center23002457459410012100center700007485380Submitted to – Prof. Sanjay Mohapatra,Xavier Institute of ManagementSubmitted by – Group A7Rishabh Mishra (UM17105)Sanya Agrawal (UM17108)Sarthak Mishra (UM17111)Shreyans Sahu (UM17113)Shubham Budhlakoti (UM17115)Sthitipragyan Sahoo (UM17116)Subhendu Kumar Panda (UM17117) 9410010000Submitted to – Prof. Sanjay Mohapatra,Xavier Institute of ManagementSubmitted by – Group A7Rishabh Mishra (UM17105)Sanya Agrawal (UM17108)Sarthak Mishra (UM17111)Shreyans Sahu (UM17113)Shubham Budhlakoti (UM17115)Sthitipragyan Sahoo (UM17116)Subhendu Kumar Panda (UM17117) center300003208020HDFC LifeReport on IT Strategy and Design Implementation9410036300HDFC LifeReport on IT Strategy and Design ImplementationDeclarationThe views expressed and suggestions made in this report belong to the authors and do not represent that of the faculty, the institute XIMB or of the company in discussion HDFC Life. We declare that the project report submitted is genuine and reflect team’s work and perspective.
AcknowledgementWe owe our gratitude to Prof. Sanjay Mohapatra for his guidance and support throughout the course of the project and providing necessary inputs and information required for the successful completion of the project.Under the esteemed tutelage of the professor, we had the opportunity to learn the nuances in devising IT strategy for a company and aligning it to its vision, mission and goals for effective implementation. Table of Contents TOC o “1-3” h z u 1. Executive Summary PAGEREF _Toc522332665 h 42.
- Thesis Statement
- Structure and Outline
- Voice and Grammar
Objective PAGEREF _Toc522332666 h 53. Methodology PAGEREF _Toc522332667 h 64. Data Collection PAGEREF _Toc522332668 h 65. Data Analysis PAGEREF _Toc522332669 h 75.1 Industry Analysis PAGEREF _Toc522332670 h 75.2 Organisation PAGEREF _Toc522332671 h 85.2.1 VMG Framework PAGEREF _Toc522332672 h 85.
2.2 Strategies PAGEREF _Toc522332673 h 85.2.3 Business Metrics PAGEREF _Toc522332674 h 85.2.4 Stakeholders and their objectives PAGEREF _Toc522332675 h 85.3 Functions PAGEREF _Toc522332676 h 95.
4 Processes for the firm PAGEREF _Toc522332677 h 105.4.1 L0 Diagram PAGEREF _Toc522332678 h 105.4.2 L1 Diagrams PAGEREF _Toc522332679 h 105.4.
3 L2 Diagrams PAGEREF _Toc522332680 h 115.5 Factors that affect IT strategy PAGEREF _Toc522332681 h 155.6 Issues/challenges faced by the company PAGEREF _Toc522332682 h 156. Risk Management PAGEREF _Toc522332683 h 167. Solution Proposed PAGEREF _Toc522332684 h 167.
1 Process Integration PAGEREF _Toc522332685 h 167.2 Application Integration PAGEREF _Toc522332686 h 177.3 Technology Integration PAGEREF _Toc522332687 h 177.4 Big Data Strategy PAGEREF _Toc522332688 h 177.4.1 Structured Data PAGEREF _Toc522332689 h 177.4.
2 Unstructured Data PAGEREF _Toc522332690 h 177.4.3 Usage PAGEREF _Toc522332691 h 177.
5 Cloud Strategy PAGEREF _Toc522332692 h 187.5.1 Cloud Architecture PAGEREF _Toc522332693 h 197.5.2 Benefits to stakeholders through cloud strategy PAGEREF _Toc522332694 h 197.5.3 Cloud ROI ; Sensitivity Analysis PAGEREF _Toc522332695 h 207.5.
4 Cloud Brokerage PAGEREF _Toc522332696 h 207.5.5 Risk Analysis for cloud strategy PAGEREF _Toc522332697 h 207.5.6 Roadmap for cloud PAGEREF _Toc522332698 h 218. Technology Scorecard PAGEREF _Toc522332699 h 229.
