemes are launched very quickly (within 3-4 days) and the appropriate data has to be accumulated from all kinds of system and spreadsheets
• Payment Data is manually entered into the Payroll, Procurement and Reimbursement systems
• 70+ distinct Incentive schemes / contests for 25 different roles of Internal Employees in 3 different channels with 6 hierarchy levels each
Business Challenge
• Implementing a single commissions system (SAP FS-ICM) that handles all the Primary commissions as well as all the incentive schemes and contests
• Single source of truth for all distribution network related information and dynamic determination of all KPI’s from all kinds of data sources during the incentive calculation
• More accurate Incentive payments; no underpayments and overpayments; less exceptions and manual errors
• Ability to segment producers and implement targeted new incentive schemes on short notice
Virtusa Solution
• Setup of new Products and changes to commission rates can be done by business users
• Substantial reduction of team size required to handle the compensation handling within HDFC
• Greater visibility / audit ability for the incentive calculation process
• Daily reporting of Target achievement and projected incentive payouts
Business Benefits
• Highly customizable system (setup of new incentive plan, products, commission schemes, agent roles, channels…) only requires table entries – no coding changes required
• Integration with HCM will enable date specific determination of Internal Employee Hierarchies and associate the business to the correct Managers
Solution Architecture
HDFC Phase 2 Highlights Implementation of 25 distinct incentive schemes in 5 ½ months – Blueprint to Go-Live
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Ongoing HDFC Business Value Proposition
• In your Incentive System can you…
Roll out a completely new compensation scheme
within 3-4 days?
Add new products and all compensation rules in less than
a day?
Pay Key Agents or Corporations daily?
Set up a new Distribution Channel and/or new agent types/roles within a day?
Implement new persistency based claw
back rules for select groups of agents in 2 days?
Launch a new Contest in 2 days?
Publish the current Target Achievement and resulting
incentive compensation daily?
Integrate with your procurement system to let
agents choose non-monetary rewards based
on points earned?
12 © Virtusa Corporation ● Confidential
Advice for those starting a new Project: DO
• Enable the business lead to change existing processes • Expect and anticipate change • Have a clear vision and communicate this early • Work in small teams • Build the right team • Ensure early involvement of the business team • Break up Large Projects into smaller subprojects
DON’T
• Let tight timelines take away from the right way to do it • Let exceptions define the process – determine the WHY, not the HOW • Let people point fingers across corporate silos/vendors • Underestimate Data Migration and Data Cleanup • Underestimate the amount of involvement required by finance, operations, and IT
teams especially during testing
Starting a New Project?
13 © Virtusa Corporation ● Confidential
Questions?