Client Case Study

 

Unum Insurance – Mikrofax eProcurement

:: Dells version of this case study ::

A "clients perspective" of a case study in procurement systems success

About Unum :

Unum is a leading provider of financial protection benefits in the United States and the United Kingdom. Unum's employee benefits portfolio includes disability, life, accident and critical illness insurance, which help protect millions of working people and their families in the event of illness or injury. Ranked 260 on the Fortune 500. Protecting 25 million people worldwide. Serving the needs of 171,000 businesses in the U.S. and U.K. Providing benefits for 37 percent of today's Fortune 500

About Mikrofax :

Mikrofax eProcurement Solutions are a leading provider of cloud based eProcurement software systems that are used around the world by leading organizations in both the private and public sector focusing on solving all the procurement challenges from the typical large multi-national Enterprise down to the small business.

Prior to Project startup :

Unum was reliant on an old 3rd party mainframe type ordering system, remote hosted & primarily designed for stock control. The system was lacking in controls and transactional visibility to the business, the hosting 3rd party also having succumbed to the economic environment in it’s financial stability.

Unum therefore needed a new procurement system, simple in concept, easily deployable in a short timeframe, with low resource demands and to a restrictive budget.

Procurement was challenged on timescale to deploy a suitable new solution, coupled with constraints to maintain business as usual activities. There was not the opportunity to engage additional IT resources in support.

An agenda priority was to deal with the risks involved in selecting and implementing the replacement purchase system. Taking an 'ownership' approach such that we had total control for direction and actions was essential to mitigate the weight of this risk, sitting squarely on the shoulders of the small (3) Procurement team.

Risks in our abilities to design and build the right system for 300+ users as Buyers / Approvers were challenging, together with a solid restricted budget environment.

In evaluating the potential suppliers we took into account these key facets:
  • Target a 2nd tier provider who would see Unum’s profile size as a core Customer of choice.
  • Experience in dealing with the financial business sector ~ rendering the supplier choice as credible for the Unum UK executive.
  • Web-hosted as opposed to licensed running on our own servers ~ giving a fully serviced product.
The filtering process for the potential of the product and supplier was conducted using a scoring matrix, covering key elements:
  • Providing a modular 'self-build' capability that can operate 'stand-alone' and be expandable as the business needs may evolve.
  • Avoidance of a large ERP type product normally associated with extensive system interfaces & production environments.
  • Capability for the system provider to upload a number of core Unum databases – suppliers, users, authorization matrix.
  • The look and feel of the system screens – could users easily navigate and undertake the tasks that we need of them
  • Cost – the total cost of applying the product for a 2 year minimum term
  • The ability to exit the system arrangement if the Unum corporate strategy were to change, to an alternative enterprise solution in the medium term.
  • Company culture
  • Overall perceived risk.
Mikrofax eProcurement Solutions in California were selected on the basis of their product being to the scale that Unum needed, flexible in their approach with a ‘can do’ culture to support mutual success.

Implementation :

Mikrofax committed to work with us very closely and objectively to reshape their traditional standard offering taken usually for a centralized purchasing environment, transitioning it to a fully decentralized operation to fit the Unum business operation.

This was essential to engage the ‘Procurement from the Bridge’ philosophy at Unum, where framework structure, control and visibility were essential as part of the Procurement vision to build an effective ‘self-serve’ sourcing capability for the business users.

Our strategy was to deliver a phased approach taking the base Mikrofax modules as first tranche, validate their use in the live environment and then enhance further to expected growing needs of the business in the future, as budget permitted.

The project commenced with the identification of key Unum databases that needed to be constructed for upload into the build by Mikrofax. Specifically:
  • User data base (300 qty),
  • Approval Authorisation matrix
  • Supplier database (450),
  • Cost Centres and Account codes.
The ability to import from Excel tables saved the team circa 3 man weeks input of the data manually.

The key challenge in the implementation was to address the rather unique operational shape of Unum, having a decentralized Procurement with users sourcing directly around the business to the frameworks set out by Procurement via Policy and Approved Suppliers by Category. This forced the merging of Requisitioner and Buyer functions within Mikrofax to one general user, denoted as Buyer.

The other complication pointed to the nature of the supplies needed to support the business; Unum being an insurance company without a manufacturing / production environment; all purchased needs are either 'indirect' materials or services... accounting for 50% of transactions.