Change Management ; Implementation Strategy of ITS PAGEREF _Toc522332700 h 2410. Managerial Implications for cloud strategy PAGEREF _Toc522332701 h 2511. Conclusion PAGEREF _Toc522332702 h 251. Executive SummaryHDFC Life was established in 2000 with an aim of becoming the leading long term life insurance provider in the company. Being a technologically adept company, HDFC Life has always believed in enhancing the customer experience and employee efficiency through technological interventions. For instance, it was the first life insurance company which introduced life insurance Chabot with Haptik.
Working under third phase of digital transformation, the company is keen in adoption of blockchain, AI and bots for business excellence.This project has been taken to understand the impact of implementation of cloud strategy in various processes and functioning of the firm. It is to understand the role of certain technological factors affecting the processes and their IT integration. And finally how these technological transformations like cloud computing and Big Data enhances the company’s orientation towards its vision, mission and goals giving strategic competence to the company.We have collected and analysed data from various secondary sources including company’s annual report, news interviews, call transcripts, conference videos and various research papers and articles.
Though the secondary data sources helped us in analysing the scope of implementation in the company but the lack of primary data sources limited our analysis.We have proposed a digital strategy enabled by cloud computing to increase the market penetration for the company. Amazon Web Services, the leading cloud service provider has been chosen for this strategy.
Many of its different tools and solutions can be utilised to develop a system that increases customer engagement with the company as well as provide data analytics for efficient decision making. The architecture will also help HDFC Life in syncing and utilising Big Data analytics. In addition to analysing the feasibility, we have also shown the technological and commercial benefits i.e. ROI, roadmap. Risk associated with cloud implementation has also been discussed in sensitivity analysis and risk management.In our report we have also discussed and charted technology scorecard for three departments – Marketing, HR and Finance.
The report also discusses the occurrence of change due to cloud strategy implementation and actionable measures of change management. The cloud strategy along with Big Data will help HDFC Life in enhancing the customer experiences, sales and process efficiency providing edge to the company in gaining competitive advantage.2. ObjectiveTo design and implement IT strategy for HDFC Life so as to achieve maximum conformity with company’s vision, mission and goals.Analyze the life insurance sector and the company structureAnalyze the risks associated with the business environmentProcess, Application and Technology IntegrationDefine a Big Data strategyDefine a cloud strategyDevise the Technology Scorecard for the departmentsSuggest Change Management in regards to cloud implementationPrepare action plan for each stakeholderState the benefits of the IT implementation3. Methodology Following methodology was adopted to arrive at an IT strategy and aligning it to the company’s goals:We analyzed the different services and insurance schemes offered by HDFC Life.
We reviewed its product landscape and set up a goal of increasing the insurance market penetration through digital platform.After studying the vision, mission and goals of the company, we aligned our functional ; IT strategies with the company’s current working business model.Simultaneously we checked with the market’s best practices to design the most optimum strategy. We did a qualitative risk analysis for adopting various strategies for streamline functioning.We proposed strategies for cloud implementation, Big Data and change management in alignment with the proposed goals.
4. Data CollectionThe project was based on secondary research. Data about company’s mission, vision, goals, business model and financials was collected from the official website as well as annual report. The IT and cloud computing strategies were researched. News articles, published whitepapers, stakeholders’ interviews were referred to gain understanding of the present situation of the company along with their current IT framework.
Various products provided by different cloud service providers were studied and compared in terms of cost and benefits.Hence the secondary research had different dimensions and different sources of credible data.5.
Data Analysis5.1 Industry Analysis (PESTEL)PoliticalOver the past few years, the imposing of service tax on services given by insurers has been raised by the government.To motivate the insurance sector to expand its spread in rural India, the government has brought about regulations which are more favourable for rural people by lowering the premium amount, bringing about new group insurance plans, etc.
