Direct Line Group has completed the separation of its IT systems from those of RBS using cloud software from Workday, and has simultaneously driven down the cost of the HR function at the insurance group.
Following the government bailout of RBS, the bank agreed to sell off its Direct Line insurance division, with the divestment creating a tight deadline to move 16,000 staff onto a new HR system to ensure that an IPO could go ahead.
With RBS previously responsible for two thirds of the insurance division’s HR, Mark Martin, HR director at Direct Line Group, had only a few months to ensure that new core systems were in place.
“We had to make a change, we had to separate, and we had prove that we were able to run as a separate organisation,” he said.
“It was a whole suite, we were able to replace everything. It was like a greenfield site for an organisation the size of Direct Line Group, which is a rare thing. You don’t usually get to build an HR function from scratch and get the support to invest in the system of your choice.”
The main priority was to ensure that staff on new contracts were able to be paid when systems went live last June. This meant putting Workday in place as the core HR system, alongside Ceridian for payroll.
“We had to change our terms and conditions, all our contracts, and we had to build the capability within the HR function such as rewards and tax, as well as implement seven new systems. The heart of that was Workday as our core system.”
Implementing Workday meant moving on from the Peoplesoft system used for RBS’ HR. Martin said that he considered a number of other options before deciding on Workday’s cloud software. This meant looking at SAP’s SuccessFactors as an alternative SaaS system, as well as considering Oracle Fusion.
“We looked at a number of choices as well as the Workday one,” he said. “The absolute priority for us was to move to a SaaS system. That was key. We chose Workday ahead of SuccessFactors, they were the two front runners in end.”
Since going live in June 2012, Martin said that the Workday implementation has been successful, with the cloud-based system offering benefits over traditional software.
“It is doing exactly what it said it would do. That is one of the things with a cloud service: that is the system,” he said.
“I have used all of the legacy systems in different businesses, SAP and SAP HR and Oracle and Peoplesoft and so forth. The difference here is that you don’t actually have, for example, a Peoplesoft system, you have your own particular bespoke version of that system.
“Therefore there are always surprises, there are always issues. The difference with the cloud SaaS system is that it is the system. It works for all the other customers, so there aren’t surprises in the way that you expected it to work.”
Using cloud software did bring challenges in the auditing processes however. According to Martin the Workday implementation was the first time that SaaS had been used in any part of RBS up to that point.
“We want to be able to go in and audit whenever we want if there is an issue that we want to sort. Of course you can’t do that in the same way with SaaS, everyone has the same system and you can’t go and look at those systems and audit them whenever you want to.
“Even though we put Workday through the ringer on all of these issues, and our people would say Workday is far more secure than the systems we had, it is still not in line with our policy because our policy is set up for legacy systems, and not for SaaS. So all of these issues had to be addressed, which is quite a painful process.”
Martin said that the Workday implementation has led to a number of benefits including reduced HR costs.
“The HR function is already significantly cheaper than it was in the old RBS setup,” he said. “The HR function will be thirty percent cheaper this year than it was under RBS.”
Aside from cutting the cost of the HR function, Workday will mean improvements to the data that can be used to drive changes at Direct Line.
“The biggest change will be the ability for us to have really high quality data that we can start to use to drive real HR strategic decision making in the organisation. That is the real prize.”