How Digital Innovation Is Changing Insurance Procurement with Risk Mitigation and Cost Savings

The insurance industry with its complex regulatory framework has traditionally lagged other industries when it comes to transforming procurement through technology. But in today’s networked economy we are witnessing an unmatched pace of digitally driven innovation.

To succeed in this new normal, insurers need an intelligent spend management solution that delivers real-time predictive insight to ensure compliance, serves customers with a responsive business network, and provides transparency via line of sight into every supplier. New and connected technologies are helping insurers address these imperatives through data-driven decisionmaking that brings efficiency and intelligence to procurement.

Procurement Trends in Insurance

As procurement becomes more integral to the insurer’s success, digital supply networks, disruptive technologies and advanced analytic solutions are opening new possibilities for source-to-contract (S2C), procure to pay (P2P) and supplier relationship management (SRM). As Deloitte Digital reports, supplier digitization is creating a “digital loop” with the continuous flow of data, information, goods, and services between the physical and digital worlds.

The opportunity upside for this digital loop is significant. Month-to-month expense variations and long-term contracts, coupled with traditional purchase orders, make it difficult for insurers to trim spending. An intelligent content extraction solution, for example, could convert static documents into data points, making it easier to identify and act on valuable indexed pricing and penalties. However, insurers need the right technology in place to both capture this data and then translate it into actionable insights– all while ensuring continued regulatory compliance.

How SAP Ariba is Solving Insurance Procurement Challenges

SAP Ariba is bringing new rigor to insurance procurement through an integrated solution for risk assessment, supplier selection, contract lifecycle management, and intelligent insight. SAP’s best-in-class procurement solution removes complexity and allows buyers and suppliers to manage everything from contracts to payments, all in one connected business process.

SAP Ariba takes into account federal regulations specific to the insurance industry that require strategic sourcing to be risk-based with documented due diligence in areas of operational risk, information security, and business continuity. Further, decision-support documentation is clear and reportable. The contract management process can be linked to performance and ongoing risk oversight.

Benefits extend beyond supplier management savings. An effective procurement process can be extended into the world of claims adjudication to not only help reduce costs but also improve customer satisfaction. Many claims service providers engage directly with the policyholders, impacting the overall claims experience and long-term customer retention. Smarter procurement across all spend categories is a win for everyone.

Realizing Savings and Efficient Supplier Negotiations with SAP Ariba Sourcing

Here are some examples of how insurers are using SAP Ariba to transform their supplier negotiation and procurement process:

  • AIA Insurance Group achieved 80 percent efficiency and transformed their business. AIA needed a platform that could provide end-to-end automation so they could capture and analyze procurement data as it flowed into their ERP system. With SAP Ariba, AIA increased headcount savings and is achieving 80 percent efficiency in all processes.
  • HDFC ERGO onboarded over 100 new qualified suppliers realizing 15 to 20 percent cost savings. India-based HDFC ERGO used SAP Ariba to improve sourcing visibility and validation, making procurement fairer and cleaner and enhancing agreement transparency. As a result, the company has realized strategic savings of 15 percent and 20 percent across all of its sourcing categories.
  • IAG transitioned their procurement process to the cloud for end-to-end savings and expanded their supplier network, better mitigating risk. The multinational insurance company took an end-to-end approach, including pre-procurement needs formulation, a robust go-to-market approach, and supplier contract management. SAP Ariba also enabled the company to reach a larger supplier network for more robust risk mitigation.

Learn More on How to Transform Insurance Procurement

As disruptive technologies reshape the insurance industry, providers cannot continue a “business as usual” approach to procurement. SAP is enabling insurance companies to become intelligent enterprises by transforming the procurement process across all direct and indirect spend categories. For more information on how digital technology from SAP Ariba is reshaping the insurance industry, visit SAP Ariba. And for more information regarding the suite of insurance solutions from SAP, visit SAP for Insurance.

Hugh Anderson is senior principal for the Industry Value Advisory Practice at SAP.