EconomicThe gross domestic savings of people in India have increased significantly, because of which they are looking to new ways of investing for future benefits, which includes various insurance plans.Insurance companies are rapidly emerging as important players in the government securities market.SocialPopulation: Increase in the population is an important factor raising the demand. It also brings about a special influence on the life insurance market in alternate ways. For example, overcrowding in public places, or too many vehicles on the road can result in hazards like pollution and stampedes, which requires coverage and are still not sold on a large scale currently.Lifestyle: The particular lifestyle in a country or at a particular age also influences the insurance sector. Hence, changes therein bring about varying demands for life insurance. Some such lifestyle changes are shrinking of family sizes (and also the increasing instances of both parents working), a large number of vehicles on the road, crumbling social values, etc.
Educational level: India being a developing country, the level of education is still not high enough. Thus, a large part of the population are still not able to grasp the concept of life insurance.TechnologicalInternet: With the increasing penetration of the Internet, insurance companies are ever increasingly using it to reach particular market segments, with specific products designed for them.Database maintenance: Insurance companies have large customer databases.
With the improvement in technology, this has affected the extent to how these companies are better able to maintain these databases.EnvironmentalThe factors such as natural calamities or major disasters play a part in the minds of customers whether to avail the use of life insurance policies.LegalThe deteriorating law and order situation, with the increasing incidence of crime, extortion, abduction, etc., are posing a new category of risks which need to be covered through suitably designed policies.
1 VMG FrameworkVisionTo be the most trusted life insurance company, the easiest to deal with, offering the best value for money and setting the standards in the industry by being the market leader acquiring leading market share in life insurance sector.MissionAchieving 20% CAGR in the gross premium income for the next five years.GoalIncrease the sales of policies by 20% in unit linked insurance plans (ULIPs) ; non-ULIPs.
5.2.2 StrategiesThe company aims to meet the unmet financial needs through product innovation and offer attractive value propositions to customers to cater to both innate and latent needs.It wants to reach the under-served customer segments through customer-centric distribution by redefining the sales process to reach a wider customer base and deliver a superior customer experience.The company wants to enhance the sub-optimal operating model through revitalization of the core by utilizing cutting-edge technology to make data and processes more relevant for present scenario.5.2.
3 Business MetricsMetricsMarketing HR FinanceNo. of more profitable ULIPs soldNo. of policies soldNo. of new customers acquiredNo. of customer grievances resolvedNo. of new employees hiredMan hours of training providedNo. of policies sold per no.
of employees Marketing budget as a percentage of salesExpense to sales ratioFactor costs5.2.4 Stakeholders and their objectivesWith company’s market capitalization at USD 46 billion in March 2018, the company shareholders’ will continue to aim at increasing their return on equity.The employees will look forward to ease of doing business especially with the onset of digitization and innovative IT solutions. The customers will expect products and services of highest quality and value along with seamless experience from the first point of contact till the last.5.
3 Functions The main functions that are performed in the company are as follows:Actuaries – Actuarial Department is in the core of the firm’s functioning as it decides the term, conditions and the premium rates for all the insurance policies.Agencies – This function includes the management of firm’s network of insurance agents and branch offices. They are responsible for recruiting, staffing, licensing, training, distributing, marketing and reviewing the performance of agency officers.Legal – This department is responsible for ensuring that the firm and the establishment properly discharges its business affairs as per the regulations and law. Insurance firms are regulated primarily by The Insurance Act, 1938 and comes under the regulatory jurisdiction of IRDA.Finance – This department is responsible for all the financial operations and transactions within the firm. They are also responsible for developing strategies for investments and risk management.
Advertising – This department is responsible for all marketing communications. It is crucial to the firm for widening and spreading awareness regarding life insurance usage and benefits to efficiently reach the customers.Accounting – This department is responsible for the preparation and audit of financial and accounting statements as required by IRDA and SEBI.Underwriting – This department is responsible for risk profiling of existing and potential customers.Medical ; Claim – This is the after sales department responsible for validating the claim and deciding the compensation as per the covered loss in the policy.5.
4 Processes for the firm 5.4.1 L0 DiagramMarketingFinanceHROperationsEnvironment ; CustomersResourcesMarketingFinanceHROperationsEnvironment ; CustomersResources5.
