Many property & casualty insurance companies today are hiding a surprising secret: Their employees are burdened with process-related inefficiencies and manual tasks due to outmoded financial systems.

These are often homegrown systems that, over the years, have evolved into a Frankenstein's monster of numerous stitched-together plug-in applications. This leads to increased maintenance costs, as more time and resources need to be expended nursing the system along so that it can function on a day-to-day basis. In addition, many daily users, faced with labor-intensive operations such as manual entries, have to spend more and more time just trying to work around the system.

Currently, a number of leaders in the financial system space offer top-notch, SaaS solutions for companies of various sizes. These companies include Workday, Oracle + NetSuite, SAP, and Microsoft Dynamics 365, all of which provide businesses with credited solutions that would allow them to put their homegrown systems, mercifully, to rest.

Often, a company finally progresses to the point of feeling comfortable migrating to a new financial system, but then fails to consider one important option: including Human Capital Management (HCM) within the scope. 

HCM can potentially provide companies with many benefits in both the short and the long term:

1. Price leverage

In this type of engagement, adding more to your subscription means that your unit costs will drastically decrease. Bundling modules provides more leverage for negotiation with the vendor. Companies can anticipate savings upward of 40% from bundling together financial and human resource (HR) modules. By extension, this is also true for the actual implementation of the system. Although companies can expect to pay at least double the amount if they also include HCM implementation upfront, integrators will usually provide reductions when you start adding more work to the scope. Paying for two separate integrations will surely cost you more than doing both at the same time.

2. Reducing application footprint

As mentioned previously, many P&C insurance companies are facing the challenge of several different applications plugging into various systems. Finding a system that can serve as a one-stop-shop for financials and HCM is a great way to eliminate the need for plug-in applications in the first place. Often, companies have a financial system with a separate human resource information system (HRIS), including different integrations with other partners for such items as payroll and benefits administration. It can become a scattered process for companies that have to manage each relationship separately.

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3. Centralized system

Having one system for both financials and HCM means that all data can interact, without the need for repetitive work in multiple systems. For example, the HCM would hold all employee information within one central location, which then can be used in other areas like payroll, expenses, succession planning, performance and budgeting. This also eliminates the need to update multiple systems whenever company changes are needed. One simple change in the system is reflected in all areas.

4. Implementation consolidation

When you bundle financials and HCM together and implement them at the same time, you're able to consolidate the implementation more effectively than if you were to do them separately. Implementation phases typically range from 10 to 15 months, depending on the scope of the project. Implementing twice (once for financials and once for HCM) is time consuming as well as a drain on a company's internal resources — essentially, a cost. You can also better manage the number of integration resources, as there may be overlapping roles that would be spread across both systems. Many chief financial officers and chief procurement officers for Fortune 500 and Fortune 200 companies have expressed regret for not implementing financial and HCM systems together for these specific reasons.

A solution that works for you

Finding a solution that accommodates multiple functions is crucial. As mentioned previously, companies like Workday, Oracle + NetSuite, SAP, and Microsoft Dynamics 365 can provide an HCM component, but they differ widely in their range of capabilities. Some solutions can provide a more all-inclusive package, while some still may need to integrate with various partners. It's for the purchaser to evaluate and decide what matches well with organizational goals.

It's fair to say that the current trend for many P&C insurance companies is to move beyond their current financial system, whether it be homegrown or immature, and adopting a SaaS solution. Despite this progress, we know that they don't always consider the benefits of including HCM in the scope to gain leverage in pricing, a centralized system, a reduced application footprint and implementation consolidation.

Leading P&C insurance companies are looking for more all-inclusive, out-of-the-box, SaaS solutions to simply their process, architecture, and overall IT footprint. Bundling financial and HCM is a great way to capitalize on that initiative. When assessing potential vendors, companies should evaluate the full capabilities of each system to ensure alignment with their future vision and strategy. This will reduce the risk of potential migration to additional applications or even completely new systems in the future.

Jaime Leonard is a Senior Associate, Global Delivery Consulting with GEP, based in Atlanta, Ga. He can be reached at [email protected]. Opinions expressed are the author's own.

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