Insights for CFOs to accelerate growth in their organizations – Part 1

CFO Blog1In IBM’s latest CFO study, “Pushing the Frontiers,” we surveyed more than 576 CFOs worldwide. A number of important trends emerged, particularly as we compared their priorities today to those they cited in 2005. One such priority that stood out was the value they placed on information integration across the enterprise. In this same survey, we also identified a group of CFOs, which we have called “Performance Accelerators” – as CFO’s who been able to generate 70 percent more revenue and profit over the past three years than their peers. What’s their secret ingredient? Yes – its insight – from all the information that flies around our companies. These highest performing CFO’s have been able to implement enterprise-wide information standards and are better at driving the integration of information across their enterprises from numerous sources.

And how have they done this? They have created a shared service delivery framework to guide the design, development and operation of key financial processes – not just transactional processes like accounts payable, accounts receivable, general accounting, but also complex finance processes like business performance reporting and analysis. This, together with the adoption of common information standards across the entirety of the business (including financial and operational data), has catapulted their enterprises into the next league of high performing companies. Over the last 18 months, this Globally Integrated Business Services model is the focus for many companies.

With a single point of responsibility and accountability for the consistent design and deployment of every financial process, regardless of business unit or territory, it’s much easier to automate manual procedures, detect variations in performance and disseminate best practices. And then combine internal data (i.e. income, expense, balance sheet data) with external data (i.e., economic indicators, liquidity factors, FX, inflation data) – and these CFO’s are able to gain real insights from all the information.

Some key actions:

  • Go global – create a single global operating model; establish centers of excellence to ensure a consistent approach and generate economies of scale, use a shared services center to become more efficient; and encourage a culture of continuous improvement,
  • Get clean and lean – simplify and standardize; develop common financial data definitions, processes and reporting procedures to deliver a single version of the truth; automate wherever possible; and
  • Connect the dots – forge seamless links between the different parts of the business, including customer-facing functions like marketing and sales as well as back-office functions like manufacturing and distribution. Data and analytics are essential for efficiency, and both depend on common technologies and processes.

So there should be no debate as to whether it is a worthwhile to drive standard or common processes, mandate standards in data, and drive integration of information across companies.

As a CFO are you using insights to create profitable growth and capitalize on Big Data? Are you addressing the need of driving integration of data across the enterprise?   What is the greatest obstacle you or your company faces as you work to drive integration and standardization of data across the enterprise? If you are already on this path, what recommendations would you have for others?

Check out the detailed findings and how you stack up to Performance Accelerators – and test how well you are tracking with the latest CFO imperatives.

Mortgage Servicing – Executing Smartly and Socially

Three reasons why you should consider social insights & analytics for loan servicing

My world has changed. I am no longer compelled to hold the physical paper while having my morning coffee; my trusted mobile device is among the first few things that I reach out for in the morning. I am user and creator of data on social media. It is not surprising that we find many reaching out to share their thoughts, success and frustrations on social media.

In the mortgage industry, borrowers may be abandoning traditional channels of customer engagement and resorting to social media to post their issues, frustrations and questions about their lender’s services. That data is immensely valuable to deepen the understanding of those customers with whom the lenders may have very little to no contact. Also, little information about their customers may be available within the enterprise to provide the help they are seeking in a timely manner. There are three reasons why you should consider social insights & analytics for loan servicing:

1)   Power of Customer Insight – Look for insights beyond agent logs or call transcripts

There is much to be explored and gained from social data analysis integrated with enterprise data mining for servicing. According to a recent survey by the Carlisle & Gallagher Consulting Group, one in three customers would use social media to complain. Social posts go beyond complaints about mods, escrow analysis, etc. to containing the customer’s own narration/voice of life events leading up to their current situation. This rich, detailed information of one’s life events is not always found in agent logs nor obtained from transcriptions of call recordings within the servicing enterprise. But this social data is free, and timely.

