Agenda
BPM - In PrincipleBPM - In PracticeWhat effective BPM can do to your businessBPM and Insurance Industry in matured MarketsBPM adoption in Indian Insurance contextBPM adoption - Key questionsBPM adoption - Critical success factorsInsurance operations of the futureBPM Solutions and IBM
BPM - In Principle
BPM disciplines make process explicit (visible and independent of its implementation) using models. Models are increasingly executable, not just documentation.
BPM suites are the most complete set of integrated composition technologies for managing all aspects of process — people, machines, information, business rules and policies.
BPM disciplines are just emerging, although many BPM-enabling technologies are quite mature.
BPM is a technology-enabled set of disciplines to better address today's more-unpredictable market dynamics by applying explicit process management approaches. And if a process is transparent, effective and agile, it is likely to be perceived as innovative by internal employees, and external customers and partners
“Business Process Management, a software segment for end-to-end management of business processes,from modeling and design to deployment and execution,
to monitoring and optimization of business processes involving both people (workflow) and systems (automation). Some use BPM to mean Business Performance Management which related to business intelligence and BAM .”
Gartner Research
BPM - In Practice
Applied as a discipline combining software and business consulting expertise to accelerate process improvement and facilitate business innovation
Used as an approach that involves managing the entire lifecycle of a process
Applied to Govern an organization’s cross-functional, customer-focused, end-to-end core business processes
Used as a principle of continuous improvement, perpetually increasing value generation and sustaining market competitiveness (or dominance) of the organization.
Key Challenges Facing Insurer Leadership Worldwide
How do I comply with government regulationsand Industry standards (Solvency II, ACORD,
GDV, ...)
How do I comply with government regulationsand Industry standards (Solvency II, ACORD,
GDV, ...)
How do I continue to reduce costs and
consolidate operations?
How do improve innovation and agility while leveraging
past IT investments?
How do I respond quicker to my customers, agents,
and partners?
CxO Challenges
BPM solves common business challenges . . .
BPM governs organizational and operational activities
Models Process Knowledge Metrics
Expertise and AssetsPolicies Business Logic Methodology
Integration Modeling Events Monitoring
SoftwareForms Active Content Rules Engine Workflow
BPM includes
Empowers business users Identifies and Removes Bottlenecks
Provides Clear Visibility intoBusiness Processes
Streamlines complex integration across multiple processes
Enables Process change
Simulates / predicts outcomes
Business Process Management delivers immediate benefits and represents a longer-term business discipline
Empower business users
Provide actionable insights
Improve business agility
Reduce costs
Enhance collaboration
End-to-end process visibility
Boost worker productivity
Improve customer service
What Can BPM Do for Me?Companies are Using BPM to Provide a Variety of Benefits
BPM Aligns Business and IT to your Business Processes and your Changing Business Needs
BPM tools Empowers You To Embrace Change and Continuously Optimize Your Business
Model and Simulate
Monitor, Predict and Act
Rapidly Deploy and Change
End-to-End Processes
Continuously OptimizeSales FinanceOperations Partners
Businesses today must adapt to faster and more transformative change
Power Shift to Consumers
New Regulatory Requirements
Industry Consolidation
and M&A
Macro-Economic Changes
Global Competitors
Insurance Industry and BPM - Key Findings• BPM Use Within Insurance Is Limited – Used primarily in non core areas,
Insurers slow to adopt
• Not Integrated with core business systems – 10 out of 16 companies used BPM for stand alone functions
• Few BPM vendors had Industry experience – Basic BPM frameworks don’t do well in helping organizations realize business benefits
• Lack of clarity on usage of BPM – Lack of business case behind investments in BPM
• Perception of High cost - No view on TCO for a definitive period
Forrester research 2006
Insurance Industry and BPM - Key Findings
Lack of experience in using BPM tools – as ETL ?? As front end ?? As transaction systems ??
Business process complexity – Ever changing needs and lack of right combination of business and BPM skills lead to discontinuation of usage
Measurement of benefits – Not being able to calculate tangible benefits as the benefits span across functions / silos
Forrester research 2006
Market size of BPM solutions will grow at a rate of 21% CAGR and will be expected to be approximately at 3 billion USD
BPM adoption in India - so far
♦ Restricted to specific functionalities
♦ Restricted to Document centric process management
♦ Viewed as Imaging and workflow management only coupled with somecontent management
♦ Not Integrated with enterprise architecture
BPM adoption - Key Questions
What is the vendor’s installed base in terms of number of insurance companies and in the current geography ?
How many internal resources are dedicated to insurance?
How differentiated is the pre - built insurance-specific software that is included with the product?
