Aviva reduces costs by 30% with cloud-based HR system

Aviva claims to have saved over £1m a year in reduced software licence fees after completing the first stage of a project to replace its Oracle-based HR systems with a cloud-based service.

The insurance company, which employs 46,000 people across 28 countries is replacing hundreds of separate HR systems, from Oracle, other suppliers and developed  internally, with a single company-wide cloud service.

Andy Moffat, European director of HR at Aviva, said the cloud-based system, supplied by Workday, has played a major role in reducing the organisation's European HR spend from €34m a year to €23m.

Aviva, formerly Norwich Union, has made further indirect savings by freeing up Oracle specialists to work on other IT projects, and HR managers, who previously spent their time collating HR management information, for higher-value roles.

"We are under continued pressure to manage costs. Our total costs in the European region in HR have come down by close to 30% and Workday has been a big component in that," Moffat said.

The Workday system replaces over 100 HR systems across Europe with a single HR database.

"Before we installed the system, the CEO of Aviva Europe asked me how many staff we had in Europe. I could not tell him. It took weeks to find out. Now I can do that in 30 minutes," he said.

Trialling the Workday cloud service

Aviva began investigating ways to harmonise the IT systems across the organisation after the group's CEO launched the 'One Aviva programme' in 2007 to ensure that different parts of the organisation began working more closely together.

The company approached its existing HR supplier, Oracle, which proposed a cloud service operated through a third-party company.

"Oracle did a very good job in trying to get costs down to a lower level, however the technology was not there. Fusion [Oracle's middleware] was not ready, and its software-as-a-service [SaaS] model was not a true SaaS model," he said.

"When we took references we heard that everything worked well, but that communicating with Oracle was very difficult," he said.

In 2009, Aviva asked Workday to run a three-month pilot in Hungary, Romania and the Czech republic, to test the product.

"We were very unclear on Workday, as it did not have a track record in Europe. We asked it to run a pilot in three countries that were not on its critical development path or language path. We did that very deliberately to test its commitment. The company knew that and we were very open about it," he said.

The insurance firm asked its own employees and managers in the three pilot countries to assess the Workday service.

"We were moving towards self-service. That was a major cultural shift. We required managers and employees to operate in a different way. If the technology was not easy to use, the danger was they would default back to the old model of people phoning HR and asking them to deal with the problem," said Moffat.

Aviva decided to go ahead, after staff gave Workday an 86% satisfaction rating.

Overcoming technical challenges

The project raised technical challenges, including the need to ensure integrity of the existing HR data, and working out how to link Workday into the company's Oracle-based payroll systems.

"We made the decision we would use the in-built processes in Workday and tailor as little as possible, unless there were legal requirements to do so," said Moffat.

Workday carries out small-scale upgrades to its platform every quarter, rather than carrying out a major upgrade every few years.

Adapting to Workday's regular product updates was a cultural change for Aviva, which had been used to working on larger, less frequent IT projects, said Leighanne Levensaler, vice-president for HCM Strategy at Workday.

"It has to look after its integration, and there could be 50 to 70 integration points in a company the size of Aviva, and it has to make sure that any integration comes out positively," she said.

Heading for company-wide implementation

To date, Aviva has rolled Workday out in Europe, North America, and a large part of Asia Pacific. By the end of 2012, it aims to complete the roll-out across the whole company.

"The big prize is the UK, partly because half of Aviva's employees are here, and partly because we have customised Oracle. Every time we went through an upgrade, we had to spend money," said Moffat. "Going down to a simplified model is where we have been able to save costs."

Aviva has used Workday to create a single way of describing job roles across the group. The move will make it easier to recruit and transfer staff around the company.

"We were finding that in one country, if you were an accountant, one person would be, say, a level D accountant, and in another country the same accountant would be a level 16. Now we can track our capability on a worldwide basis," said Moffat.

Work is underway to develop a learning management system and a recruitment management system across the group. And the company is looking at rolling out an iPad application which will give managers access to HR data on the move.

"We are trying to future-proof with Workday. It is new technology, it is cloud computing, it is the direction the industry is going in," said Moffat.

Andy Moffat is speaking at the HR Tech Europe Conference in Amsterdam, which takes place on 2-3 November.

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