4.2 L1 DiagramsMarketingTargeting CustomersSaleCRMDetermining premium according to customer profilePromotionTargeting CustomersSaleCRMDetermining premium according to customer profilePromotionHRRecruitment ProcessAppointmentTraining ; DevelopmentVerification ProcessRecruitment ProcessAppointmentTraining ; DevelopmentVerification Process5.4.3 L2 DiagramsMarketingProcess – Targeting Customers0-635StartCustomer ProfilingCRMIs customer suitable to approach?StopYesNoDataStartCustomer ProfilingCRMIs customer suitable to approach?StopYesNoDataProcess – CRM00StartBuilding relationship with customerDetermine premiumIs customer ready to purchase?StopYesNoCustomer InformationGather requirementsSuggest product ; promote schemesStartBuilding relationship with customerDetermine premiumIs customer ready to purchase?StopYesNoCustomer InformationGather requirementsSuggest product ; promote schemesHRProcess – Recruitment Process0-635StartSet the job requirementsAppointmentIs candidate suitable for job?StopYesNoData from functional departmentsOpen job applications in colleges and through agenciesShortlist potential candidatesMultiple evaluations of candidatesStartSet the job requirementsAppointmentIs candidate suitable for job?StopYesNoData from functional departmentsOpen job applications in colleges and through agenciesShortlist potential candidatesMultiple evaluations of candidatesProcess – Training ; Development0-635StartIdentify knowledge gapProject AssignmentIs candidate competent?StopYesNoData from functional departmentsSubcontract SMEs for training purposeIdentify candidates in need of trainingSet up training modulesEvaluationStartIdentify knowledge gapProject AssignmentIs candidate competent?StopYesNoData from functional departmentsSubcontract SMEs for training purposeIdentify candidates in need of trainingSet up training modulesEvaluation5.5 Factors that affect IT strategy Management support: If the apex management is invested from the start then it is simpler for the organization to implement IT strategy.
Identification of correct business process required: It is not always easy to identify the correct business process required. A certain process such as re-engineering or automation may not be required for the organization, but they go through with it because the rest of the industry follows it.Stakeholders’ interests: At times, certain stakeholders may feel that they are better off in the status quo state, rather than going for any kind of technology adoption.Sustainable technology implementation: Many a times, organizations adopt any technology just for the sake of IT implementation. On the contrary, the organization should make sure that it is actually able to reap some benefits and have a positive ROI.Costs: IT implementation involves high costs and requires expertise and time as well. Hence, any such investment should be well thought out before implementation.Technology laws: These laws vary from country to country, and in some restrictive cases, may hinder the adoption of full-fledged IT implementation.
5.6 Issues/challenges faced by the companyUnder-served customer segments: There are still latent needs which are not yet served. There are still many customers that lie beyond the ambit of traditional insurance.Unmet financial needs: There is still a lack of proper value proposition. There are still various non-focus areas for insurers to work upon.Sub-optimal operating model: The current distribution model still has various limitations. There are also quite complex fulfilment processes.6.
Risk ManagementRisks for HDFC Life:Business growth might be negatively impacted due to the dilution of biggest distribution channel (bancassurance).In case of a natural catastrophe or a big disaster, high proportion of protection business might lead to high claim incidence.Profitability and business growth could be negatively impacted due to increase in competition in its high margin group protection business.There is high dependence on the bancassurance channel for distribution.Compared to other large private insurers, agency channel is weak.Risk Mitigation:There is enough room for growth due to the under-served market in India.There can be an increase in market share on the back of development of agency channel, superior customer service and strong product offering.
Greater growth can be achieved by product innovation and more investments in digital platform.Leverage its large number of group customer base by cross selling individual businesses to them.7. Solution ProposedThe key processes were identified with respect to different departments. Then as per the best market practices and prevalent software, the applications were mapped to those processes. The Big Data strategy and cloud strategy were designed keeping these in mind.
