TIAA-CREF Realizes Benefit from PeopleSoft Investment
For over 80 years TIAA–CREF has been providing benefits for the education and nonprofit research communities, earning a reputation for high quality, low-cost financial products, as well as responsive service, disciplined investment management, and unrivaled professional integrity. With approximately $300 billion in assets under management TIAA–CREF is a leading financial services organization, a major institutional investor, and the world’s largest retirement system. To service the needs of their customer base, which includes any employee of a nonprofit education or research organization, TIAA–CREF offers a range of products from insurance, long-term care and trust services to investment vehicles for college education, supplemental retirement annuities (SRAs) and IRAs and Keogh plans. Based in New York City, TIAA–CREF prides itself on setting a new standard for providing greater choices to its customer base at a lower price point through greater technological, operating and administrative efficiency.
The Challenge
In the face of new legislation that abolished the walls between banking, securities and insurance, TIAA–CREF was propelled into a new financial services world. Having become a more complex institution that wanted continued focus on customer satisfaction by offering a broader array of services, they needed a greater understanding of the costs associated with these products and services. Their existing financial and accounting systems could no longer provide the information necessary to make intelligent business decisions in this new environment.
The corporate entity used a mainframe system while the annuity side of the house used an antiquated version of the same ledger no longer supported by the vendor. The subsidiaries performed accounting functions on a variety of smaller solutions ranging from Lotus spreadsheets to Peachtree accounting. All reporting functions were performed out of a separate sub-system. Additionally, at TIAA–CREF there were over 25 different charts of accounts with over 7,000 unique accounts. All product, location, and inter-unit affiliate intelligence was built into the account coding scheme.
For Payables, TIAA–CREF maintained 3 unique vendor files in multiple systems to service their purchasing, payables and law departments. The data entry error rate was high due to a lack of control procedures and the inability of the old system to capture voucher data without paying and posting. TIAA–CREF was unable to capture invoices upon receipt and take advantage of favorable payment terms offered by the vendor. Additionally, there was no feature to allow consolidation of multiple payments to the same vendor thereby reducing the number of checks and handling of these payments.
The PeopleSoft-Beacon Solution
TIAA–CREF needed a system that could address these business issues and create a single source solution for management, statutory and regulatory reporting. After embarking upon a lengthy, costly feasibility and fit/gap study that brought them no closer to a final solution, TIAA–CREF turned to Beacon Application Services to help them receive benefit from their PeopleSoft investment.
With a small team of experienced consultants, Beacon put a sensible, phased approach plan in place. Phase I focused on the implementation and consolidation of the subsidiaries onto PeopleSoft. With one Beacon consultant leading the TIAA–CREF Ledger team, one Beacon consultant leading the Payables team, and one Beacon technical consultant to support them, the subsidiaries were live on their new PeopleSoft systems within 5 months. The Phase II implementation converted the entire corporate entity onto PeopleSoft, with the addition of only one technical Beacon resource to manage the complex task of integrating to a foreign purchasing system. Phase III (in process) will finalize the move to PeopleSoft by bringing the Annuity division onto PeopleSoft. Complicated by the need for tight integration with mainframe-based specialized systems to accommodate their factor calculation and large volumes of historical data to convert, Beacon and TIAA–CREF continue to reach aggressive time frame goals with a small but result-oriented team.
Benefits
TIAA–CREF now enjoys one common chart of accounts for the entire company. Beacon guided TIAA–CREF through the COA development effort to ensure the various chart fields were used properly to reduce the number of accounts. Only the appropriate level of detail for statutory, regulatory and management reporting was brought into the ledger to streamline processing. Certain areas such as cafeteria services, car services and treasury now have automated interfaces directly into PeopleSoft eliminating paper and manual entry of information. Beacon also created customized Excel spreadsheet upload templates for some originating areas to input their journal entries, which later get consolidated for easy processing.
The payables department now has the ability to capture invoice data upon receipt thereby reducing on demand payments, taking advantage of discounts and more accurately reporting on accrued expenses since the expense accrual is posted independent of when payment is made. With new control procedures in place, multiple payments are now consolidated and a single vendor file eliminates error while supporting centralized naming standards, streamlining vendor additions and reducing duplicate vendors. The most significant benefit for TIAA–CREF came in the reporting area. The multiple reporting systems were all replaced by PeopleSoft’s nVision, utilizing PeopleSoft delivered fields and establishing the necessary rules. Consolidated reporting, centralized entry and storage make analysis easier, more meaningful, and more accurate.
TIAA–CREF and Beacon also identified the gains that could be realized by using the PeopleSoft system to calculate and report on their allocations processes that were once performed in yet another mainframe system. Beacon sent an allocations expert to work with TIAA–CREF through a design and proof-of-concept engagement that built confidence at TIAA–CREF that using the PeopleSoft system, we could once again improve process and consistency and reduce cost and maintenance.
© 2008 Beacon Application Services Corporation. All rights reserved.