Laying the right technology foundation is key for better customer outcomes, says icare general manager, financial management and treasury Fehraz Fallil.
It is said that the truest measure of a society’s greatness is how well it treats its most vulnerable people.
New South Wales has for many years had schemes to help people severely injured at work, or in road accidents, or stricken with diseases caused by harmful workplace dust. By 2015, no less than seven such organisations were in place to fund care and compensation.
In 2015 the NSW state government brought these organisations under one umbrella, icare NSW, to improve the efficiency of the schemes and transform the experience of scheme participants.
“We wanted to change the way people thought about social insurance, which is what we do in government. We also wanted to have uniform ways of processing all insurance-related matters within the NSW government,” Fallil, said.
“Each scheme had their own business teams, finance teams, and front and back offices. We wanted a standardised approach and have uniform customer experiences.
“The outcome of that was a uniform customer experience at a reduced cost – although reduced cost was not the primary driver – it was about a better experience for our customers.”
But icare is not only responsible for injury claims, it also carries the insurance of more than $190 billion in NSW state assets – including the Sydney Harbour Bridge and the Opera House.
icare acknowledges that such precious assets are prudently re-insured, spreading the risk.
Two other state assets insured by icare, public schools at Bobin and Wyataliba north of Sydney, were burned down in the bushfires that have raged across parts of New South Wales since November.
The Grattan Institute estimated in 2016 that it cost about $15 million to build a relatively standard primary school and more than twice that for a secondary school.
Fallil says that with $35 billion in assets under management (AUM), icare is probably bigger than most commercial insurers in Australia.
Although it is a not-for-profit enterprise, icare must ensure it is a viable concern. “We say that we have ‘a social heart and a commercial mind’.
While the focus is not solely on commercial benefit, we still have to make sure that we manage commercially viable schemes.”
icare’s biggest scheme is the NSW Workers’ Compensation Scheme, which protects 3.2 million workers across more than 320,000 employers.
The Workers compensation scheme was outsourced to several commercial operations, each with its own systems and processes before icare was created.
“We had limited visibility of what was going on – it just made it harder to make the right decisions at the right time, “says Fallil.
“There were seven different schemes, with three general ledgers. The finance systems architecture across them all resembled a spaghetti diagram more closely than anything else.”
With seven reporting entities the reporting and finance teams were siloed, a problem compounded by the fact they were located across multiple sites.
“Just to give you an indication, reporting would sometimes take up to 45 days after month-end.”
Falill notes that “What we decided by creating icare, was to back ourselves to build our own insurance platform. In April 2016, the icare team settled on SAP S4/HANA to be the core of icare’s systems.
We wanted to build a uniform SAP platform across all our schemes to support our insurance platform – Guidewire to ensure that people could have trust in the numbers.”
“Implementing SAP S4/HANA effectively meant that we could integrate all the data on our insurance system with SAP and have full visibility over every transaction.
Reconciliations would also be largely automated. “We were 10 months out, didn’t have a ledger, had three different systems and multiple teams. In December 2016, eight months later, we had a fully functioning SAP S/4 HANA ledger.”
We say that we have ‘a social heart and a commercial mind’. While the focus is not solely on commercial benefit, we still have to make sure that we manage commercially viable schemes.”
Fallil notes from there it took a huge effort by the team and a major change management program to implement the HANA technology.
“In the change management program, we undertook to say we really weren’t going to just pick up the existing processes and retrofit them into S/4 HANA.
“We were going to use SAP standard processes as our operating model and would change our processes to suit the system, as opposed to the other way around.
“By doing that, I think it was one of the fastest implementations of its time,” Fallil says, noting that no other entity in the Australian market appears to have managed a similar achievement.
He acknowledges that even an implementation that went as smoothly as this one can still encounter challenges, such as difficulties with data migration.
“However, SAP themselves have been helping us through that and will be helping us in the coming years – a true partnership approach,” he said.
A major ambition for the project was to ensure that icare had a robust finance system that reconciled to the Guidewire insurance engine, and to make sure Fallil’s finance team had no loss of financial control.
“A key risk in implementing new systems is the possible loss of financial control. There were no audit points [accounting issues that must be corrected] to note when we did our financial audit post SAP implementation in 2017. That’s a great thing, not just for icare but the team that manages SAP as well.”
This article first appeared on Asia-Pacific Banking & Finance Magazine.