When Tom Van Berkem, senior vice president, HR, arrived at WellPoint (Thousand Oaks, Calif., $20.4 billion in 2003 revenue) seven years ago, he was faced with the challenge of cost-effectively managing human resources for a company of about 6,000 employees that planned to quadruple in size.
"We faced the strategic challenge to build an [HR] infrastructure for a Fortune 500 company to become Fortune 100," says Van Berkem. "Our existing system wasn't up to that challenge."
Van Berkem's vision for meeting that challenge was to centralize HR services, along with instituting sweeping self-service functionality and 24/7 call center capability - an ambitious set of requirements for that time. Having vetted all the vendor players in the marketplace, Van Berkem relates, WellPoint chose PeopleSoft (Pleasanton, Calif.) because, "We were looking for a vendor we thought shared our vision and most closely matched what we wanted."
Lacking internal resources, WellPoint relied on "a major accounting firm" for PeopleSoft version 7 in January 1998, according to Chuck Moore, staff vice president, HR information systems and administration. It went live on the client/server system in October 1998, with about 100 HR staff users.
In 2000, when WellPoint was ready to make the leap to Web-based self-service, it turned to PeopleSoft Global Services to implement version 8.0 of the vendor's solution. The five-month implementation, which ended in August 2000, required a significant investment in hardware to cope with a shift from the 100 HR users to the entire employee population of over 14,000. But it was at that time that WellPoint also achieved a large payback from the system. A month after going live, the carrier was able to use the PeopleSoft solution to bring its open enrollment process in-house, saving $25-per-head - or roughly $400,000.
That kind of gain was possible because of the strategic role envisioned for the system, according to Moore. "At the beginning, we made the decision that the PeopleSoft database was going to be the source of all [employee] information," he says. "Over time, we have more and more systems dependent on PeopleSoft to become the source of accurate information." The solution is tied into tertiary budgeting and expense report systems, and it plays an important role in employee communications. For example, by tying into PeopleSoft, "a vendor can contact scores of our employees on a moment's notice with voicemail messages," Moore explains.
WellPoint turned to PeopleSoft Global Services again in the summer of 2003 to manage an upgrade to PeopleSoft version 8.3, which enabled all HR manager transactions to be immediately uploaded to the solution's database. The carrier is currently in the process of launching a PeopleSoft portal, which delivers more personalized information than the standard self-service interface. WellPoint is also about to move to a PeopleSoft-driven paperless paycheck system that will save the company $1.17 per employee per check. With about 20,000 employees currently, savings for open-enrollment add up to $500,000 annually, and paperless paychecks amount to a savings of $608,400 per year.
Full-Service Strategic Solution
Added to these benefits is a savings of about 40 to 50 human resources employees, plus related facilities expenses not needed within a self-service HR paradigm. With productivity benefits owing to the efficiency of the self-service process, the solution more than pays back an investment of about $8.5 million plus undisclosed annual maintenance fees, says Van Berkem. "We have transformed a traditional payroll [and] personnel record solution into a full-service strategic solution at a cost not substantially higher than a traditional solution," he asserts.
CASE STUDY CLOSEUP
COMPANY: WellPoint, Thousand Oaks, Calif., $20.4 billion in 2003 revenue.
LINES OF BUSINESS: Managed healthcare.
VENDOR/TECHNOLOGY: PeopleSoft 7, 8, 8.3; PeopleSoft Global Services.
THE CHALLENGE: Implement an adequate HR system to accommodate growth challenges.
Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio