The Business Value of BPM

1. Jon Strickler www.jit-technologies.comwww.agileelements.com The Business Value of BPM

2. Session Objectives

3. A BPM CASE STUDY The Business Value of BPM

4. Executive Summary

5. We analyzed <Company Name>’s bank card claim processing Includes • ATM and Debit • Fraud and Dispute Excludes • Claims Intake Center (CIC) 52 processorswork 18,000 claim transactions/moworth $1.8M Governed by Regulation Ewhich dictates standards and maximum cycle time for claims

6. ATM and Debit Creidt Claims - 52 processors work 18,000 claim transactions/mo worth $1.8M • Become 100% Reg E Compliant • Gain Efficiencies – Reduce Work In Progress, Cycle Time, Touch Time • Reduce Costs: Reduce Write-offs, Charge Backs, and Mitigation Rate Validation of Problem Visualization of Solution • 770% ROI projections • 3 year NPV of $4.5M • Improving efficiency from 25% to 55% will save $875k each year Justification of Project

7. We found the process to be manual, inefficient and paper intensive • Manual work assignment using tally sheet Research & Assignment CIC Letters Clerk Verify Claim Info AssignClaim in Clear Claims Capture Claim Receive New Correspond-ence • Tracking and reporting on process is through manually generated reports • 11 different systems require duplicate keying and multiple look-ups Verify & Research Transactns Review Clear Claims File Print Research Make Claim Decision Process Charge backs Create Paper GL Ticket Create & Print Letters Process & Report Fraud Update Clear Claims • New paper is created to document research, communicate charge backs and write to customers Claims Processor • Approximately 6,000 sheets of paper printed by the team each day Letters Clerk Team Lead Manager Reconciliation Submit Paper to Letters Clerk Reconcile Falcon Report Scan, Fax & Mail Letters & CB Docs Key Into Falcon Validate & Approve Falcon Reconcile GL/Transit Processing

8. Our Solution Approach simplifies process and increases efficiency • Automated work assignment Letters Clerk CIC Receive New Correspond-ence Capture Claim • Real-time, automated reporting and performance dashboards Integrated User Experience • Integration used to reduce or eliminate re-keying of data, and the need to work within multiple systems Claims Processor Reconciliation Verify Transactns & Info Review Clear Claims File Process & Report Fraud Process Credits & Debits Reconcile GL/Transit Processing Process Charge backs Update Clear Claims • Automated capture and attachment of research evidence and correspondence • Implementation process improvements including straight-through processing for claims under $20 Letters Clerk Scan, Fax & Mail Letters & CB Docs Correspon-dence Mgmt

9. BPM architecture enables numerous improvements in user experience and process Manager / Supervisor Processor Single User Interface for Each Persona Exec / VP BPMS Real-Time Reporting Dashboards Automated Work Allocation Workflow & Process Orchestration Letter Generation Automated Calculation of Provisional Credit Document Management Web Services Integration Layer Safe Issuer Direct Acquire Navco Imagesoft General Ledger MPS Fidelity Letter Macro Mail Merge FTBS Falcon EnterpriseSystems General Ledger

10. Improving Card fraud process using BPM will result in a Net Present Value of $4.5M In less than 6 months the solution will have paid for itself The solution has an ROI of over 770% 5 Year Cash Flow

11. Approach

12. viewPoint Assessment Approach Approximately 10-20 Days Approximately 10-20 Days Solution Proposal Problem Definition User-centric Discovery Analysis • Stakeholders agree upon goals and success criteria • Whiteboard high-level process • Discuss pain points • Identify process participants • Prioritize goals • Identify metrics • Observe and interview participants in work environment • Gather current process metrics • Observe process participants doing work • Gather artifacts • Identify opportunities for improvement • Tailor a solution to your unique needs • Map improvements to goals • Design improved process • Mock-up key user experience roles • Calculate and validate estimates • Agree to recommendations and improvement potential • Review proposal with stakeholders • Understand process improvements • Present user interface mockups • Refine projected return on investment

13. Our solution addresses key goals Regulatory Compliance Cost Savings Efficiency Customer Experience

14. Findings

15. We found the process to be manual, inefficient and paper intensive Research & Assignment CIC Letters Clerk AssignClaim in Clear Claims Receive New Correspondence Capture Claim Verify Claim Info Create & Print Letters Verify & Research Transactns Review Clear Claims File Process Charge Backs Create Paper GL Ticket Process & Report Fraud Update Clear Claims Print Research Make Claim Decision Claims Processor Letters Clerk Team Lead Manager Reconciliation Submit Paper to Letters Clerk Reconcile Falcon Report Scan, Fax & Mail Letters & CB Docs Validate & Approve Falcon Reconcile GL/Transit Processing Key Into Falcon

