Embracing Digital Transformation: In Conversation with Star Health Insurance CFO Nilesh Kambli

Digital transformation has become a cornerstone for organisations seeking to streamline operations and adapt to evolving market demands. One of the latest big players to take this leap has been Star Health Insurance.

The multinational health insurance company has recently entered into a strategic partnership with Oracle to modernise its financial operations. This involved migrating its non-core financial operations, lease management, and procure-to-pay processes to Oracle Fusion Cloud Applications, marking a crucial shift towards a cloud-first strategy.

To understand this digital transformation journey better, CFO India sat down with Star Health Insurance CFO Nilesh Kambli, who shed light on the pivotal role technology plays in enhancing operational efficiency and maintaining competitiveness in today’s dynamic landscape.

Q: What were the primary objectives behind your organisation’s recent digital transformation efforts, particularly in terms of improving operational efficiency and scalability?

Nilesh: To give a background about Star Health, we have a 33% market share when it comes to retail health insurance market. We closed last year with around Rs 13,000 crores of premium. And for the first nine months, we were growing at 18%. It’s a large organisation with 15,000 plus employees now. The objective was to ensure that we have end-to-end automation.

There were manual processes where the approvals were on emails; they were Excel sheets. The objective was to do a digital transformation and ensure that the business processes are seamless. There is end-to-end automation, process efficiency, cost savings that can come through. All these are audited as well because compliance plays a very important role across departments. We are under the compliance from SEBI as well as IIDF. Keeping all that in mind, we decided to take this transformation journey.

Q: How did the implementation of the new ERP and procurement solutions contribute to centralisation and better control over spending within your organisation’s operations? Can you provide examples of tangible improvements?

Nilesh: Let’s consider a scenario where someone wishes to make a purchase. Previously, these processes were decentralized and manual. If the technology team needed to engage with a vendor, they would draft a purchase order (PO), negotiate terms, and send it, often resulting in project delays. These resources were already committed for three months initially. Now, with a potential two-month extension, there is no control over the timeline. However, today, all procedures are conducted through a centralized system. Consequently, we’ve established a centralized procurement team. Any new requirements must be routed through this team, initiating a request in the system. A standardized process for purchase requests is followed, including approval from department heads. This procurement team also liaises with vendors to discuss rates, arrangements, timeframes, and market competitiveness before issuing a PO. If a project faces a two-month extension, thorough questioning and deliberation occur within the system to identify reasons and delays. Every step is now system-driven, incorporating additional checks and balances to ensure control. This is just one example. Across departments, we now have visibility into vendor relationships and existing vendors, facilitating vendor consolidation and enhancing efficiency.

Today, individuals no longer need to manage emails or prepare Excel sheets. Automation through the system enhances workforce efficiency and productivity. Lease management serves as a prime example. We’ve implemented a lease module within Oracle Financials. With approximately 840 offices, we deal with around 1500 landlords, some of whom may own multiple properties under different names. Renewals of these contracts, some of which may have separate maintenance or parking charges, were previously managed in Excel but are now seamlessly integrated into the system. We have comprehensive information on vendors, contract expiration dates, amounts, additional services utilized—all automated. This strategic shift drives our operational approach.

Q: How has the partnership with the chosen vendor influenced your organisation’s financial management strategies and decision-making processes? Have there been noticeable improvements in areas like financial reporting or forecasting?

Nilesh: There have been notable enhancements, facilitated by the seamless integration of our solution with Oracle EPS software.

As mentioned earlier, the establishment of a centralized procurement team has significantly improved our negotiation capabilities with vendors, resulting in considerable cost efficiencies.

From an audit standpoint, say, six months back, if the auditors asked us for an approval, mails were pulled out and sent. If something was missing, then you take some manual approvals or something like that. Today, the entire end-to-end process is managed through the system, including delegation of authority metrics, leading to enhanced stability. One more thing we are doing is, we are working on the budgeting module as well. Today, the budgets are on Excel, the actual spends are there. This is part of phase 2. That is also under discussion and implementation, where the budgets of each department, which are decided at the beginning of the year, will be tracked through the system. If an individual exceeds the budget, they will not be able to raise a purchase order. We are in the process of implementing approvals that will be readily available either off the shelf or at the time of raising the purchase order. This contrasts with the previous method where purchase orders were issued post-agreement signing, often leading to budgetary discrepancies at payment time. That’s the kind of efficiency automation that we are currently experiencing.

Q: How important was the support provided by the partner’s customer success services during the implementation phase? In what ways did this support contribute to the success of the transformation?

Nilesh: PwC and Oracle were great partners right from the start. A dedicated manager was assigned because there are numerous infrastructure elements at the backend that require seamless support, particularly since it’s a cloud infrastructure. They guided us through the creation of various masters, offering insights into the latest developments and sharing their positive experiences with other clients, along with recommending best practices for Star Health to adopt. Regular interactions with both the Oracle and PwC teams were instrumental in ensuring that the implementation met the highest standards. By following established best practices, we were able to leverage the benefits of those practices as well.

Q: Looking forward, what are the expected long-term benefits of Star Health Insurance’s digital transformation in terms of sustaining operational efficiency and competitiveness?

Regarding long-term benefits, all stakeholders are aware of the specific processes in place, which are system-driven. Payments are made promptly, and we consistently adhere to payment terms.

Employees stand to benefit from streamlined operations, as the reliance on email data storage and Excel spreadsheets diminishes, fostering heightened efficiency and productivity. Moreover, simplified auditing and compliance procedures mitigate cybersecurity risks inherent in traditional data management methods.

By storing agreements and purchase orders within the system, compliance management is bolstered, aligning with rigorous standards set forth by regulatory bodies like IDA.

The establishment of a dedicated procurement team strengthens vendor negotiation capabilities, leading to cost-effective solutions and vendor consolidation within the system. Furthermore, the adoption of cloud-based software enhances scalability and technological efficiencies, addressing previous limitations.

This again is a very big advantage when it comes to infrastructure management from a technology cost as well as efficiency standpoint. Multiple objectives, be it cost, productivity, audit and compliance, infrastructure management, all that has become very smooth and efficient.