When finance takes the cloud lead: AON Hewitt’s journey

While IT generally spearheads a company’s journey into the cloud, one company has the finance department taking on that role, while working closely with the IT department. Meet Sandeep Aggarwal, CFO of India, Asia Pacific and the Middle East at consulting multinational Aon Hewitt, which has operations in some 60 countries.

“Aon is a global leader in providing risk consultancy and advisory to our clients,” says Aggarwal, CFO of India, Asia Pacific and Middle East at consulting multinational AON Hewitt, which has operations in some 60 countries.

Aon Hewitt had been using PeopleSoft v8.8 as its finance solution, but the product was no longer supported by Oracle and hence stopped receiving security patches. This problem, coupled with aging hardware, prompted IT and the finance team to either upgrade to a supported product or look to cloud-based options.

Aggarwal’s team evaluated a couple of SaaS solutions before deciding on Workday, a decision made primarily due to Workday’s functionalities around analytics and a “better user interface”. The company decided to move both finance and HCM into a single platform in order to achieve greater operational efficiency.

“Aon is a large public company, and while speed to market is important, we also have to manage risk and add all of the controls we are required to comply with,” Aggarwal said. “Workday wasn’t really evaluated for Finance until 2014. Aon as an organization has acquired many businesses over the years, which has resulted in a patchwork of systems across the globe. In many cases, these systems were optimized for local needs with happy stakeholders. Our HCM deployment was more of a big bang as Aon and Hewitt had done consolidation to a great extent on the PeopleSoft HCM platform with two different instances.

In our current deployment plan for Workday Financials, we will get 60 countries on the same platform within 3 years. For comparison, it took us much longer time to do the same with PeopleSoft.”

Aggarwal spoke to CFO Innovation’s Cesar Bacani and Asia Cloud Forum’s Melissa Chua about Aon’s decision to deploy Workday Financial Management modules over three years, what the expectations are and how these can be achieved, and other issues. Edited excerpts:

What were the main ‘push’ factors toward a cloud-based finance solution?

It is Aon’s IT strategy to move to cloud-based solutions wherever possible, so as to reduce dependency on infrastructure support and costs.  It was more a question of “when” and not “why”.

You talk of the ‘ability to positively impact colleague experience’ – what do you mean by that?

Workday offers an intuitive user interface and is easier to use, which lowers our colleagues’ resistance to change. It also allows managers to provide approvals on the mobile platform, which is of great convenience.

The workflow in Workday is transparent and gives us the ability to see where a transaction is in the process at all times. Also, it is easy to attach documents to most transactions, which is an improvement for journal entries and asset management in the Financials module.

We also found that Workday retains transaction detail in ledger balances, making it possible to drill from a trial balance down to journal entries, invoices, etc. This saves time and effort from back and fro handling of data among different colleagues.

Aon has done 500 acquisitions over the years, resulting in finance having to deal with various legacy systems.  Why not keep your current on-premise systems and just upgrade?

Very typical of a legacy ERP environment, you have processes that are well-defined. You’re posting transactions and getting them approved through the workflow. Then you wait for the batch runs so you can look at the impact [of the transactions on the books] and do some reporting around that.

If there is a change in the regulatory environment or the statutory requirement at the local level, then it actually becomes a nightmare. You have to do a batch upgrade or a systems upgrade. In a legacy system, everybody wants to avoid that.

In a cloud-based platform, the vendor itself looks at those changes and provides new releases and updates. You can check them in a test environment without impacting your live data. If those work, then you can take them on. So you are almost always up to date.

For teams like finance, it becomes a big pain point if you have to do a lot of manual processes to meet the statutory local requirement, which is enabled to a large extent by cloud-based platforms like Workday.

Your implementation is 100% public cloud, not a hybrid of public cloud and on-premise servers. You have concluded that the risk is manageable?

Absolutely.

Why do you not seem concerned about data hacking and other security breaches in putting financial data and processes on the public cloud?

Aon is a global leader in providing risk consultancy and advisory to our clients. We are also expanding rapidly in the cybersecurity space. When we were looking the cloud as the next-gen IT solution, we looked at multiple aspects.

We certainly believe that there is no basis to believe there may be security concerns.

With more and more organizations moving to the cloud platform for their solutions, the concern is reducing day by day. [Industry researcher] Gartner is saying that by 2018, 25% of core finance applications in large enterprises will move to the public cloud platform.

What we have observed and felt is that [Aon’s chosen service provider Workday has] very robust security protocols. There are independent audits that take place and they get certified every year in terms of the overall environment that they create for their clients.

So for on-premise solutions, you would need to be in the office using the desktop to approve transactions and so on.

You would need to be on the computer. You could still access [the application] from home through VPN connectivity, but you need high bandwidth. And you cannot access it on your mobile, to a large extent.

In this [cloud] environment, that’s not the case. You are on your smartphone. If you have to do certain transactions, you can do that.

You have to do batch runs [in an on-premise legacy ERP] and sometimes you do it during weekends or during the night, when the staff isn’t there. You see the financial outcome or impact on the financial books only after the batch runs are over. So there is a lag when you do the transaction and you see the impact of that on financial posts.