How easily does this integrate with core Insurance solutions ?
How sophisticated is the product’s set of tools for monitoring and managing processes including change in rules and modifications in the processes?
Total cost of ownership
Key roles and Best Practices in BPM ImplementationRole Best Practice
Business process expert Focus on process first, then technology.Retain process intellectual property.Implement cross-departmental processes.Use collaboration for targeted business processes.Make the processes transparent
Enterprise architect View metadata broadly.Use process standards.Provide foundation for reusable tasks
IT operations professional Be sure underlying infrastructure is ready.Help select the right BPMS tool for your businessusers.
Application developmentprofessional
Help insulate process experts from underlyingtechnology.Support goals of the enterprise architect
BPM vendor Identify low-hanging fruit for initial applications.Standardize templates with ACORD businessprocess and data models.Provide business cases.Promulgate best practices
Critical Success factors
♦ Emphasis on the business process and overall objectives
♦ View process knowledge as a strategic asset
♦ Select cross system / functional processes for Implementation
♦ Use collaboration tools in the right context
♦ Measure results and improvise
Mailroom Process ApplicationPrep Route Output and StorageIndex
Workflow Enabled Operations (Content Centric)Workflow Enabled Operations (Content Centric)
Operations of the Future (Integration Centric)Operations of the Future (Integration Centric)
Traditional Paper Operations (Human Centric)Traditional Paper Operations (Human Centric) Data
Data
Data
Processes Services
TIFF XML
ProcessServer / Fabric
InputManagement
Automated
50 – 60%50 – 60%
15 - 30%15 - 30%
5 - 10%5 - 10%
Filenet
Operational efficiency limited by Knowledge worker being the “Integration” layer between Documents and Applications
Document recognition, work task automation maps, and exposed SOA Services enable “Lights Out” Automation and intelligent work task assignments
Insurance operation of the Future
Insurance Asset Intensive Solutions Separating process from system through service orientation
creates a new level of flexibility
Self Service Solution
Consumer Direct Sales
Website
Consumer Direct Sales
Website
Customer Data Management
Operations of the Future
Core Insurance Solution
Processes consume Services from the Core
Applications
Self Service Interactions trigger Automated
Processes
Self Service access Core System Functions
Automating business processes triggered by inbound documents, calls,
self service requests, etc.
Core systems that process the business
transactions –ideally service
oriented
Easy to use access for Agents and
Consumers to buy and
service on line
Agent Self Service Portal
Agent Self Service Portal Life: NAVA
STP SolutionLife: NAVA
STP Solution
P&C: Series II Modernization
Solution
P&C: Series II Modernization
Solution
Claims: Application
Modernization
Claims: Application
Modernization
Input Management
Input Management Intelligent Task
ManagementIntelligent Task Management
Automated
Processes
Automated
Processes
Access
Process
Execute
Insurance Operations of the Future helps address new challengesInsurance Companies are facing a challenging time where Expenses are growing
while Revenues are shrinking
• Since the mid-50’s, the Insurance industry failed to turn an underwriting profit – profit earned by taking in more premium than it pays out in losses
• This changed in 2001 when the Industry began recording it’s most profitable years since the Depression
• However, the industry started trending backwards in 2007 when, expense growth outpaced premium growth as revenues started a decline due to softening rates
Industry trends and expense challengesExpense growth outpaced premium growth by 3.7%
SAN FRANCISCO Jan. 31, 2008
• Standard & Poor's Ratings Services has published a report that says U.S. property/casualty insurer expense ratios are expected to rise in the coming years. The report, titled, "How High Can U.S. Property/Casualty Insurer Expense Ratios Go?," notes that the average expense ratio of its rated P/C insurers is expected (once all data is in) to have risen in 2007 compared with 2006.
• "Insurers benefited from relatively low claims activity and robust earnings in 2006 and 2007, but are now finding themselves increasingly challenged by the double-edged sword of increasing expenses and the cyclical decline in premium growth," noted Standard & Poor's credit analyst Michael Gross.
• These pressures do not bode well for 2007 or 2008 expense ratios. For the five-year hardening premium rate environment of 2002-2006, expense growth among Standard & Poor's rated insurers outpaced premium growth by 3.7 percentage points.
• P/C insurers seeking to rein in expenses will face increasing challenges in 2008. Expense ratios at many insurers have room for improvement. "However, given the soft market's continuing headwind, we believe expense ratios are likely to increase before they start to decline," added Mr. Gross.
