The revamp of its commissions and remuneration system by financial services giant, Old Mutual, using off-the-shelf, industry-specific software from business solutions market leader, SAP, constitutes the first such implementation in Africa and the largest and most complex of its kind in the world.
With more than 20 000 contracted intermediaries selling its products, Old Mutual's retail division is a strategic revenue driver for the group. It manages up to five million transactions a month.
"The financial services market has evolved rapidly in the past few years and investors' appetite for new and exciting financial solutions has been fuelled by a wave of innovation by both new and established providers," says Willem Schutte, business owner of Old Mutual intermediary payment.
"As a result, the number and range of product types exploded exponentially - and all are clamouring for the attention of the best intermediaries, brokers and advisers.
"To retain those intermediaries, therefore, you need extremely flexible commission and remuneration packages that can be adjusted quickly yet still accurately service thousands of individual intermediary contracts across multiple product types. And, of course, you need to support intermediaries with a continuous supply of new, cutting-edge products - all linked to attractive remuneration packages. Our legacy system was just too rigid to cope.
"We looked at nine different solutions worldwide before settling on the incentive and compensation management (ICM) module of mySAP ERP Insurance. It was clear from the content of the solution that SAP had in-depth understanding of our industry. We were also impressed by its robustness, because we knew we'd be asking a great deal of it."
Henk van Huyssteen, one of Old Mutual's project managers responsible for Solution Delivery for the SAP implementation, says that although the project team included local and international SAP specialists as well as Old Mutual's own very experienced information technology experts, "this was an extremely tough assignment. For one thing, we had to take into account the commission system's impact on business processes as diverse as human resources, payroll, financials, product development, and sales and distribution.
"Also, nothing had been done at this scale anywhere else in the world, so we were breaking new ground in the industry. The fundamental structure of the SAP package gave us an 80% fit. But, we still had to decide how we wanted to apply its best practice templates to suit Old Mutual. So, we often took the package where it hadn't gone before."
"It's paid off, though," says Schutte. "The solution is delivering exactly what we want and we were able to introduce a new remuneration model in five months. It would have taken as much as a year before."
"The solution's enabling process brought about efficiencies in other areas of Old Mutual's business, too. But, that's a bonus. Our primary reason for going with a new system was to be more responsive and proactive regarding our intermediaries and, through the resulting improved relationships, to drive greater growth for Old Mutual. And that's what's happening."
SAP Africa's general manager financial services, Lloyd Chisholm, says the ICM solution contributes to an organisation's strategic capabilities because, although it is designed specifically for a commissions environment, "it's actually a workforce management tool. It gives you the flexibility to address the specific remuneration needs of individual employees or suppliers. So they have tangible proof that you, as an organisation, care about what matters to them. And that's a very powerful means of motivating people to do better on your behalf."
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