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, kbpolloc@us.ibm.com 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
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  • 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
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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
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  • 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
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  • 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
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  • 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, michaelw@uk.ibm.com.

IAOP final day: corporate social responsibility, SMAC talk, and the future of outsourcing

by Stephen Sheahan, Customer Solutions Executive
IBM Global Process Services HR, Learning and Recruitment Services

February 19, 2014

The IAOP Outsourcing World Summit closed with three special general session segments.

The first session, Corporate Social Responsibility in Action, Part 1, was structured as a game show with three judges awarding outsourcing work to two of four “impact sourcing” providers based on their responses to a series of questions about their practices and results. “Impact sourcing” is the term of choice to describe an arm of the services sector that intentionally employs poor or vulnerable individuals under one of three models:

Non-profit providers operating BPO centers that employ disadvantaged people in locations not traditionally tapped by the outsourcing industry. One example is the U.S. non-profit Digital Divide Data, which has been operating for 10 years in Cambodia and Laos and for the past three years in Kenya.

Established BPO providers subcontracting to impact sourcing providers, an arrangement typified by efforts in India to subcontract work to rural-based small impact sourcing providers. This effort has been supported by the NASSCOM Foundation to reverse a migration to large cities that had a monopoly on opportunity and to provide work to communities of disabled people.

Direct employment of poor and disadvantaged people by major BPO providers who implement special outreach and training programs and establish sites in non-traditional locations to establish and maintain pipelines for the skills they need and to grow their business in those areas.

Services provided by the impact sourcing sector are weighted toward data processing and analysis, including data capture, data mining, and large content conversion or digitization projects. But the sector also provides BPO services such as accounting, document management, and even contact center.

The four impact sourcing providers who “competed” for the work were impressive in their accounts of what they have been able to achieve – not just for their workers – but for their clients in terms of near-zero attrition rates, very favorable pricing and consistently exceeded quality requirements.

Impact sourcing is beginning to appear as a component of the social responsibility scrutiny that clients and advisors apply to prospective providers. And with six of the world’s fastest growing economies located on the African continent, this topic deserves attention from global providers who seek to grow at or faster than market pace.

I had interesting exchanges with Jag Dalal and IAOP President Michael Corbett about domestic applications of this kind of global initiative, and both were supportive of the ideas that there are opportunities in the U.S. to use sourcing techniques to alleviate poverty and that such initiatives would also be likely to undermine resistance to outsourcing where it continues to be confused with offshoring.

The second session, Corporate Social Responsibility in Action, Part 2, Best Practices Trends, and Priorities, was a panel discussion that included representatives from the client, provider, and academic communities. This discussion focused more broadly on social responsibility metrics ranging from diversity to greenhouse gas emissions, which clients are increasingly monitoring with respect to their suppliers and potential suppliers’ compliance status. Here’s some information on IBM’s global corporate social responsibility programs: http://www.ibm.com/ibm/responsibility/

The final segment, a Great Minds Town Hall, was another discussion with a larger panel of clients, advisors, providers, and academics who responded to questions that were tweeted from the audience and appeared on a screen in the ballroom. Most of the questions solicited forecasts for the future direction of the industry. The key takeaways (opinions which appeared to be well supported by credible sources) included:

- There will be an increased emphasis from customers on effectiveness (rather than efficiency) and the achievement of business outcomes beyond cost savings.

- Multi-sourcing across a pool of suppliers will continue, with fewer deals being awarded to only one provider.

- While we won’t see a return to the large deals of the past, today’s smaller deals will grow to mid-sized ones  as clients look to a lead provider to help them manage “the messy middle” by integrating related services from multiple sources through subcontracts or vendor management arrangements.

- Population demographics will geographically shift the availability of skills. By 2040, half of the populations of the U.S. and Western Europe will be over age 50 while the reverse will be true of India and Brazil.

- More and more, clients will work collaboratively with their providers to solve problems, disclosing more information in the process than they have in the past.

- The migration to “SMAC” (the accepted acronym for “social, mobile, analytics, and cloud”) will continue to generate a great deal of activity over the next few years — especially cloud. Witness the U.S. government’s mandate that 15 percent of its applications be cloud-sourced and the struggle that all of our government agencies are having trying to bring that about.

- SMAC will continue to realign influence within the C-suite, as it is CEOs – not just CIOs — who are driving its adoption to solve business problems.

The 2014 IAOP Outsourcing World Summit will be held in Phoenix, Arizona, from Feb. 16-18. This year will be a tough act to follow.

The Customer is Right … At Least 80 Percent of the Time!

By Chris Jenkins

Happy customers pay. This is true for you and me and it’s also true for our clients’ customers. When you purchase a product or service, you feel let down by the provider if what you receive differs from your perception of what you bought. This disappointment leads to frustration and worse if not dealt with quickly and sympathetically.  Two bad experiences — the first when you purchased, the second  when you felt rebuffed, makes you far less inclined to buy anything more.  So, when we uncover a customer issue, we should take the opportunity to minimize the damage already done. And consider this: research shows the customer is correct in 80 percent of disputes. Ironically, if you are swift to detect and resolve an issue, the customer will interpret this as integrity. They will be more likely to perceive you as a “trusted provider” and buy from you again. In our experience, 50 percent or more of the past due balance on a client’s ledger is tied to unresolved or undetected customer issues.

How Tech-Infused can help

Everyone knows this, right? So how does this still happen? Think about the size of a challenge.  At any given time, a typical manufacturing company could have 300K+ open transactions over 38 different countries split across 50 or more receivable management resources. Each transaction could be disputed with up to 50 different issues (wrong price / wrong quantity, and so forth).  Each of these issues has to be validated individually. How can we track all this?

The ARCollect workflow prompts the team to call large value transactions in advance to verify they are not disputed. These transactions enter the resolution cycle faster and are less likely to become “disputed overdue.”  Each dispute is tagged to a transaction using a status code, which is linked to questions that collect key information needed to validate and resolve the issue. Then the issue is electronically routed to the right person, and they add comments or supporting documentation.  Then the collection agent is automatically notified and can either go back to the customer with an appropriate explanation or raise a credit note as warranted.  ARCollect uses analytics to assign priorities to disputed issues, particularly important in the healthcare industry. As a result, we glean large quantities of valuable information to collate and mine. We benefit from a rich seam of root cause information about broken processes and poor behaviors that we can use to optimize the process and further enhance the customer experience.

An ounce of prevention is worth a pound of cure, right?