Changing demands from customers, regulators and agentsCarriers must invest in order to respond
• Consumers:– Expect rapid turn around via
multiple channels– Demand more innovation in
products and services
• Agents:– Will trade commission for
ease of doing business
• Regulators:– Regulation is increasing in
scope and complexity
• Employees– Skilled resources are
becoming scarce and expensive
• Carriers are still investing in new systems, channels, processes, and organizations to respond to a changed demographic
• Carriers are investing to either create – or respond to – new innovations…something new to this industry
• Carriers are having to compete for the agents customers on more than just price and commission – and also need to be easier to do business with as well
• National and Local regulations are on the rise – accounting for
ti bl t f
Success StoriesInsurance Carriers strive to better align their business initiatives with existing resources and
technology to achieve a higher level of operational efficiency
… while preparing for future growth and business models at the same time.
Source: Company Annual report, 2005
“The Zurich Way”: Focus on core markets Focus on core processes Increase operational efficiency Standardization of methodologies and processes
Source: Company Annual report, 2005
“The Zurich Way”: Focus on core markets Focus on core processes Increase operational efficiency Standardization of methodologies and processes
Further industry concentration: Individual Capital Adequacy Growing investment in technology and service
Critical success factors in the UK market: Flexibility in DistributionEfficiency in Capital ManagementBrand AwarenessDelivery Capabilities
Source: Company Annual report
Further industry concentration: Individual Capital Adequacy Growing investment in technology and service
Critical success factors in the UK market: Flexibility in DistributionEfficiency in Capital ManagementBrand AwarenessDelivery Capabilities
Source: Company Annual report
“Accelerating the pace of change” as the programme for 2006-2008: Operational improvement Growth & innovation, Capital optimization, Enhanced governance
Source: Company Annual report 2005
“Accelerating the pace of change” as the programme for 2006-2008: Operational improvement Growth & innovation, Capital optimization, Enhanced governance
Source: Company Annual report 2005
“3+One Strategy”: Protect and strengthen capital baseBoost operating profitReduce complexityIncrease competitive strength through customer focus and sustainability
Source: Company Annual report 2005
“3+One Strategy”: Protect and strengthen capital baseBoost operating profitReduce complexityIncrease competitive strength through customer focus and sustainability
Source: Company Annual report 2005
Company objectives: Provide more cost transparency to clients Reduce expenses and increase return on equityReduce claim processing timeProvide high quality customer service based on accessibility and professionalism in customer careWith one group-one system philosophy, use Danish Insurance system as a model for further development of its international activities
Source: Company Annual report 2005
Company objectives: Provide more cost transparency to clients Reduce expenses and increase return on equityReduce claim processing timeProvide high quality customer service based on accessibility and professionalism in customer careWith one group-one system philosophy, use Danish Insurance system as a model for further development of its international activities
Source: Company Annual report 2005
Operations of the Future Business ObjectivesIn moving to the Service Oriented Enterprise, Operations of the Future addresses 4
strategic imperatives while responding to changing market expectations
ReduceCycle Time
• Customers begin to expect instantaneous response to requests through policy life cycle
• Agents place business with carriers that deliver accurate results quicker – at times demonstrating a willingness to take lower commission
Mega-trend indicates processing efficiency becomes a competitive differentiator equal to and possibly more than commission to respond to changing demographic
OptimizeResources
• Skilled resources are graying and becoming harder to find – especially in the claims, underwriting, and agent skill classes
• At the same time, the market is demanding more complex and diversified programs to differentiate through product innovation
Mega-trend indicates that productivity of skilled resources will need to increase dramatically in order to respond to market demands and changing demographic
Reduce Expense
• Softening market and other competitive pressure require reduced cost of operations
• Once a new baseline is established on reduced labor from global sourcing – pressure will move to automation – removing labor costs entirely
Mega-trend indicates that operational innovations will be required to maintain bottom line competitiveness – especially in the face of outside entrants into market
IncreaseAgility
Technological advances are allowing for increasing innovations in product design and expectations
Mega-trend indicates that traditional claims operations will not be able to support “processing as usual” as carriers will have to rapidly change and modify their operations to support new and innovative products and product lines
Agents
Customers
Out
put M
anag
emen
t
Process Choreography and Management
Business logic, business specific functions, data, employeesIT-Infrastructure
Agents
Customers
@
Telephone
Internet
On-
site
Sup
port
Self
Serv
ice
Back Office
1st Level(CSR)
2nd Level(Specialist)
On-
site
Sup
port
Self
Serv
ice
Inpu
t Man
agem
ent
@
Telephone
Internet
Automation
Operations of the Future Solution ConceptService Orientation enables a transformation from document centric workflows – to completely automated processing of
inbound mail, e-mail, calls, and faxes
Core Insurance SolutionCore Insurance SolutionCore Insurance Solution
3rd Party
Filenet
ProviderAgentConsumer
PhoneWeb MailE-Mail
PhoneWeb MailE-Mail
Insurance Self
Service Solution
Insurance Insurance Self Self
Service Service SolutionSolution
Input Management
Scan and Interpret Inbound work
tasks
Dynamic Folder
Organize & Manage Work Folder Content
Output Mgmt
Process Work Task Output
Process Mgmt
Monitor processes and tasks
TeamLead
Lev 1 Emp.