7.1 Process Integration The following table shows some of the processes that could be integrated to improve overall efficiency for the company Functions ProcessesMarketing 639663205721Sales & Forecasting Advertising & Promotions New product launch Pricing CRM Market ResearchFinance Means of Financing Working Capital Management Capital Budgeting HR Recruitment Training Performance & Appraisal Management Compensation -1171788-42737400 Operations 12065-96964500Maintenance of website/other platforms Data Analytics and Management7.2 Application IntegrationApplications ProcessesAmazon S2, IHS Markit EDM Sales & ForecastingData Analytics and ManagementMarket Research Amazon Mobile, IOT, AI, EIS Suite Advertising & PromotionsCRMMaintenance of website/other platforms Amazon EC2, Amazon EMR, CycleCloudWorking Capital Management Capital Budgeting Pricing Amazon WS, OrangeHRMRecruitment Training Performance & Appraisal Management Compensation7.
3 Technology Integration Service Type Private IaaS CRM, Enterprise ManagementPrivate SaaS Knowledge Management Application,HRMPublic PaaS Big Data Analytics, Artificial Intelligence, Data Backup7.4 Big Data Strategy HDFC Life can utilise Big Data for effective decision making as well as enhancing business models and their relationships with the customers.7.4.1 Structured DataStructured data for an insurance company may include customer data, policy data, claims data, employee data, accounting data, etc.
which is either collected by machines or is fed into the computers by employees. 7.4.2 Unstructured DataUnstructured data for insurance companies mostly include data collected through digital platforms and social media like online posts’ views, likes etc. The data usually has textual content and multimedia files.
7.4.3 UsageRisk Assessment: Big Data tools help in accessing the risk associated with a customer by analysing the past claims and assigning the appropriate premium. Employees can now understand the risks associated with the introduction of new products in a specific market and can accordingly devise plans to go ahead and mitigate the risk.Reduction of Fraud: Big data can help in identifying patterns of past behaviour to determine if a customer is likely to make a fraudulent claim. The tool will then alert the agents and then they can determine whether or not to seek more information or refuse to issue a policy completely.
Improving Customer Experience: The main way this sophisticated technology is helping HDFC Life to improve its customer experience is by helping to tailor make policies to fit each individual client. This helps them avoid selling fixed policies that often don’t suit their customer’s exact needs. Streamlining the Process: HDFC Life use big data analytics to analyse how well particular policies are selling, correlate customer feedback, which policies receive the most claims, and how customers respond to various sales techniques/promotions etc. Since all this data can be processed in a short space of time, managers can examine up-to-date information on what particular things are doing well and what aren’t. This allows them to refine products as well as better train staff in how to sell products etc.Customer Retention: Big Data tools when implemented optimally can reduce the cost of customer acquisition. Using these tools, companies can acquire new customers staying well within their marketing budgets across all market segments.7.
5 Cloud Strategy HDFC Life is planning to maximise its penetration through digital strategy. For a robust digital strategy, HDFC Life first needs to make a transition to the cloud platform and data lake. It also needs to incorporate its legacy systems for seamless operations. We would suggest using products of Amazon Web Services (AWS) to achieve this goal. Considering the highly sensitive nature of the data, the security of AWS products can be relied upon. With the large scope of AWS’ products, it will help HDFC Life to attain the scalability to store an ever-increasing volume of data whilst maintaining costs under control. It additionally allows a swifter go-to-market strategy.7.
5.1 Cloud Architecture7.5.2 Benefits to stakeholders through cloud strategy EmployeesEase of doing business through paperless and cashless transactions facilitated by cloud computingTime of completing a task drastically decreasesMinimization of human error in processing of tasksData analytics and recommendations system aids employees to target specific customer segments with predefined and customized offersHigher degree of resilience and reliabilityCustomersDigital transformation will enable a frictionless customer journey with customized offersConvenience to customers to view and choose among various plans without any interference of brokersPaperless, cashless and presence-less transactionsReal-time engagement and recommendation engineInvestorsSignificant cost reduction with increased operational efficiencyIncreased revenue generationEnvironmentPaperless transactions promote green environment 7.5.
3 Cloud ROI ; Sensitivity Analysis Please refer the excel sheet attached with the report.7.5.4 Cloud Brokerage HDFC Life can adopt the following function of cloud brokersCloud Customizer With multiple vendors for cloud service and partnering up with small scale insurance providers HDFC Life can select cloud service on behalf of an individual/group of customers, integrate the service to work together and sell the new offering under its brand name.