2)   Power of Systems of Engagement – Make efforts to integrate social data and enterprise data

Making sense of this external data and integrating it with enterprise data appropriately will take us one step further in the quest to deeply understand our customers as a ‘segment of one’

However, a caution: use of informal, highly dynamic, less reliable social media in business processes can increase risk – risk of harm to consumers, compliance, legal, operational and reputational risk. Technologies are emerging to integrate social media at appropriate risk levels with enterprise data for proper validation and use.   Lenders need to develop localized policies for appropriately addressing these concerns and build a robust governance model for mitigating risk, thus ensuring they are not missing out on the potential of social media analytics.

3)   Power of Social – Consider the benefits of social media analytics

IBM’s point of view is unique and differs from other companies. Our focus is on responsibly using the social content to provide better services to customers. At IBM, we are developing advanced analytics to know more about customers at an individual level, for example:

  • We use analytics to deepen our understanding of accounts with which the servicer had no contact for an extended period
  • Uncover reasons for the lack of engagement especially if the accounts are delinquent
  • Analyze characteristics of delinquent customers who take up loan modifications but have never talked to the servicer, so that we can develop actions that would help customers proactively prevent re-defaulting
  • Mine customer touch points including social media data to determine what events might have turned off customers who were engaged with the servicer before.

These three practices help customer-facing operations improve service delivery at the right time to the right customers by using deep analytics to drive intelligence into the service delivery operation and to understand your customers, better.

For more information on IBM mortgage services and social media analytics, please contact Chitra Dorai, Mortgage Chief Data Scientist, and visit IBM Global Process Services Financial Services page.

CFO Insights… “Pushing the Frontier”

By Christine Gattenio

New findings have been identified that provide fact-based insights that can help you learn from high performers, called Performance Accelerators, and how they are standing out in driving efficiency, business insight and profitable growth.

It is quite compelling to understand how Performance Accelerators operate much more efficiently than the rest of the pack.  In fact, the study highlights that Performance Accelerators have push farther than others in driving process and data standards enterprise-wide:

  • 100% have standard / common finance processes
  • 100% have standard chart of accounts
  • 100% have common finance data definition and governance
  •  85% have implemented enterprise-wide information standards

In addition, more than half have created a service delivery framework to guide the design, development and operation of key financial processes. They are also more likely than other finance organizations to use a standalone, cross-functional shared services center for transactional financial activities.   These are critical enablers that helps to accelerate the leverage of big data.

A critical differentiator for these top performers is how they use data. While the average CFO relies on spreadsheets and intuition for the majority (66 percent) of their work, more than two-fifths (44 percent) of Performance Accelerators combine internal and external data to produce insights. As such, Performance Accelerators are more effective at conducting various forms of analysis including tracking and forecasting supply-chain financial data, planning and predicting resource capacity as well as conducting industry and competitor analysis.

Most significantly, Performance Accelerators use the deep insights they’ve unearthed to create profitable growth, spending more time on a wide range of activities, particularly forging an infrastructure to capitalize on Big Data, handling acquisitions and divestitures and developing new business models.

Check out the detailed findings and how you stack up to Performance Accelerators – and test how well you are tracking with the latest CFO imperatives.

IBM Watson: Advancing Brain Cancer Treatment

By on March 20th, 2014
Sometimes life throws a few unexpected events at you.  Near midnight on the evening of July 19th, 2012, I felt my wife shaking me and pleading:  Wake up; you have to listen to this guy!”  Groggy, through half-open eyes, I listed as Charlie Rose interviewed Dr. Lukas Wartman about how whole genome sequencing famously saved his life from cancer.  At the time my mother was battling… continue reading

Genomic Diagram

Compliance Excellence in Today’s New Mortgage “Norm”

By Eric Ray

The mortgage industry continues to experience an unprecedented number of changes to its regulatory framework.   The rules mandated by Dodd Frank are designated as consumer protection in nature as well as overall banking and mortgage regulations.  The impact of these regulations will inevitably result in increases in the cost to originate and service loans.  It is more critical than ever for lenders and servicers to plan and invest in processes and technology that are compliant with this new industry “norm”.