16. Research and Assignment is NVA and uses automated queuing poorly Research & Assignment Open all transactions to get info that is not displayed in the list CIC AssignClaim in Clear Claims Capture Claim Verify Claim Info Balance work across 23 processors 1 claim at a time using tally sheets QA is a duplication of the 1st step performed by the processors Open all transactions, though only manual transactions are fixed

17. Of about 13 min spent in claim processing, 20% of time (2.4 min) is spent making claim decisions Verify transaction information Look up on Mainframe or Other system Investigate & Decide Re-Key & QA data Sort, Copy, Transport Create & Print Letters Verify & Research Transactns Review Clear Claims File Process Charge Backs Create Paper GL Ticket Process & Report Fraud Update Clear Claims Print Research Make Claim Decision Create 1200 new pieces of paper/day Claims Processor Submit Paper to Letters Clerk Reconcile Falcon Report

18. Support staff & others off-load much of the non-value added work from claim processors Look up on Mainframe or Other system Copy, Fax, Scan, Sort, Transport Re-Key & QA data Letters Clerk Receive New Correspondence Letters Clerk Team Lead Manager Reconciliation Scan, Fax & Mail Letters & CB Docs Validate & Approve Falcon Reconcile GL/Transit Processing Key Into Falcon

19. Much of the team is support staff; Of claim processor effort, most is non-value add 24 Minutes of Processing Support Staff (23) Claim Processors (29) non-value add value-add 80% 20% = 2.4 Min

20. Benchmark KPIs Indicate Room for Improvement Reducing process inefficiencies could free up 45% of process time= 35,000 hours annually or $875K Cycle Time is 60% over goal Error Rate is 5X benchmark

21. Recommendations

22. The solution addresses needs of individual people within the process Claims Processors Mangers & Supervisors Executive

23. Processor DashboardProvides access to all functionality through one UI Work Lists always available from the dashboard or fed to processors by clicking “Get Next” Real-time performance metrics are front-and-center, providing motivation for processors (“peer pressure” approach) Processors are always aware of their performance measures and where they stand among their peers

24. Processing ScreensGuide the user through the process step-by-step All case contents consolidated into a tabbed container. User experience guides the user through the process step-by-step. Information about the overall claim is separated into its own section. Transaction-specific information is displayed directly below the transactions and arranged into logical sections.

25. Processing ScreensIntegrate mainframe applications Checklist ensure the processors perform all necessary research. Will research the ability to click a button to attach a screen shot as a document to the file. Systems required for research displayed within the system, Automatic research and calculation of reversal fees

26. Processing ScreensEnable automated letter generation Automatic letter generation within the process flow Letter displayed within the system for processor to review. Fields auto-populated from systems of record to ensure quality Letters automatically attached to case folder and printed to one central printer.

27. Manager Dashboard: Staff Performance Work list for items that get escalated for manager assistance Historical view of overall staff performance by claim type Real-time staff performance metrics, including top three processors for Fraud and Disputes Processor performance charts with ability to view by claim types (Fraud or Dispute)

28. Manager/Supervisor Work Allocation Ability to specify work allocation using rules based on claim type, claim amount, or any other attribute of a claim. Ability to assign or un-assign users from a work list at any time.

29. Executive / VP Real-time staff performance metrics, including top three processors for Fraud and Disputes Historical view of process metrics Monthly report of claims by source Transaction volumes by work type

30. Automate Correspondence Management using data from Clear Claims and centralized print & mail • Eliminate manual configure, print, transport, sort, copy, scan • Eliminate the up to 3 duplicate data entry steps for each letter • Eliminate the up to 4 QA checks on each letter • Eliminate need for printers at each processor desk

31. Automate Work Assignment with rules-based, optimized queuing of front & back end processing • Eliminate30 hours per week assigning work • HelpmeetReg E deadlines • Streamline work with better logic • Adjust work based on current loads • Improve recovery rate GET NEXT