In a cloud environment, that is not there. You see the impact immediately, almost on a real time basis, as you make those transactions.

What were the main challenges with migrating from a legacy system such as PeopleSoft over to Workday? Were users receptive? Did they face difficulties, and how did you mitigate them?

Any change could be difficult for different users and we have to accept that. But keep in mind that doing nothing was not an option for us either. We engaged our key stakeholders early, from current situation analysis, vendor evaluation, feedback solicitation, etc. One of the major challenges was to have a proper data mapping between Workday and the existing solution. This exercise was critical to the success of the project and we took our time and decisions carefully. Last but not least, having proper project governance with different key stakeholders to monitor the progress, to make decisions, and to advise the project team is crucial to mitigate any potential risks.

I understand the Workday Financial Management solution will be deployed next year only in some markets, and then rolled out to the rest of the 60 countries in 2018 and 2019.

On the finance side, we have picked up five modules to begin with, which are core finance applications: GL, AP, Expenses, Asset Management, and Settlements.

Over a period of time, I think we will be picking up the Projects module as well as Time Tracking, and then go with that as we implement Phase 2 [in 2018] and Phase 3 [in 2019] in other markets.

After we are done with the original plan, we will evaluate modules like budgeting, planning and forecasting and then put those as part of the overall ecosystem, if needed.

Only six countries are going live [on Workday Financials] on January 1, 2017. The majority of the countries are still going to use our legacy ERP system.

The unified Workday HCM and Workday Financials is the end-state that we have in mind [in 2019].

But are you confident that all this will work?

We expect a very positive experience. Our confidence comes from the Workday HCM deployment that we did.

I’m also a user of the HR platform. I think the interface is pretty intuitive. It’s like you are navigating an application like Facebook. You can customize it according to your needs, you can access it on the go, you don’t have to log in to the enterprise network if you have Internet available on your smartphone or you tablet. You can work remotely.

These are very big pain points if you look at it from a legacy ERP perspective. There is much more flexibility. As a manager, if I have to approve a certain transaction, I don’t have to log in to the server and then wait for things to load. I just have to go there.

With Workday, the notifications you receive are far superior. They give you actionable things to do. You go there, you follow the link, you approve and then you are done. It actually saves a huge amount of time. And it gives you a complete audit trail.

We certainly expect the user experience to go up. And with the other pieces, the analytics capability that Workday brings on the table, and the real-time data and more accurate data, you can go to the national level of details.

As a finance end-user, right now I spend a substantial amount of time just recording transactions and then extracting that information for any kind of analysis or management report.

With Workday, if you want to do analytics, slicing and dicing of data from a multiple organization perspectives, then it gives you that edge. I think faster speed to market is a key component as we perform our services. That’s where we just want to see the strategic transformation, and within the finance team as well, where we become strategic business partners for our client-facing folks.

Your current legacy ERP, consolidation tool, analytics and other solutions cannot do these things, or are cumbersome in these areas?

Aon acquired Hewitt in 2010 and both were using two separate [ERP] versions of PeopleSoft. We allowed them to continue on two separate platforms, although there have been efforts to consolidate the data at some level.

We use Hyperion for financial consolidation and reports. Hyperion pulls data from the finance version of PeopleSoft that we use for our financial transaction recording and reporting.

For management reporting and analytics, we use a management reporting tool deployed across the organization, and also access [data in] Hyperion. We use Tableau for consolidating operational data as well as financial data.

The process is not as efficient as we would like it to be. But once we have all the [Workday Financial Management] modules implemented, I think it should be a seamless transition and integration of multiple data sources.

Hyperion is going to stay for the overall consolidation and reporting [until 2019]. I’m not very sure how we are going to move data from Workday to Hyperion. Processes will be required, but that will be a short term [workaround] that we have to go through because of the phased approach we are taking.

So another expectation is that finance will be able to do better and faster analytics on Workday.

This is exactly what we expect, because you will have access to real time data and the more accurate data, and with some in-built analytics features [in Workday Financial Management]. 

It will free up a lot of bandwidth for our finance teams, and we expect that bandwidth to be spent doing value-added activities. We expect them to spend more time doing analysis for the business, rather than spending time doing just transactions.

And it will give them the opportunity to upskill themselves as well, to be more analytical in their approach, and make a real difference in the organization.

How much is this costing you?

The major savings will come from [foregone] IT infrastructure and support. With our legacy systems, you need to keep the infrastructure on premise or with the vendors, and then an army of resources to support that. And then making any upgrades or any patches involves huge amounts of time and effort, and you are never certain how this will work.

We certainly expect the overall infrastructure and support cost to go lower. We can then invest back into our resources and into upskilling the finance teams, bringing in new capabilities to them.

Are you convinced that cloud is the way to go, moving forward?

There is no doubt that cloud is the way to go – not just in the future, but right now. “Public Cloud” offers the highest possible level of security with cutting-edge tools, constant monitoring, and BCP readiness. This will not be possible for individual organizations to do on their own. It is also easier to implement new technologies, and reduce the base cost as well as cost to upgrade.