RAC Insurance saw an opportunity to modernize its financial planning and analytics processes by replacing its manual, spreadsheet-based approach with a more integrated, automated platform.
Working with IBM and Cornerstone, RAC Insurance used IBM® Planning Analytics on Cloud to build a comprehensive financial performance management platform in six months.
Extendsinsight to a wider audience, improving accountability and decision-making
20%estimated increase in productivity by reducing budgeting work for the finance team
Acceleratesreporting and unlocks new scenario planning and stress testing capabilities
Business challenge story
Focusing on the community
Western Australia comprises a third of the total area of Australia—the same size as Alaska, Texas, and California combined—and is the second largest state in the world. As a provider of auto insurance and roadside assistance services to more than a million members scattered across this vast state, the Royal Automobile Club of Western Australia (RAC) sees road safety as its number-one priority.
Alex Houvardas, Chief Financial Officer for RAC Insurance, explains: “If your car breaks down in the outback, it could be hours or days before someone finds you. In some cases, it can literally be a matter of life and death. At RAC, we see it as our responsibility not only to provide first-class products and services, but also to invest in road safety and other important mobility initiatives that benefit both our members and the wider Western Australian community.”
A large proportion of the funding for these initiatives comes from RAC’s insurance subsidiary, which provides home and auto insurance for more than half of Western Australian households. Run as a member-based organization, all the company’s profits are reinvested in improving member services and community programs.
“As the only major insurer based in Western Australia, we’re one of the most trusted brands in the state, and we have seen strong growth over the past three years in a very competitive market,” says Houvardas. “But we’re never content to rest on our laurels. We need to make our systems and processes as resilient and efficient as possible, to ensure that we can continue supporting the community.”
Financial planning and analytics was a key area identified for improvement. For many years, RAC Insurance’s main budgeting and forecasting processes had depended on a complex process involving more than a hundred linked spreadsheets.
“We wanted to reduce the amount of time and effort our actuarial team spent on budgeting and forecasting, while also making the process more transparent so that the rest of the business could participate,” says Houvardas. “If we could automate parts of the process, we would be able to unlock much more powerful capabilities, such as rolling forecasts, scenario modeling, stress-testing, and predictive modeling.”
A big bang without a crash
The RAC Insurance team created a strong business case for investing in a solution that would be powerful enough to handle every aspect of financial planning and analytics, from profit and loss statements and balance sheets to cash flow and capital calculations.
“We looked at eight different products, and assessed them not only on technical grounds, but also on the availability of implementation partners with insurance experience,” says Houvardas. “Perth is the most isolated city on earth, and the other major insurers are based in either Sydney or Brisbane, which is a five-hour flight away, so local resources and expertise are scarce.”
Following a detailed evaluation, RAC Insurance selected IBM Planning Analytics on Cloud as its new platform and chose Cornerstone, an IBM Business Partner, to deliver the project.
“Cornerstone had a good track record of implementing financial planning and analytics solutions for insurance companies, and we were very confident in IBM Planning Analytics,” comments Houvardas. “It was one of the few solutions we saw that could handle everything we wanted to do, and most of our finance team had worked with similar products like IBM Cognos® TM1® in the past.”
He adds: “Choosing the cloud deployment option for Planning Analytics was an easy decision for us—it’s the way of the future. Instead of a major upgrade project every couple of years, you get new functionality automatically every few weeks! And IBM’s story around security measures and risk mitigation is very strong, which is critical for a highly regulated industry like insurance.”
The company took an ambitious approach to the project—a “big bang” implementation that would bring 14 different Planning Analytics modules online in a single project. To raise the stakes even further, it would be the company’s first ever major cloud project, and one of the first deployments of the cloud version of the software in Australia. Moreover, due to external factors, the original project timeline of eight months was reduced to just six.
“Cornerstone and IBM did a very good job,” says Houvardas. “We were really impressed with the level of commitment from IBM at a global level—they flew in some of their top people to help us simplify our implementation plan and verify our big bang approach. As a result, despite the constricted timeframe, we delivered the project on time with all the key functionalities in place.”
Piers Wilson, Managing Director of Cornerstone Group, adds: “Given the tight timeframe, we utilized onshore and offshore resources to ensure we could hit the project’s milestones. Not many organizations tackle a fully integrated P&L, balance sheet and cash-flow solution in a single phase, but we knew we could meet RAC’s deadline and deliver an elegant solution by utilizing Cornerstone’s Planning Insurance Blueprint.”
On the road to smarter financial management
Now that IBM Planning Analytics on Cloud is online, RAC Insurance has a single, integrated platform for financial planning and analytics across all its major business domains, from premiums and claims to expenses, cash flow, capital and operational expenditure, and remuneration.
“Getting such a comprehensive solution online within just six months is a remarkable achievement,” says Houvardas. “Planning Analytics on Cloud unlocks so many new possibilities for our finance team, from rolling forecasts to scenario modeling. We have barely scratched the surface of what we can achieve.”
The first budget with the new solution is now underway, and RAC Insurance expects to see a significant reduction in the amount of time and effort its actuarial team needs to spend on the process—resulting in an estimated 20 percent boost to productivity.
“The solution should help us free up two or three of our actuaries, so they can focus on their core role instead of crunching numbers for the budget,” says Houvardas. “Moving away from the spreadsheets is also going to save us countless hours on reporting and integration, as well as eliminating the huge risk of manual error. It also helps us avoid over-dependency on key people by spreading the knowledge and capability.”
“More importantly, though, the process itself is also much more transparent and collaborative. Each department will have much more input into their budgets, and we can drill down to the product level to calculate return on capital and other key business metrics. That’s really what this project is about: giving the business more insight and greater accountability in their decision-making.”
Taking a big-picture view, the solution puts RAC Insurance in a strong position to identify, analyze, and overcome whatever challenges the future may hold.
“Whatever business you are in, disruption is always on the agenda,” concludes Houvardas. “IBM Planning Analytics on Cloud helps us build flexible plans for both the immediate and the longer-term future, and analyze different scenarios to prepare for any contingency. By keeping our business healthy and competitive, we can continue to fund the vital community projects and advocacy that keep people safe on Western Australia’s roads.
RAC Insurance is the insurance arm of RAC WA, a member-based organization that serves over a million members with car, home, and travel insurance and services. RAC also has a strong focus on sustainability, safety, and advocacy, reinvesting its profits to serve both its members and the wider Western Australian community.
- Cognos TM1
- Planning Analytics
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IBM Analytics offers one of the world's deepest and broadest analytics platform, domain and industry solutions that delivers new value to businesses, governments and individuals. For more information about how IBM Analytics helps transform industries and professions with data, visit ibm.com/analytics. Follow us on Twitter at @IBMAnalytics, on our blog at ibmbigdatahub.com and join the conversation with #IBMAnalytics.
Cornerstone Performance Management is an IBM Platinum Business Partner and a leading provider of performance management consultancy in Australia and Asia. Founded in 2007 and drawing on over 200 years of combined business experience, Cornerstone provides business management tools for strategic planning, budgeting, forecasting, and multi-dimensional analysis. For more information, please visit: cornerstone.com.au