Lev 2 Emp
Work Management
Assign and Route Work Tasks
Manager
Insurance Operations of the Future Solution – Asset View
Disability Claim Services
PLM Services
NAVAServices
Auto ClaimServices
NAVA ATP
“Lights Out”Automation of Documents
PLM ATP
“Lights Out”Automation of Documents
Disability Claim ATP
“Lights Out”Automation of Documents
Pers Auto Claim ATP
Automated Processing of Work Tasks
Traditional WF
Automated
Manual Work Tasks
IBM Asset
IBM Business Partner
In Development
SWG Offering
In POCIn POC
Available TodayAvailable Today
Solution OutlineSolution Outline
Available through Business PartnerAvailable through Business Partner
Available Through Business PartnerAvailable Through Business Partner
The Benefits of a Strategic Transformation through Tactical Deployments
Today, the typical insurer may automate 10 to 15% of their tasks. By moving this to 70% - which appears reasonable by applying Service Orientation – this could result in as much as 66% operational
costs reduction
Type of Work
Fully Automated Tasks
Simple / CSR Tasks
Manual / Advanced Tasks
% of Work
15
40
45
100%
Cost
15
1000
2250
$3,265
% of Work
70
20
10
100%
Cost
70
500
500
$1,070
An example of a task is the work required to process an inbound piece of mail. It would also include tasks resulting from emails, Web interactions, and phone calls
Items are relative: Automated = $1; CSR Tasks = $25; Specialist Tasks = $50
Note: Numbers are not sourced to a commissioned study – they reflect observations and projections from customer experience but are not yet referenceable
Current State Future State
Solution Applications
• Mail Room Operations:– Streamline operations and automate sorting, indexing, and routing
• Mature File Net Operations:– Move from document handling automation to lights out processes– Automated indexing and routing
• Workforce Management– Automated / Optimized assignment of tasks from multiple channels (eMail, Phone, Web,
Mail, etc.)
• Straight Through Processing for:– Auto Claims and Claims Payments– Straight Through Policy Processing– Customer Service Requests
• Dynamic Folder:– Renewal processing– Claim processing – Complex commercial lines
• Output Management– Automated document generation (Thunderhead)
Industry Domain Models
BPM and Industry Expertise
Leverage expertise and pre-built industry solution accelerators
Accelerate Your Success with BPM
Industry Content Packs
Optimize measurement management frameworkOptimize business processes in real time
Export first-level Business Process Execution Language (BPEL) Install/configure business process manage-ment system (BPMS) runtime environmentChoreograph processes across applica-tions and SOA services
Develop future business processesDevelop new organizationDevelop KPIsPerform process benchmarkingSimulate future business processesDevelop high-level service model
Assess and document current business processesAssess current IT and current organizationDocument current business rulesAnalyze process capability gaps
Evaluate current business strategyReview and evaluate strategic objectivesSelect opportunities/projects for improvement
Optimize measurement management frameworkOptimize business processes in real time
Export first-level Business Process Execution Language (BPEL) Install/configure business process manage-ment system (BPMS) runtime environmentChoreograph processes across applica-tions and SOA services
Develop future business processesDevelop new organizationDevelop KPIsPerform process benchmarkingSimulate future business processesDevelop high-level service model
Assess and document current business processesAssess current IT and current organizationDocument current business rulesAnalyze process capability gaps
Evaluate current business strategyReview and evaluate strategic objectivesSelect opportunities/projects for improvement
Process governance
ExecuteDefine OptimizeAssessEnvision
Processgovernance
Execute
Assess
Optim
ize Defin
e
Envision
CBMBusinessComponents
EnablingPlatform
SOA BusinessServices andApplications
DistributionDistribution
ProcessingProcessing
CampaignExecution
Correspondence
SmartRouting
Dialogue Handler
CaseHandling
Sales FinancialsConsolidation
MarketInformation
AdvertisingCampaigns
ApplicationsRelationshipManagement
In-boundCall Center
Service/Sales
Admin.
LocalBranchAdmin.
TellerServices
Channel/Distribution
Mgmt.
