Aviva Controls Cost with Ariba's Spend Mangement

by Pankaj Maru    May 27, 2008

UK’s largest and the world’s 5th largest insurance group, Aviva, provides life and pensions products across the world. It has a 40 million-customer base worldwide and has more than ” 364 billion of assets under management.

In India, Aviva started its operations back in 1834 and was the largest foreign insurer in terms of the compensation paid by the Indian government. It was also the first foreign insurance company to set up its representative office here in 1995. Currently, it works along with Dabur group.

Aviva has 193 branches in India (including rural branches) supporting its distribution network. Through its Banc assurance partner locations, Aviva products are available in more than 2,795 locations across India.

Need for Solution:

Aviva was facing a situation where spending was more in the areas of systematic sourcing process, program management services, new supplier identification, category expertise, spend analysis, contract management, and many more. Among the key departments that were falling under the over spend were marketing, IT, printing, travel events, HR, training, infrastructure and transportation.

Abhay Johorey, director (Transformation and Services) of Aviva India said, “The Indian banking and financial institution segment (BFSI) is expanding at a rapid pace, and in order to keep up and maximize our opportunities for growth, we need to diligently manage our expenses.”

The company faced challenges pertaining to procurement, sourcing, spend visibility and supplier management. Hence, Aviva was looking for a solution that could raise efficiency in outsourcing process, improve productivity and lowers costs.

According to Johorey, the company in the last 6 years has successfully built a franchise of about a million customers and a billion dollars worth of value. “We realized that we could do better on controlling our cost structure. There was scope to improve our productivity metrics, product portfolio, capacity utilization, customer satisfaction and a culture that defended status-quo,” he added.

Solution:

To address the over spending pertaining to outsourcing process, Aviva opted for Ariba’s Spend Management Architecture. The solution offers greater transparency in negotiating systematic sourcing process, program management services, new supplier identification, category expertise, and spend analysis, and so on.

Aviva is using a combination of Ariba’s analysis, sourcing, category management, and contract workbench solutions.

T.Sivakumar, group director of Ariba (Asia South) stated, “Spend Management is a critical business imperative that an increasing number of banking and financial service firms are embracing. With the spend management expertise, Aviva can effectively manage its costs, reduce risk, drive compliance ultimately, increases its advantage in the competitive global marketplace.”

The technology brought in the dynamic negotiation capabilities to Aviva’s buyers, which expedite their negotiation capabilities across multiple suppliers with short span of time. The technology also ensured that uniform information is available to the suppliers at any point of time.

Benefits:

“Leveraging Ariba’s solution and expertise, we have implemented a more efficient process for outsourcing. This has improved our productivity and lowered costs. The recent deployment has already brought a significant change in the ROI, identifying savings in the range of 8 to 32% across key categories such as information technology, printing, travel, training, infrastructure and transportation,” informed Johorey.

Ariba’s Spend Management solutions allowed Aviva to streamline its purchasing practices with increased visibility to the spend categories and the advanced strategy solutions to it work more efficiently. The Spend Management Architecture ensures uniform availability of information to the suppliers at any point of time.

With Ariba’s sourcing technology solution, Aviva has been able to generate the target savings, and standardize category specific sourcing process. It has enabled the company to generate document repository in order to create and retain knowledge. With this deployment, Aviva aims to source more than US $50 million (Rs.200 crores) in spend and increase its savings in the next 12 to 18 months.

About the deal:

Aviva deployed the Spend Management Architecture in 2007.

SNAPSHOT:

In India, Aviva started its operations back in 1834 and was the largest foreign insurer in terms of the compensation paid by the Indian government. Aviva was also the first foreign insurance company to set up its representative office here in 1995. It works jointly with Dabur group.

Aviva has 193 branches in India (including rural branches) supporting its distribution network. Through its Banc assurance partner locations, Aviva products are available in more than 2,795 locations across India.

Challenges:

* Aviva needed a solution to control the over spending issue related to outsourcing process

* The company faced challenges in the areas of procurement, sourcing, spend visibility, and supplier management

* It needed a solution that could improve productivity, raise efficiency and lowers costs

Solution:

Ariba’s Spend Management solution

Benefits:

* The solution has raised efficiency in outsourcing process and has improved Aviva’s productivity and reduced operational costs

* It ensured uniform availability of information to the suppliers at any point of time

* The solution enabled to generate target savings, and standardize category specific sourcing process

* It generated document repository in order to create and retain knowledge

* The solution helped to gain control of the entire procurement lifecycle through rapid engagement of end users and suppliers

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