Natalie PritchardOctober 2013

Building a Benefits Management Framework within IAG

Introduction

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• IAG has a portfolio of general insurance businesses with leading and established brands across its home markets of Australia and New Zealand, and a growing presence in Asia.

• IAG underwrites around $9 billion of insurance premiums each year and employs over 13,000 people

• Direct Insurance trades nationally under the SGIO, SGIC & NRMA brands

• Core lines of business include Motor, Home, CTP and Business insurance

• Direct Insurance initiated a major strategic change program last year

• More than 70 projects will deliver significant Customer, Staff and Financial benefit over 5 years

• Benefits Management is one of the key controls employed to ensure that the change program is delivering successfully

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Benefit Management in IAG DIGuiding Principles

1. Every Project is responsible for delivering or improving one or more business capabilities in line with the End State Design

2. Delivery/improvement of capability triggers Benefit Drivers that deliver Benefits.

3. Project success measures are defined and accountability for delivering Benefits is agreed prior to business case approval. Benefit Owners sign up to benefit estimates included in business cases.

4. Benefit realisation is tracked throughout the project lifecycle and for a period of time after project completion as a measure of sustainability.

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Benefit Management in IAG DIGuiding Principles

5. Every project is able to be linked directly or indirectly to the success of the change program

6. The PMO facilitates the application of the benefits frameworks and provides tools and support

7. Estimating and tracking benefit realisation is an art not a science - we cannot do it with complete accuracy but we must make best effort

8. The Benefit Framework will continue to evolve and will be reviewed regularly– it will start simple and increase in sophistication over time

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Governance

• Benefit Owner: Accountable to validate and sign-off on benefit estimates as well as their achievement

• Project Manager: Responsible for the delivery of the project and agreed business capability measures

• Project Sponsor: Accountable for delivery of the overall project benefits and business case

• PMO: Accountable for quality assurance over benefit management (end to end)

Program Governance Structure Project Roles & Responsibilities

Benefit Management End to End

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  What does the business / project do? Tool / ArtefactWhat does GO BenefitFramework Manager do?

Propose Identify, categorise and quantify benefits Value Driver Map

Feasibility Identify Benefit OwnersValidate or refine benefit estimates

Benefit Analysis ToolBusiness Case

QA the business case

Initiate

Plan for benefit realisationBenefit Register

Create and pre-populate Benefit Register for project

Incorporate into cost and revenue centre budgets

Facilitate the inclusion of benefits in budgets

Build and Implement

Revalidate benefit estimates and follow change control process if material

varianceBenefit Register

Facilitate the change control process if applicable

Realise Benefits

Track realisation of benefitsAgree rationale and corrective action for

material variance Report on benefit realisation to PMO

Benefit Register

Update benefit actuals into consolidated Benefit Register

Report to ECC on benefit realisation for the program

Consult with project teams

Maintain consolidated

benefit register

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Value Driver Map

Ability to provide policy refunds electronically to customer bank account

↑ Profit Margin

↓ Operating Costs

Legend

In Scope Portfolios

Benefits can be directly or reasonably

attributed to this project

Benefits are expected but cannot be

directly or reasonably attributed to this

project

AAA

BBB

CCC

DDD

EEE

↑ GWP

Eliminate customer irritant and meet

customer expectations

↑ Customer Advocacy

More promoters / less detractors per surveys

↓ Cost of processing refunds

↑ Customers

↑ Breadth of Relationship

55% of refunds processed electronically

Eliminate staff irritant and meet staff expectations

Improved colleague experience

↓ Volume: Staff Attrition/Turnover

Fewer staff leaving

...that will deliver 

these benefits

...will trigger these benefit drivers

...will be resolved 

by this solution...

This problem/

opportunity...

When refunding premium to our customers from a HUON policy, we are currently only able to provide our customers with a cheque. This is as a major irritant for our customers and front line colleagues.

