Reinsurance Group of America and Fonterra: Going for Unified Global Operation
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What is the business value of these global systems developments for the companies mentioned in the case?
The business value of these global system developments for the companies mentioned in the case is very high. In case of RGA, the employees can analyze data by client, contract, and product and can find client errors very easily. This has been made possible because data is not stored at one place. This is very important for supporting the reinsurance business. It has made it easy to manage the reinsurance business. The global system developments help RGA data validation and data quality. This enables better risk analysis, and retention analysis leading to greater profits. Similarly in case of Fonterra the upgrading of the Fonterra business so that that the silos at the diary group are of large stainless steel variety. The global systems program aimed at improving the supply chain of a diary giant from cow to manufacturing to storage to customers.
How did they achieve these benefits?
RGA achieved these benefits because it was relieved of the problem of worrying about how the business should be managed. In addition, the system helps strengthen data validation and data quality. These useful benefits were achieved by engaging the business and adapting its own practices to the demand of the situation. The company has achieved the benefits by setting up an integrated, multicurrency, and Multilanguage life reinsurance administration system called the CybeRe.
In case of Fonterra the benefits were achieved by setting it up an amalgam of the diary industry with self-contained business functions. The back-office functions of were consolidated globally within New Zealand into transactional services based in Hamilton.
What were the major obstacles they had to overcome?
The major obstacles that they had to overcome are that when business requirements were gathered for the RGA system, it faced the obstacle of having different units doing things differently, and every unit could not be persuaded to do things in the same manner. There were obstacles in converting historical data and loading it on to the CybeRe system. Further, there were problems related to data cleansing and migration. There were also problems related to differences in terminology used. In case of Fonterra the problems were related to the size of its operations. It was having offices in 70 countries and employed 19,000 personnel. The obstacles were that every part of the business had to be analyzed, all processes, and organization structure had to be analyzed.
2. What are the advantages and disadvantages of a full-blown versus a phased approach for system implementations in general and global ones in particular? How do you make the decision on which road to take?