CustomerContactHandler
Self-serviceChannel
ProductDirectoryMarketing Inventory
Management
RewardsManagement
MerchantOperations
ProductManagement
FundManagement
RetailSecurities
PortfolioTrading
OTCServices
ProductDevelopment& Deployment
Production &Operations
Management
RetailLending
(Mortgages)
SecuritiesMarket
Analysis
ApplicationProcessing
CustomerProfile
Contact/Event History
Collections& Recovery
Recon-ciliations
OperationsAdministration
FinancialCapture
Payments CustomerAccount
Billing
Authorizations ProductProcessing
AllianceAdministration
Wireroom(S.W.I.F.T.)
DocumentManagement
Deposits(DDA)
Statements
AcquisitionAdministration
ConfirmationsContract Notes
ServicingManagement
PortfolioAdministration
ProductTracking
CustodyAdministration
Settlements
Valuations
CollateralHandling
Trading(Back Office)
Trading(Front Office)
MarketResearch
Alliance &Authority Mgmt
BusinessArchitecture
AcquisitionPlanning
BusinessUnit Tracking
Fixed AssetRegister
CustomerPortfolio &Analysis
CustomerBehavior& Models
BusinessAnd Resource
Planning
CustomerServicing &
Sales Planning
SegmentAnalysis &Planning
CreditManagement
Treasury
FinancialControl
Securitization
RiskManagement
Branch CashInventory
FinancePolicies
LoanSyndication
BusinessPolicies &
Procedures
Audit/Assurance/
Legal
AccountingGeneralLedger
CustomerAccounting
Policies
Asset &Liability Policy
& Planning
CustomerCreditAdmin.
ConsolidatedBook/PositionMaintenance
Insi
ght
Business Management
Risk and Financial
Managem
ent
Business Management
Manufacturing
CBMBusinessComponents
EnablingPlatform
SOA BusinessServices andApplications
DistributionDistribution
ProcessingProcessing
CampaignExecution
Correspondence
SmartRouting
Dialogue Handler
CaseHandling
Sales FinancialsConsolidation
MarketInformation
AdvertisingCampaigns
ApplicationsRelationshipManagement
In-boundCall Center
Service/Sales
Admin.
LocalBranchAdmin.
TellerServices
Channel/Distribution
Mgmt.
CustomerContactHandler
Self-serviceChannel
ProductDirectoryMarketing Inventory
Management
RewardsManagement
MerchantOperations
ProductManagement
FundManagement
RetailSecurities
PortfolioTrading
OTCServices
ProductDevelopment& Deployment
Production &Operations
Management
RetailLending
(Mortgages)
SecuritiesMarket
Analysis
ApplicationProcessing
CustomerProfile
Contact/Event History
Collections& Recovery
Recon-ciliations
OperationsAdministration
FinancialCapture
Payments CustomerAccount
Billing
Authorizations ProductProcessing
AllianceAdministration
Wireroom(S.W.I.F.T.)
DocumentManagement
Deposits(DDA)
Statements
AcquisitionAdministration
ConfirmationsContract Notes
ServicingManagement
PortfolioAdministration
ProductTracking
CustodyAdministration
Settlements
Valuations
CollateralHandling
Trading(Back Office)
Trading(Front Office)
MarketResearch
Alliance &Authority Mgmt
BusinessArchitecture
AcquisitionPlanning
BusinessUnit Tracking
Fixed AssetRegister
CustomerPortfolio &Analysis
CustomerBehavior& Models
BusinessAnd Resource
Planning
CustomerServicing &
Sales Planning
SegmentAnalysis &Planning
CreditManagement
Treasury
FinancialControl
Securitization
RiskManagement
Branch CashInventory
FinancePolicies
LoanSyndication
BusinessPolicies &
Procedures
Audit/Assurance/
Legal
AccountingGeneralLedger
CustomerAccounting
Policies
Asset &Liability Policy
& Planning
CustomerCreditAdmin.
ConsolidatedBook/PositionMaintenance
Insi
ght
Business Management
Risk and Financial
Managem
ent
Business Management
Manufacturing
Key Agility Indicators
BPM Methodologies
Industry Best Practices
Industry models and best practices
IBM Benchmark Wizard
People
Applications
Information
Agent
Customer
Loss Adjuster
CallCentre CSR People
Applications
Information
Agent
Customer
Loss Adjuster
CallCentre CSR
Over 2850 BPMcustomers in over 30 countries and growing
#1 in BPMS market shareMarket leading products
Deep industry knowledge and pre-built assets
Largest partner ecosystem
Global reach and scale
BPM from IBM Delivers Unrivaled Customer Value