An opportunity exists to utilise more cost efficient refund methods whilst improving customer and colleague experience

More policies to new customers

More policies to existing customers

Refund costs and attrition costs

Benefit Ownership

Benefit Name: Refund processing costBenefit Owner: <name>

Negative benefit arising from project (excl project costs)

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Benefit Analysis ToolProject InformationProject Name:Work Request Number:Executive Sponsor:Project Sponsor:Business Owner:

BenefitCategory:Name: Reduced cost of processing refundsBenefit Owner:Will Benefit be tracked against project? YesPortfolio: AAA BBB CCC EEEDefinition of Metric:

FY12 FY13 FY14 FY15 FY16 FY17 Total Baseline Performance:  650,818$ 650,818$ 670,343$ 690,453$ 711,167$ 3,373,599$ Forecast Performance: 600,818$ 465,749$ 479,722$ 494,113$ 508,937$ 2,549,340$ Forecast Benefit: 50,000$ 185,069$ 190,621$ 196,340$ 202,230$ 824,260$

Comment:

Benefit Driver 1Category:Name: Percentage of refunds generated by EFTBenefit Owner:Will Benefit be tracked against project? YesDefinition of Metric:

FY12 FY13 FY14 FY15 FY16 FY17 Total Baseline Performance:  0.0% 0.0% 0.0% 0.0% 0.0%Forecast Performance: 55.0% 55.0% 55.0% 55.0% 55.0%Forecast Benefit: 55.0% 55.0% 55.0% 55.0% 55.0%Comment:

Authorisation and Responsibility 

Benefit Owner: Project Manager:

I confirm that I accept responsibility for delivery of benefits as outlined above I confirm that I accept accountability for delivery of the business capability as outilned above

Signature: Signature:Full Name: First and Last Name Full Name: First and Last NamePosition: Position Position: PositionDate: dd/mm/yyyy Date: dd/mm/yyyy

Other

XXX

Forecast figures in FY13 reflect the 3 months post go live, not the full fin year.

Operational Effi ciencies

Cost savings driven by increase in EFT refunds compared to cheque refunds (calculations are shown in OCE Calcs worksheet)

Project AXXXXXXXXX

XXX

XXX

Program Sponsor -Program Manager –Project Manager -

The following documents were reviewed:• <Business case name including version number>• <Name and version of other documents reviewed e.g. DCF>

All evaluation criteria has been met

One or more evaluation criteria has not been met, without material impact on the validity of the Bus Case

One or more evaluation criteria has not been met, with a material impact on the validity of the Bus Case

LEGEND

Overall Assessment (reviewer name)

• Alignment to DI Strategy and GO roadmap• Solution design alignment to the Design Principles• Capability delivery clearly articulated• Overall cost/benefit outcomes (inclusive of non-financial and intangible benefit)• Appropriateness of any trade-off decisions• Recommendation

Delivery Assurance  (reviewer name) Costs (reviewer name) Benefits (reviewer name) Technology  (reviewer name)

Recommendations:

• <Provide summary of Risk recommendation assessment with commentary>

Recommendations:

• <Provide summary of Financial recommendation assessment with commentary>

Recommendations:

• <Provide summary of Benefits Management recommendation assessment with commentary>

Recommendations:

• <Provide summary of Technology recommendation assessment with commentary>

Key Findings:

• Risk / issue identification and management

• Resourcing• Scheduling• Interdependencies and constraints• Appropriate documentation and

confidence

Key Findings:

• All costs estimated• Reasonable estimation of costs with

appropriate level of variance• Suitable contingency• Availability of funding on current GO slate

Key Findings:

• All tangible benefits specific, measurable, plausible

• Due diligence applied to benefit estimates• Identification of benefit drivers and

contribution to GO Success Targets• Sign-off of benefits and impact to budget• Net Present Value, Payback Period,

Internal Rate Return

Key Findings:

• Architectural goals met • Complexity reduced or managed• etc

Business Case Quality Assurance Review

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Benefit Realisation RegisterBenefit Tracking ApproachActions required to track benefit:Role responsible to track benefit: XXX

Benefit tracking delegated to: YYY

Frequency of benefit tracking: Monthly

Forum to manage variance within tolerance: AAA Program Steering Committee

Forum to manage variance outside tolerance: AAA Executive Change Committee

Updated Benefit Register to be provided to: GO Benefit Framework ManagerUpdated Benefit Register to be provided by: Work Day 6 of each month