32. Electronically capture, transmit and archive to improve efficiency & drastically cut paper related costs • Capture research for archive and charge back without need to manually print, scan transport, sort and fax • Increase electronic archive from 3 months to regulated 7 years • Automate fax for charge backs 50% reduction = $60K per year in paper-related cost savings

33. Streamline the process and reduce non-value added work and associated cost, errors and ramp-up • Correct at least 10 identified work-arounds and system short comings • Integrate GL Voucher completion, submission and reconciliation Increase Process Efficiency from current 15% to 55% (up 300%) Anticipated savings of 35,000 processing hours Amounts to $875K savings each year

34. Use BPM to orchestrate the process; integrating with 11 different systems Letter Macro/Mail Merge Falcon Tickets FTBS MPS Fidelity Safe, Issuer Direct, Acquire, Navco, Image Soft GL

35. Provide real-time visibility to track and manage as the process is executed • Eliminate the approximately 20 hours per week collecting metrics • Reduce time to take corrective action to better meet Reg E time limits

36. Solution Approach reduces process effort and increases efficiency Research & Assignment CIC Letters Clerk AssignClaim in Clear Claims Receive New Correspondence Capture Claim Verify Claim Info Create & Print Letters Verify & Research Transactns Review Clear Claims File Process Charge Backs Create Paper GL Ticket Process & Report Fraud Update Clear Claims Print Research Make Claim Decision Claims Processor Letters Clerk Team Lead Manager Reconciliation Submit Paper to Letters Clerk Reconcile Falcon Report Scan, Fax & Mail Letters & CB Docs Validate & Approve Falcon Reconcile GL/Transit Processing Key Into Falcon Correspondence Management

37. Solution Approach reduces process effort and increases efficiency Letters Clerk CIC Receive New Correspondence Capture Claim Integrated User Experience Claims Processor Correspondence Management Verify Transactions & Info Review Clear Claims File Process Charge Backs Process Credits & Debits Process & Report Fraud Update Clear Claims Letters Clerk Reconciliation Reconcile GL/Transit Processing

38. We created models to allow analysis & process improvement simulations As-Is

39. ROI

40. Improving your process using BPM will result in a yearly savings of $622,000 In less than 6 months the solution will have paid for itself The solution has a net present value of $5.2M The solution has an ROI of over 900% 5 Year Cash Flow

41. Improving Card fraud process using Process360 will result in a Net Present Value of $4.5M over 5 years Return Summary

42. Major drivers of savings are improved process and automation Quantitative Targets Measurable Results Improved Process Efficiency 30-40% Processing Cost Automate & Integrate Paper Cost Reporting & Oversight time Better Insight Into Process Cost of fixing errors & monitoring Error Situations / Rework 80% Reg E Compliance

43. Improved efficiency results in cost savings… Benefit Estimates

44. NPV is calculated using a 5 year time horizon 5 Year Cash Flow

45. A MODEL FOR ROI QUANTIFICATION Business Value of BPM

46. Most common objection to BPM 60% Source: Forrester October 2007 US and UK Enterprise Architecture and Business Process Management Online Survey

47. A Business Case Assessment Builds the rational for Investing:

48. Typical Assessment Methodology: Approximately 10-20 Days Problem Definition User Centric Discovery Solution Proposal Analysis Interviews & Observation Solution Approach Process Discovery To-Be Process Usability Analysis User Interface Mockups Goal Alignment Persona Analysis ROI Calculation As-Is Process Metrics / KPIs

49. ROI Estimation Steps • Use broad measures to understand what impact is possible • For each Benefit Strategy, gather data to estimate return • Create Value Model that maps Qualitative Targets to Measurable Results • For each Solution Approach, estimate costs • Use the ROI Estimator Spreadsheet to document and calculate value • Refine approach based on value; focus on high return areas • Document qualitative benefits not well quantified in ROI; this should be the exception • Verify assumptions with business

50. Metric Definitions • Volume = Output, usually expressed in units or $’s • Productivity = Output per unit of time • Cycle Time = Time spent in process = Work Time + Wait Time = WIP/Exits where WIP is the total units being worked or in the process • Quality = Error rate = Errors/Output usually expressed as a % or sigma value. 6σ = 0.0003% errors • Efficiency = Productive time divided by total time expressed as a %. Can be a measure of cycle time or work time. • Efficiency (CT) = value added work time/total cycle time • Efficiency (Work) = value added work time/total work time • Value Added Time = time spent producing customer valued output without waste ~ straight through processing time (STP)