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Stuart Lauchlan

Head of Editorial At Sift Media

Read more about Stuart Lauchlan

Case Study: Cloud HR system key to Direct Line Group’s transformation

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RBS Insurance Group announced earlier this year that it intended to rename itself Direct Line Insurance Group.

The move comes ahead of a divestment of the division, which owns the Direct Line, Churchill, Privilege and Green Flag brands, by parent RBS.
 
It has to sell the assets by the end of 2014, under the terms of its bail-out agreed with the UK government in 2008. But one of the knock-on effects of the sale has been the need to introduce a new HR system as part of the unit’s wider corporate transformation programme.
 
Mark Martin, HR director at the Direct Line Group, explains the rationale: “The primary driver for all this is our need to separate out as an HR function. I joined back in 2010 to build an HR standalone function. Very importantly for us, HR is the most integrated of the functions with RBS. Some two thirds of our HR was delivered by the group.”

What this means in practice is that the organisation is in effect almost a ‘green field’ site in systems terms. “We have a rare opportunity here,” Martin says, who has had experience of implementing HR applications in a number of other businesses.

 
“This is the fourth HR function I’ve built. Back in the 1990s, I worked with [consultancy] Origin to build my own bespoke HCM system. So I was quite aware of what I was looking for,” he explains.
 
Martin’s IT-savvy as an HR director is perhaps still relatively unusual at a time when the HR function is often more ready to complain about their IT systems than participate in defining what they should look like or in deploying them.
 
Massive opportunity
 
But he says: “There is a massive opportunity for HR within IT and IT within HR. The reason I got involved in IT so much was through being responsible for trying to change the culture within multi-national organisations.”
 
In other words, genuinely empowering people, while at the same time ensuring that there are appropriate governance procedures in place cannot be done without implementing an effective system. “You need to have your people strategy and your systems working closely together,“ Martin advises.

The ‘green field’ nature of the Direct Line Group’s HR function in IT terms meant that Martin and his team were able to buy applications that suited their HR strategy rather than be tied into the requirements of existing systems.

Although RBS currently uses Oracle’s PeopleSoft packages, Direct Line Group decided to undertake a major market evaluation to better understand its options.

 
It looked at all of the “traditional legacy vendors” such as Oracle and SAP and also evaluated Oracle’s new Fusion human capital management applications.
 
“We have been able to make a lot of choices. We could probably have cobbled something together, but RBS Group has backed us very well to do this properly, Martin says. “We have been able to change all our systems, eight in total. It’s a significant investment by RBS Group.”

In the end, the Group opted to go for applications from Software as a Service vendor, Workday based on a number of considerations. “Firstly, it was a cloud computing option,” Martin explains. “The system works and it’s the same system that everyone else has so we know from the start that it is going to work.”

Another appeal of an SaaS-based system is there are limits to how much customisation can be undertaken.
 
The security challenge
 
“HR functions will always seek to reinvent the wheel when it comes to core processes, but cloud gives us the discipline to say ‘don’t play with those core processes. Think about how you’re going to get the most out of them’,” he says.
 
 
A third factor was that Workday’s offering is based on an object- rather than relational database.
 
Martin explains the rationale: “Usabilty is critical for me. Many HR systems have very small elements of capability to be used. Object-orientation is important because it’s how people think. People like to wander from one object to another rather than stay disciplined to one place as you’d do with a relational database. It’s very intuitive.”

And initial user satisfaction rates have, to date, been positive. “We are a couple of weeks away from the full go-live, but we have a number of people using it and testing it and proving it for us,” says Martin. “Within those people, they are loving it.”

As for concerns over how to protect sensitive data in the cloud, he acknowledges that: “It is definitely one of the biggest challenges when it comes to selling cloud to senior management”.

 
Martin explains: “There seems to be this attitude that, if you can actually look at the box, it is somehow more secure. But you don’t usually see your own data centre anyway. It is a challenge we have to overcome. Security is not something you can overlook as a company like Direct Line Group where data is core to our business.”
 
As a result, one of the reasons that the business went with Workday was its “very strong focus on security”, he says.
 
But as Martin concludes: “We are the first major cloud implementation within RBS Group. We haven’t used cloud computing in core systems elsewhere, but people are starting to like the experience we are getting from the cloud. So we’re trailblazing.”
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Stuart Lauchlan

Head of Editorial At Sift Media

Read more from Stuart Lauchlan
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