For many firms embarking on digital transformation, the temptation is to start small, testing the waters with a pilot project in a non-critical area or satellite office.
But in fact this approach has the greatest potential for failure, according to Paul Risk, chief of global applications and architecture at insurance firm The Warranty Group, who notes that the company chose to start with its biggest business, North America, which accounts for 60% of the firm’s revenue. His rationale is simple:
Where a lot of companies fail is they try a small block of business, and then when it doesn’t do this or that or that, of course it doesn’t, because you picked it for this teeny block of business.
We forced everybody to get behind it one way or another as if we failed the company’s major revenue stream was at risk. Some came kicking and screaming, some came very willingly. My advice is don’t take a small science experiment, take something that encourages everybody else in the company to get behind it.
Risk joined The Warranty Group in 2013, at the same time the 52-year-old firm, which specializes in automotive warranties, was starting to think about a complete transformation of its IT infrastructure. He says “the stars aligned” to enable such a large project to get signed off and underway, thanks to a combination of the size of the company and a change of equity partner:
Inertia in a lot of companies is such that they can’t get over that hump to get off the legacy systems. They try, and then they discover they don’t have the political capital or the board doesn’t have the stomach to go through the transformation. But the longer you wait, the harder it gets. We were small enough and at an inflection point in our company history – the board said just go and get it done. It cost a lot of money, took some time, there was some cultural resistance. But no one argued this was the wrong thing to do, no one was saying keep me on the AS/400. They’re saying can I get there faster.
For a firm in its sixth decade, this threw up other challenges, namely around people and attitudes to change. Risk explains:
Some of the people had been there 20, 30 or 40 years and they saw no need to change. This kind of change isn’t something they can initiate on their own, it’s foisted on them out of necessity. We all knew we’d end up in a much better place, it’s just sometimes the journey is long and painful. Not everybody makes the journey. That’s a fact of corporate life. We had to accept that there would be some changes that not everybody would love.
The Warranty Group chose Salesforce as the linchpin of its IT transformation, and Risk was brought on specifically for this project. At the time, the firm had about 30 legacy systems doing the same thing Salesforce offered, and the plan was always to add in other components from AppExchange partners to perform functions Salesforce did not do natively out of the box. Risk argues:
To make the platform really sing and dance, you need to add other components to it. One of the key components was FinancialForce to do all our transactional billing, invoicing, general ledger and cash management for the system.
Although the firm considered financial systems from Oracle, NetSuite and a couple of others, it settled on FinancialForce pretty quickly, mostly down to the fact it had already decided to go with Salesforce, but also as the FinancialForce sales team “did a good job”.
The company is also running an old PeopleSoft 8.9 system for ERP, which has been in use for about 10 years; it uses some Azure middleware that links Salesforce and FinancialForce to PeopleSoft:
Rather than trying to send our transactional data into the general ledger and pollute it with millions of transactions, we use FinancialForce inside of Salesforce to manage all those transactions, keep the numbers balanced, summarize the data and send that off to PeopleSoft.
Kick in the butt
The Salesforce applications are now up and running, and used by around 600 staff, with a further 40 to 50 FinancialForce users. The project has allowed the company to centralize its systems and processes, moving away from the old setup where the 35 different countries the business operates in were treated like individual fiefdoms. Finance and underwriting are both centralized, while sales are coordinated for global customers, and the firm is able to use and repurpose the same technology in different parts of the world. Risk says:
Getting off the legacy was just the kick in the butt that gets you moving. We needed something that was configurable, that was multi-language, that was multi-currency, that was supported by a vendor that would get monthly or quarterly releases out of it, that our users could configure.
Right now our processes run through IT and we didn’t want them to. We wanted to push the boundary level of technology back to the business, as close as possible to the consumer, be that in our dealerships or into the field. This allows our business users and in the case of FinancialForce, our financial users, far more direct control over the reporting, the configuration, client setup, fee management and cash management than having to run to IT every time they need something fixed.
That was a huge consideration. It’s also a major cultural change. But we felt that by getting everything onto the cloud we could enable that kid of cultural change. Of all the components – the technical process, political, cultural – that cultural piece was the hardest but it’s also produced the most benefits.
Risk also espouses the security advantages of moving the company to the cloud :
Every IT department likes to think it’s the second coming of IBM – they can build things better. When it comes to security, it’s like you buy this really fancy house and then you build your own lock. And you can’t understand why the neighbor’s 12-year-old kid can pick the lock with a bobby pin. You don’t know how to build the lock, it’s not what you do. Leave security to the security professionals. I will never be able – with my budget and my revenue stream – to stand up to the kinds of hackers that routinely attack companies.
But I can get onto Salesforce and Oracle and Microsoft, and I know that they can provide the security. There’s safety in the herd. All these companies that get hacked, the reason they were hacked is because they were alone. They didn’t invest enough money, they didn’t have [enough] smart people, they were alone. And if you’re alone, you’ll eventually fall.
Looking ahead, Risk says while the firm will eventually get round to moving off of PeopleSoft, the current focus is on the data migration aspect of the project, which entails moving 50TB of data:
It will all end up in the cloud some place. Current transactional data will end up inside of Salesforce, and some of the older legacy data that we just need to keep will end up in Microsoft Azure. There’s a clear path for where things go. Setting up the technology part – I wouldn’t say it was easy and fun, but it’s easy and fun compared to migrating data.
Image credit - Warranty Group
Disclosure - At time of writing, FinancialForce, NetSuite, Oracle and Salesforce are premier partners of diginomica