This demanded more stringent structure in the workflow to combine into one the Requisition and Buying modules in the process and create a robust structure to guide users to the right suppliers to source their needs. Unum adopted a Category stream model with the supplier base assigned to support one (or more) Categories; this is the first step in the ordering process for a user, deciding the type of supply that they need e.g. Facilities.

We took the time in our approach planning to give extensive thought on what kind of data or Management Information we would need from the system; we also involved key stakeholders in these discussions. The portfolio of the data output determined what was used to design the mandated key input fields applied, essentially reverse-engineering the quality of reporting and intelligence to be derived from the system.

Procurement then built the framework with the essential assistance of Mikrofax; it was refreshing that Mikrofax took vital time to understand how Unum needed to operate and applied lateral thinking in adapting their system to cater for Unum business practices…..whilst maintaining the goal of keeping the system as standard as possible.

The Procurement team recognized that effective communication across the business and user training were critical success factors. We invested significant time outlining why we were implementing the tool and the marginal extra inputs needed (including users receiving goods onto the system for the first time as a pre-requisite for payments being made).

Every user was trained either in group or individually before they were assigned their login to the system. The general consensus was that the system was easy to use with logical workflow.

We continue this training practice today, either face to face or via web-conferencing, many months after the system has gone live and indeed it is viewed to have paid dividends in facilitating good data entry and users positive experience with Mikrofax.

Finally, prior to launch, we decided to allocate 2 months in the project plan to test all aspects of the system; this was conducted within the Procurement department and some pilot test users in the IT and operational areas.

Use :
The live deployment was organized by release to Category group users starting with the IT system fraternity; the rationale here was to test with the most demanding users having the mindset to 'break' systems. This was most productive and learnings gleaned in process flow gaps proved useful in refining the system with Mikrofax assistance.

It was satisfying during this period that any issues raised to Mikrofax support, resulted in prompt action and fixes, which certainly impressed our IT teams. In some instances we facilitated direct contact IT to IT on technical matters, to good effect.

We continued in stage deployment across our 8 Categories over a period of 4 months, the system receiving sundry refinements during the course and learning gained along the way.

The system is now fully deployed and conducts approx 220 orders / month, covering circa 85% of our indirect spend via purchase order production. Exceptions are of the Utilities nature (energy etc) where transactions are conducted under separate contracts and via direct debit. We are now instigating the practice of 'enabling' annual orders for contracts such as contractor labour; the use of a maximum annualized sum with call-off and invoice posting during the term will go some way to addressing the exceptions profile and provide us with more extensive reporting data.

We continue to receive positive feedback on the system operation and we are targeting to ramp up our activity in the use of the system reporting, on a self-serve basis. Standard cost centre manager reports are built and ready for use, requiring our training of the managers to access and utilize the intelligence of the data in the system

We have recognized key value-adds resulting from us implementing the system:
  • The gain of solid control on what is purchased from around all areas of the business using only Procurement approved suppliers
  • A 'no order - no payment' policy has all but eliminated maverick activity.
  • Availability of data at a keystroke.
  • Increased visibility of Procurement and credibility within the business.
  • Solid data to use in supplier negotiations
  • Robust policy of payments only on received orders
  • Procurement dashboard allows full timely control of user access, inputs and management of any risk scenarios
  • We are considering how to integrate Mikrofax into our disaster recovery processes, given the operation is cloud based and un-reliant on our servers or sites being available.
The Procurement team is also very proud to have engaged with Dell Computers in the UK to build our first catalogue 'punch-out' system to the bespoke Dell-Unum premier customer product area. This was a very successful tri-partite venture where the positivity and drive of all involved was remarkable. We went live with this in Q2 of this year, Dell remarking their satisfaction in that we were only their sixth customer to have achieved a real B2B solution with them.

The Mikrofax rollout at Unum UK has generated interest in web solutions from other divisions within Unum, specifically Unum USA having a far broader scale. The UK model innovation has sparked interest in our vision discussions for Procurement excellence and our Enterprise transformation journey for the Procurement strategic role of the future.

Dave Kay MCIPS, Head of Procurement, Unum UK
For more information about how Mikrofax can help you please contact : Mikrofax eProcurement Solutions USA : +1 888 399 8586 UK : +44 845 680 2302 sales@mikrofax.com