A robust compliance management system across the end to end enterprise is more critical than ever, not only for risk reduction, but as an important profitability lever.   Lenders need to focus on three key areas:

  • Compliance through operational execution through consistent, repeatable processes generating a positive customer experience;
  • Accuracy and transparency in all reporting, and
  • A controls framework governed independently from the business reporting structure to ensure true objectivity and adherence to all aforementioned rules.

Technology infused compliance framework

When looking to invest in solutions, it is important to look across the enterprise to leverage compliance benefits as well as business benefits.   Investing in enhanced capabilities, such as compliant imaging and digitization (e-documentation, etc) technology, will be critical in order to drive efficiencies across the business model as well as provide new reporting capabilities.   The regulatory environment today is focused not only on process execution, but the management processes and reporting required to track and identify results, manage exceptions, and remediate issues.   Record retention and content management solutions will be more critical in order to demonstrate past results and demonstrate the outcome of remediation plans.

The collection of data across the entire end to end value chain is the single most important attribute required to not only ensure the business is operating  in a compliant manner but to enable the identification of  gaps and remediation efforts.  Although some of the new servicing rules were relatively simple to implement, many required significant collaboration across business units and technology to get them accomplished.   The Consumer Financial Protection Bureau  (CFPB) examination manual for mortgage servicers points out that servicers are not only subject to Real Estate Settlement Procedures Act (RESPA), Truth In Lending Act (TILA), Equal Credit Opportunity Act (ECOA), Gramm–Leach–Bliley Act (GLBA), and the Fair Credit Reporting Act (FCRA), but they will also be focusing on other risks that could impact consumers, such as unfair, deceptive, or abusive acts or practices (UDAAPs).

Compliance in this new evolving regulatory environment will require robust internal quality control programs.   Monthly and quarterly periodic monitoring of core processes such as default servicing, including loss mitigation efforts, foreclosure processing, servicing transfers and new boarding data, fees, and escrow administration, among others will reduce the risk that issues will go undetected for extended periods of time and limit or eliminate harm to consumers and regulatory violations.   The reporting methodology to executive management needs to be consistent and frequent.   Executive and operations management need to be actively engaged to ensure process improvements can be designed and implemented.

The ability to successfully manage this new norm of evolving regulatory changes over the next five to seven years will dictate who the new leaders will be in the servicing industry.   With margin pressures on all lenders and servicers, those able to achieve compliant operational excellence will enhance profitability and ultimately grow market share as GSE’s, as well as other  large lenders and holders of MSR’s,  will increase their reliance on these best in class servicers.

For more information on IBM’s mortgage risk and compliance processes, please contact Karen Pollock, Mortgage Chief Risk and Compliance Officer, and visit IBM Global Process Services Banking page.

About Eric Ray:

EricEric R. Ray is currently the General Manager of the Financial Services Sector business. In this capacity, Mr. Ray has global profit and loss responsibility for IBM’s business process outsourcing portfolio for its clients in the Insurance, Banking and Capital Markets industries.

There is a Hole in My Bucket!

Death by a thousand drips. The noise that keeps the CFO awake long into the night. The CFO knows his company is leaking profit and revenue, but where to look?

How do you stop all those invisible dripping taps? If you regularly receive irate calls from customers complaining about being undercharged or from people in your distant past who want to make good on written-off debt, then sleep well. Otherwise you will need to continue investigating.  One key problem with leakage is that the causes are difficult to see and even harder to stop.  The ARCollect tech-infused working capital assessment performs like a detective, it investigates and identifies the leakage culprits.

How does it work?

Using a team of trained order-to-cash subject-matter experts, we evaluate the end-to-end process by looking at the output measurements for each order-to-cash sub-process and compare them to appropriate industry benchmarks.  Using this approach, opportunities present themselves. Next, our experts evaluate sub-process activities against best practices and score their execution on a scale of 0–3. (Anything less than 3 means the activity is sub-optimal).  A roadmap is created and a plan of initiatives are designed that will address deficiencies.

So next time your organization’s boat seems a little lower in the water, it could be because you need to go below decks and plug some holes.

Is there a hole in your bucket?