7.5.5 Risk Analysis for cloud strategySecurityUnauthorized access or leak of Customer’s information.Availability RisksEither the cloud vendor or the ISP can go down, hence there are certain chances of reduction in uptime.Incomplete Data DeletionDue to reduced customer’s visibility and spread over data on different data storage mediums, data deletion at times remain incomplete.7.
5.6 Roadmap for cloud8. Technology ScorecardMarketing, HR and Finance Department have been considered for the scorecard evaluation. The Balanced Scorecard has been mentioned below: Performance Measures Weight OverallMarketing 50% No. of policies sold 0.4 0.
16No. of new customers acquired 0.3 0.12No. of more profitable ULIPs sold 0.2 0.
08No. of customer grievances resolved 0.1 0.04 HR 25% No. of new employees hired 0.
3 0.075Man hours of training provided 0.7 0.175 Finance 25% Percentage of gross premium income spent in marketing 0.
4 0.10Percentage of gross premium income spent in recruitment ; training 0.4 0.10Managing factor costs 0.2 0.
05MarketingHRFinance9. Change Management ; Implementation Strategy of ITSProject Structure: The professionals involved in the implementation of cloud project are divided in the following roles as per their responsibilities:Finance/Accounts Managers: They are responsible for the finances and budget allocation, project appraisal, and capital management.Senior managers and Leaders: They are responsible for syncing the business values and project implementation.
Technical Architects: They are required to design systems for proper functioning and implementation with agility and dynamics. System Engineers: They are responsible for system analysis, designing and testing various components of cloud.Goals: Cloud adoption in four regions: North, East, West, and South Achieving high adoption by training for the change.Critical Success Factors: The CSFs should be investing in system infrastructure building, development, training and operational efficiency and effectiveness.
Communication Strategy:Head and Zonal Office Management: HDFC Life has cross functional General Managers and Deputy General Managers in the Head office. And Regional managers heading North, West, South, and East Zone of HDFC Life Business managing audits, accounts, and inspection. This level, typically, is responsible for the strategic, medium- and long-term business level decisions. Implementation of the cloud will help them in taking such strategical decisions using more efficient DSS and analytics. Divisional Office Management: It includes Departmental Divisional Managers, Deputy or Assistant Managers, Administrative Officers and Accountants. They will be largely benefited by optimized financial and actuarial planning reports. Branch office and Insurance agents: It includes brand managers, agents and relationship managers.
The cloud implementation will help them in more efficient customer profiling, sales planning and policy design using real time analytics. Pilot Strategy: This will include the implementation and change management in a more sorted and disciplined territories/regions, preferably South India. Then systematically stretching the adoption in other regions. Review: This should be undertaken by Senior Managers acknowledging the above-mentioned CSFs with the help of analytics tools and manual algorithms.
This has to be done based on stages of project implementation. Training: Training has to be provided to all the crucial stakeholders and end users of the system. This has to done by ‘TTT’ strategy i.e. Training the Trainer!Rewards ; Recognition: Efficient implementation and successful adoption should be adequately awarded. The same can be linked to KPIs of the employees to motivate them to adopt the new technology.Feedback: Frequent feedback regarding interface, feasibility and scope of improvement should be taken by all the stakeholders to strengthen the cloud architecture y making it robust and more usable by the employees. 10.
Managerial Implications for cloud strategyTo customers an effective cloud strategy will provide seamless experience throughout as well as increase their satisfaction with speedy resolution of their doubts and concerns. The interactions through digital platform will keep them updated with the latest products and services provided.To shareholders the cloud would provide increased returns owing to three outcomes of cloud strategy – cost reduction, increased revenues and larger customer base.To employees the cloud would provide increased coordination and collaboration amongst peers. It would reduce their workload and data analytics will support their decision making process.
To senior management the cloud would enhance their decision making process, planning and strategic implementation through rich inputs after data analytics.11. ConclusionThe project discussed the feasibility and the consequences of the implementation of cloud and Big Data strategy in HDFC Life. In addition to proposing the roadmap for the cloud implementation,we have analysed the technological and commercial benefits and the risks associated with the adoption of cloud and Big Data. The implementation will help HDFC Life in gaining competitive edge in this technologically intensive world.