Cigna picks ASP to implement global system
In Japan, an accounts payable clerk at Cigna International uses a financial application from Oracle to enter a transaction in Yen, while in Brazil her counterpart performs the same operation in Reals. In California, Oracle employees tend the software supporting these users and others in more than two dozen countries. And in Philadelphia, Nick Amin is happy.
As senior vice president of global operations and technology at Cigna International, a $2.2 billion division of employee benefits powerhouse Cigna, Amin bet early and bet big on the application services model. Six months after the completion of a phased rollout, some 200 workers in 26 countries are using a suite of Oracle financial applications to conduct business in multiple languages and currencies. "Quality of management improves with higher visibility, and we now have the ability to drill down from anywhere at any time by using a browser," Amin says. "We have seen a significant cost reduction and improvements in the delivery and quality of data. There has been a reduction in time for closing the books."
The global project is a big deal for Oracle as well, a proving ground for its strategy of providing software services to large enterprises. "It was a big step up from what previously was going on in terms of our focus on small- to [mid]sized companies," says Tim Chou, president of the Oracle.com services business. "It stretched every capability we had." While a deployment now under way for Bank of Montreal will have several times as many end users, the global scale of Cignas endeavor made it especially challenging, he says.
The demands of the job also helped speed Oracles decision to absorb its Business OnLine services unit into its core software operations, where it is branded Oracle.com. "By that point we had realized that the concept of a separate company for services was a silly idea, but this deal hastened the change," Chou says.
Cigna needed new financial applications for its international operations after the sale of some business lines in 1999 left it without a global infrastructure of people and systems. The decision to go with software services instead of running the stuff locally in 26 places was made quickly. "We didnt want to go with the historical models of having an infrastructure of our own," Amin says. "It was a business-driven decision to outsource as much as possible so we could focus on our own core business."
Oracle got the nod as the service provider when third-party application service providers werent able to meet the needs set forth in Cignas request for proposals.
"People dropped off when we asked for capabilities they couldnt deliver," Amin says. "The ability to work in the local language and provide 24 [by] 7 support are key requirements, and Oracle has the depth and breadth of skill we need."
The softwares physical location was irrelevant to Amin as long as the vendor met Cignas standards. "I dont need to know where the server is, and my users dont care," he says, though he has on occasion visited the hosting site.
The project moved quickly, says the Porsche-driving Amin, who employed Ernst & Young to help with the implementation. Work was under way by January 2000, with the rollout beginning in May and completed in November. Applications went live in groups of countries at a time, with common languages or regional blocks, for example, coming online together. Each market required localization of content to account for specific laws, customs and usages, but Amin says the process was relatively painless.
"I didnt have a sleepless night, and I wasnt pulling my hair out," he says. What problems there were cropped up in getting the right languages to come up in the right places. "Simple things, but you want it resolved," Amin says. "We have a very tight relationship with Oracle and talked to Tim when there was a problem."
Users also have a real relationship with Oracle through localized support, Amin says. "My person in Korea can call Korea for support, and the person in Chile gets Spanish-language support," he says. The demand for local support helped push Business OnLine into Oracle.com, Chou says. "We thought, how do we handle calls in Spanish on a 24-hour basis if we are a separate company, by hiring our own Spanish speakers?" he says. "All youd end up with is an IT outsourcing company, and who wants one of those?"
Calls for support on application services are routed to the same support centers as those from traditional Oracle users. "The only problem was training guys not [to] ask questions like what version are you using, or have you tried rebooting the machine?" he says. Neither question is relevant to a user of hosted applications.
Oracles visibility into its managed software gives ASP customers an advantage over self-managed users, Chou says. "Traditional service terminates with the call, but in the online world you can see if there is a common problem behind multiple calls."
While Cigna represents a milestone, Oracles enterprise business is still in the early stages, Chou says. "We hear about it on our Tuesday sales pipeline call," he says. "The big guys are having this conversation. Were not on Main Street yet, but we have broken through the view that this is for little companies that cant afford a database administrator." There is still resistance to the whole concept, he adds. "There is no doubt that a group of more conservative [chief information officers] sees this as a threat," he says.
While Oracle is managing the applications, Amin spends a certain amount of time managing Oracle. "I see it as an extension of our own shop, except I expect higher quality than what we could do," he says. "You have to go in with an open eye and create a partnership between the ASP and user, to have common goals." Four Cigna employees are assigned to the Oracle system, providing daily and weekly performance reviews. "Thats not something you can off-load," Amin says.
Cigna owns the license to its Oracle applications, a common setup in the ASP world despite the "pure" ASP model of rental and usage-based pricing. "At the time we did it, rental was not available," Amin says. As he shops for some hosted human resources applications, though, he is considering the rental option. "It provides a level of flexibility to use what I want, not the whole thing" he says. Oracle is the front-runner on the HR project, given the success of the financials, Amin says, but the company will look at other service providers as part of its formal due diligence.
While he wont rush to outsource country-specific applications that require no global presence, Amin says that could change. "As I look out five-plus years at the way the delivery of software will change, adding hosted productivity and desktop services as a new country opened up would be possible."