Top 5 Retail ‘hotspots’ & how business process outsourcing (BPO) helps drive growth, cash and profits for retailers

Hotspot 1 – Expansion to new markets
  • Wal-Mart to accelerate China expansion with 110 new stores Bloomberg News 2013
  • Tesco’s $110m India expansion given go-ahead BBC 2013
  • Successful global growers: what we can learn from Walmart, Carrefour, Tesco, Metro Forbes 2013

Retailers face multiple challenges in pursuit of store expansion in new markets. Varying laws by countries or states and ‘alien’ business environments make the set-up and operational support a real challenge. Shared Service Centre’s (SSC’s) established by BPO service providers already exist in emerging markets, especially China, Russia, India, Brazil and Eastern Europe, and can help with fast and inexpensive entry where reporting, compliance, tax and local regulatory knowledge are critical foundations for success. More often than not, BPO providers are already selling technology and services in target markets you want to enter and they will partner with you to grow rapidly.

Hotspot 2 – Cost reduction

Consolidating brand, country and HQ support functions saves cost.  Pooling together common activities and in particular outsourcing non-core processes represents a mature operating model. A BPO provider’s core expertise in business operation transformation for finance & accounting, HR and procurement (GNFR*) helps retailers achieve simplified, geographically harmonized and technologically automated processes i.e. they do it better and cheaper than you can do yourself.

*Goods not for sale

Hotspot 3 – eCommerce & online trading
  • Walmart expands ‘To Go’ test as competition heats up for online grocery Sales  Forbes 2014
  • Woolworths’ online sales ahead of 2014 full-year target  ZDNet 2014
  • Tesco lifted by surge in online sales over Christmas Express 2014

With the rapid rise in online and mobile usage, retailers need to evolve new back office eCommerce services, such as cross border payments, order management and “chat” services. BPO providers typically have a technology heritage and are renowned for social, mobile, cloud and analytics solutions. Technology applications when embedded within retail processes allow BPO providers to offer smarter ‘Platform as a Service’ products i.e. the IT application and the people to run the end-to-end service. Many providers have already set up eCommerce Centres of Excellence to help their clients offer a unified customer experience across multiple brands and stores. If your legacy back office cannot evolve with the growth in online trading, it will come back and bite you at some stage and cost you dearly.

Hotspot 4 – Generate growth from big data & analytics
  • Millennial shopper want to do things themselves, they need visibility and consistency in shopping transactions. Traditional shoppers look for consistent pricing across channels and prefer loyalty programs to be consistent between online and in-store IBM Study 2014 

‘Knowing your customer better’ is the new battleground and leading retailers are taking this very seriously. We know data from loyalty cards, store cards, online and retail POS, third parties, contact centers, surveys, product reviews, conversations in social networks are all ‘big data points’ and provide customer insights. So, what value can BPO providers bring? In short, it’s access to cost effective people and tools needed to unlock the value of the data and provide the innovation to convert to new revenue channels. For example, everyone does social listening on Facebook, Twitter, You Tube, etc. but is your retail company capturing competitor complaints, mapping those comments to the customer service provider  through sophisticated data filters and responding in real time to convert that complainant to your business as a new customer sale (usually with a discount coupon or offer).

Hotspot 5 – Differentiate products and services
  • The idea of paying full price for anything seemed absurd for shoppers  Time 2014
  • Approximately 80 – 90% of trade promotion spend do not reflect a ROI for manufacturers
  • Retail industry has witnessed deteriorating level of working capital YoY PWC Study

You think your business is special and only your own people can manage it effectively. It’s a common view, but the reality is BPO providers are working with huge household names in retail all over the world; and have been doing so for decades. They have deep retail industry process knowledge and contribute value within specific processes such as promotional campaigns, optimized goods replenishment, waste and shrinkage, working capital improvement, “cash acceleration”, debt collection, discount and rebate contract compliance, forecasting, buying and even store management. Find an extra £20m cash to open a new store, access £m’s of funding for acquisitions through better trade receivables management or increase buying power with suppliers through payments and innovative discount terms. This is all possible with BPO providers who have become very adept at understanding your processes and representing what makes your brand special.

For more information, please contact Mike Withey, Associate Partner IBM,