Management of Benefit Variance (to be updated as required)Mar-13 Apr-13 May-13 Jun-13 FY13 YTD FY13

Rationale for benefit variance (if applicable) new implementation embedment period as project went live 10/03/2013CTP refund method is sitting at 11% compared to target of 55%. CTP Refund form has been updated to promote electronic refunds which should drive up results. . Commentary (incl corrective action if applicable)new implementation embedment period as project went live 10/03/2013CTP refund method is sitting at 11% compared to target of 55%. CTP Refund form has been updated to promote electronic refunds which should drive up results. . Endorsed by <name of governance forum> XXX XXX

Endorsed on <date> 15/04/2013 19/05/2013

BenefitReduced cost of processing refunds Mar-13 Apr-13 May-13 Jun-13 FY13 YTD FY13Baseline performance:Forecast Performance:Forecast Benefit: $ 3,733 $ 15,422 $ 15,422 $ 15,422 $ 19,155 $ 50,000 Actual Performance:Actual Benefit: $ 5,725 $ 12,850 $ - $ - $ 18,575 Variance: $ 1,992 -$ 2,572 -$ 15,422 -$ 15,422 -$ 580

Variance %: 53.4% -16.7% -100.0% -100.0% -3.0%

Benefit Driver 1Percentage of refunds generated by EFT Mar-13 Apr-13 May-13 Jun-13 FY13 YTD FY13Baseline performance: 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Forecast Performance: 55.0% 55.0% 55.0% 55.0% 55.0% 55.0%Forecast Benefit: 55.0% 55.0% 55.0% 55.0% 55.0% 55.0%Actual Performance: 22.7% 39.0% 0.0% 0.0% 30.9%Actual Benefit: 22.7% 39.0% 0.0% 0.0% 30.9%Variance: -32% -16% -55% -55% -24%

Variance %: -58.7% -29.1% -100.0% -100.0% -43.9%

Benefit Driver 2Total number of policy refunds generated Mar-13 Apr-13 May-13 Jun-13 FY13 YTD FY13Baseline performance: 9,754 40,641 40,641 40,641 50,394 131,675 Forecast Performance: 9,754 40,641 40,641 40,641 50,394 131,675 Forecast Benefit: - - - - - - Actual Performance: cheque 25,267 26,100 51,367 Actual Performance: bank transfer - email remittance 6,346 13,896 20,242 Actual Performance: bank transfer - mail remittance 731 1,771 2,502 Actual Performance: bank transfer - no remittance 351 1,025 1,376 Actual Benefit: 22,941 2,151 - 40,641 - 40,641 25,093 Variance: 22,941 2,151 - 40,641 - 40,641 25,093

Variance %: #DIV/0! #DIV/0!

Number of refunds generated by EFTActual Performance: 32,695 42,792 - - 75,487 -

1) Open XYZ Volume report (location TBC, User name and Password )

Handover to BAU criteria:• Full quantum of financial benefit has been reflected in

operational budgets• Majority of benefit actuals have been within 10% of target for at

least 3 months• Capability has been embedded into BAU• A minimum of 6 months has elapsed since commencement of

benefit realisation• Confirmation received from relevant governance forum (as per

delegated authority levels) that benefits no longer need to be tracked for the project specifically

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Transition benefit realisation to BAU

Conclusion

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What does good look like? Where are we now / lessons learnt

1. Projected benefits for all GO projects are endorsed by Benefit Owners, recorded centrally by project and benefit type, and aggregated

• In place• Traceability and audit control

2. A schedule is in place for business case development and assistance is proactively offered to business case authors

• In place• Position PMO as ‘value add’ rather

than ‘policeman’

3. All benefit projections are incorporated into operational budgets

• Partially achieved• Unambiguous sign off of benefits

Conclusion

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What does good look like? Where are we now / lessons learnt

4. Benefit Realisation Benefit Registers are in place for all projects / business areas

• In place, requires maintenance• Measurable benefits

5. Benefit realisation is tracked and addressed at appropriate governance forums and informed decisions made to manage variance

• In place, requires maintenance• Culture change

6. Benefit management applies to financial and non financial benefits

• In place for financial benefits• Work in progress for non financials• Relationship management