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IDBI Federal Life Insurance Co. Ltd. (IDBI Federal) is a joint venture between India’s IDBI Bank and Federal Bank, and Europe-based, insurance giant, Ageas. Established in 2005, the organization provides insurance, wealth management, protection, and retirement products to individuals and businesses through (as at September 2012) 50 offices, 987 IDBI Bank branches, and more than 1,000 Federal Bank locations across India.
By upgrading to Oracle E-Business Suite Release 12.1, IDBI Federal cut its time to respond to changes in Indian taxation rules and regulations, created financial reports faster to assist with decision-making, and gained more control over purchasing activities.
In 2007, IDBI Federal realized the need for standardized financial and purchasing processes, and lease payments. The organization wanted processes that would reduce the time to supply monthly financial statements to the Insurance Regulatory and Development Authority (IRDA), in India, and other regulators.
IDBI Federal was also using spreadsheets to track monthly rental payments for 100 office spaces, and manage purchasing stationery, printing services, and IT equipment.
“These manual processes caused unnecessary delays in rental payments,” said Kamlesh Jobanputra, head of application development, IDBI Federal. “In addition, there were no standard controls for ordering office products and services, which meant that there was the potential for some purchases to be invoiced more than once. We needed to find a way to enforce a consistent process for each purchase order. We also wanted to ensure we deployed automated, best-practice processes from the first day of operations.”
Between 2007 and 2010, IDBI Federal deployed Oracle E-Business Suite 11i modules Oracle Financials, Oracle Purchasing, and Oracle Property Manager. In 2011, the organization upgraded to Oracle E-Business Suite Release 12.1, running on Oracle Database 11g.
IDBI Federal must adhere to the Government of India’s complex taxation laws. Oracle E-Business Suite Release 12.1 has helped IDBI Federal eliminate issues related to the incorrect interpretation of the tax-deducted-at-source (TDS) mode of income tax collection.
Under this regime, IDBI Federal subtracts TDS tax from invoices received from suppliers. At the end of the financial year, IDBI Federal provides statements to its suppliers indicating tax deducted from their invoices, so they can claim a tax refund from the Government of India. Occasionally, the government changes the rules about how TDS should be calculated.
“Oracle E-Business Suite Release 12.1 enables us to easily define and meet requirements of Indian taxation laws that relate to our insurance business,” said Jobanputra. “We no longer spend time working out tax rates, manually, which ensures we interpret and apply the tax rules correctly and meet our compliance requirements.”
IDBI Federal uses Oracle Financials to generate monthly financial reports that contain information, such as the performance of its insurance products at each location. Senior managers use this information to determine where to allocate staff and marketing resources, based on which insurance and wealth products are selling well and in which locations across India.
“Since deploying Oracle E-Business Suite Release 12.1, we can create financial reports in around 20 minutes, compared to four hours, previously,” said Jobanputra. “This means our financial team can close monthly accounts and supply financial statements to the IRDA and other regulators within 7 days, compared to around 10 days, previously. This also helps our sales and marketing teams quickly identify where to allocate appropriate resources to maintain revenue from our various insurance products.”
In addition, new functions in Oracle Financials, such as subledger accounting, asset rollback, and payment batches, have helped improve employee productivity.
“The new features have helped users reduce manual tasks and corresponding human errors,” said Jobanputra. “Although our accounting operations have probably increased four- or five-fold, we have only needed to increase our finance staff by approximately 20% to 30%.”
Oracle Purchasing is used by IDBI Federal’s administration and IT staff to purchase stationery, printing services for the organization’s insurance marketing collateral, and products, such as servers, desktops, and software. The organization also uses the solution to purchase IT service and support contracts.
“We now have a standard application that provides more control over our purchases and enables us to easily track the goods and services we have received,” said Jobanputra. “It also ensures we are only paying for the items we consume, which eliminates waste because people aren’t buying products and services unnecessarily, and this has helped us cut procurement costs”
The automation also helped reduce the time it takes to request and release a purchase order by 87%—from 15 days to 2 days. This is particularly important if the organization needs a product or service urgently, for example, a printing service to produce marketing collateral for a new insurance product.
IDBI Federal uses Oracle Property Manager to automate the process of paying monthly rent to landlords for around 100 offices across India. The system automatically generates recurring payment schedules for each lease and sends a request to the company’s finance department to ensure rent is paid on time.
“Oracle Property Manager provides us with more control over the rental payment process,” said Jobanputra. “The solution has eliminated the risk that administration staff will forget to pay our landlords on time, while ensuring they don’t inadvertently pay rent more than once.
IDBI Federal also upgraded from Oracle Database 10g to Oracle Database 11g. The organization is taking advantage of Oracle Database 11g’s active-active mode, which will soon enable the organization to move its database and application reporting processes to its disaster recovery site.
This will ease the transaction load on servers in the company’s primary data center, freeing up processing capacity for more mission-critical insurance applications.
“Oracle Database 11g has also enabled us to enhance security controls and memory management, as well as locate and resolve problems in the database faster and more easily,” said Jobanputra. “Overall, the performance of the database has significantly improved, and database stability has increased by more than 30%.”
Oracle E-Business Suite Release 12.1 was the only solution that met IDBI Federal’s need to respond quickly to changes in Indian taxation laws, and streamline its purchasing, financial, and lease-management activities.
“Oracle is also very strong in the financial services market in India,” said Jobanputra. “It was clear that we were going to receive all the support we needed from Oracle, KPMG, and our colleagues at IDBI Bank, which also uses Oracle E-Business Suite.”
In 2007, IDBI Federal engaged Oracle Specialized Partner KPMG to deploy Oracle E-Business Suite, including Oracle Financials. Oracle Purchasing and Oracle Property Manager were deployed in 2010.
IDBI Federal turned to KPMG again in late 2011 to complete the upgrade to Oracle E-Business Suite Release 12.1. The upgrade was completed in a record time of three and a half months.
KPMG has worked closely with a steering committee from IDBI Federal since 2007 and was familiar with the organization’s business processes and requirements. KPMG prepared a detailed project plan for the upgrade to Oracle E-Business Suite Release 12 and Oracle Database 11g.
Weekly reports were circulated to the steering committee to monitor progress and ensure key milestones were met, such as the completion of internal testing by KPMG, and user acceptance testing. There was no need for extensive customization, as Oracle E-Business Suite Release 12.1 contained many of the standard functionalities required by IDBI Federal.
“KPMG ensured the upgrade ran smoothly and with minimal downtime,” said Jobanputra. “We were able to release the system to our users on the day scheduled in our project plan and have not experienced any major issues since going live.”