Part 2: Smarter Collection Strategy: IBM Collections Analytics improves overall collection performance defined by higher cash flow and lower delinquency rate for clients across Industries

In our previous blog on “Part 1 – Smarter accounts receivables collection strategy improves collection rate by more than 15% and reduce delinquency rate by 50%”, we learnt how IBM Smarter Collection Strategy takes into account end to end collection process, generating insights from past customer behavior including payment pattern, claims, deductions and judging the credit risk associated at a customer level. And now in this part we will be sharing the important elements of the collections strategy, which makes it unique for clients.

Study2Smarter collection strategy embeds technology, tools and analytics into collection process acts as solution for the process limitations. There are four components to IBM Smarter Collection Strategy which acts as a differentiators:

  1. An integrated Approach – Joint Ownership of Collections Operations & Analytics
    IBM helps its clients in providing an integrated approach where there is a joint ownership for the collections operations and analytics component. Analytics team becomes an integral part of operation and analytics drive collection process related decision like, contact strategy, escalation, agent allocation, agent productivity, escalation. Data Analytics is embedded into all decision made in the collection process. IBM helps clients in using analytics for business insights and driving financial efficiency to continue to outperform peers across all phases of economic cycle. This gives a better view and control over factors impacting collection performance and achieving the defined target becomes easy.
  1. Dynamic Strategy Management
    Strategy which is a contact schedule describing customer to be contacted, mode of contact, priority attached to the customers. This strategy needs to be dynamically managed to ensure rigor over time. This Dynamic strategy management is critical as these schedules are built based on past payment patterns. These payment patterns are significantly influenced or biased by the past contact strategy. IBM works with collectors who are closer to the customer and helps in reducing this bias. Periodic evaluation of the performance through dynamic strategy management helps in ensuring relevance of the strategy to changing nature of the portfolio.
  1. Collaboration with Process Experts
    Under Smarter collection strategy, collaboration among the process teams and analytics delivery is a key component. Through collaboration the insights are incorporated. Analytics engine might identify a customer as high risk and recommend for frequent follow up and calls. Inherent process gap or customer challenges driving these behaviors are discovered. Accounting for behavior illustrated by the customer collection strategy is customized and it’s more than just follows up from process teams. This ensures control on aged AR and effective utilization of available resources in process teams.
  1. Implementation of Recommendation
    Most important factor in achieving desired outcomes using analytics intervention is successful implementation of the strategy. Under smarter collection strategy implementation is closely tracked and driven by analytics team along with process owners. Implementation effectiveness is tracked at daily, weekly and monthly level at collector, risk and value segments. This tracking is leveraged by analytics team to provide clear focus area for process owners to drive effectiveness of implementations.

Sharing examples of some of our clients across Industries who have achieved improved collections performance by higher cash flow, lower delinquency rate and controlled aged balance with IBM’s Smarter Collection Strategy:

A Global Service Company achieved higher collection performance by 15.0% which translated into 15M additional cash collected over 3 years of managed service. 50% reduction in delinquency rate was achieved by driving and maintaining the change in customer payment pattern driven by analytics & change intervention. Customer behavior changed and early payments were achieved, so for low risk payment due date of payments was reduced by 71%; for medium risk by 29% & for high risk by 3%. Driven by change in customer payment behavior, risk mix also improved: low risk customer improved by 29%; medium risk improved by 6% and high risk reduced by 12%.

Global Document Management Company achieved 50% reduction in delinquency comparing year on year despite worsening economy & shrinking balance across countries.

A Publishing Company showed 4% improvement in collections, converting to 2.8M additional cash collected in a Quarter.

Maintaining cash flow is a critical component of running a business successfully. The focus should be on ensuring that sufficient cash is available for investment by not tying up cash in stock unnecessarily or putting procedures in place for chasing up outstanding debts and controlling different levels of cash outflows in relation to the size of the business.

For more information contact Muthu Mangai Muthiah, IBM GPS Advanced Analytics Delivery Leader (muthu.mangai@in.ibm.com) or Kamalesh Karanad, IBM GPS Analytics as a Service Offering Leader (kamalesh.rao@us.ibm.com)

New technologies have opened doors to support a fully automated, integrated and more intelligent business processes

Authors – Christine Gattenio, VP, IBM Global Process Service F & A Practice and Jason E. Kelley, VP, Partner, CTO & Design, IBM Global Process Services

The convergence of digital technologies (cloud, analytics, mobile and social, or CAMS) has created a data-driven world that is fundamentally changing operating models. The typical path to business process automation is being repaved, and business processes continue to evolve in how they can be executed.

Study3aThis new environment requires (and enables) more intelligence—delivered with speed, visualized for deeper understanding and optimized for higher return on investment. It’s become clear that the combination of these new technologies will be profound, driving disruptive innovations and competitive advantage in the reinvention of business processes.

A variety of automation technologies have rapidly gained traction for their ability to enable fully automated, intelligent and integrated business processes that support a digital global operating model. Business process delivery execution includes access to a suite of technologies such as Business Process as a Service (BPaaS), business process management (BPM) platform, embedded analytics, robotics process automation (RPA) and cognitive tool-based automation.

Study3bWhile the ability to automate processes isn’t new, cognitive, adaptive and intuitive software and tools capable of supporting complex processes are becoming more consumable and easier to implement, integrate and use. As a result, complex processes are becoming more consumable, applications more integrated and enterprise data more valuable across the business.

But to effectively drive automated processes and reap the benefits of successful business process reinvention, organizations need to identify and address obstacles across—and even beyond—the business process lifecycle. This requires an informed, end-to-end look across the current business landscape.

The shift to a digital operating model has opened up new choices in how you can use the latest technologies to not only automate processes, but make them more intelligent and intuitive. While technology is an enabler, having a sound framework with industry-specific service expertise and design capability for delivering superior user experienced is the real game changer.

For almost a decade, IBM has been investing in enabling technologies—including robotics—that help enhance outcomes for our clients. As the journey continues, it expands to include BPaaS and analytics. Today, the majority of our clients are using some form of robotic automation. As our portfolio evolves, robotics will continue to play a key part in enabling us to bring the tools, services and capabilities you need to support a more efficient, cost-effective digital operating model.

For more information

To learn more about the IBM Global Process Services, please contact Christine Gattenio, Vice President, Global Finance & Administration & B2B Customer Service Practice (Chris.Gattenio@us.ibm.com) or Jason E. Kelley, Vice President, Partner, CTO & Design, IBM Global Process Services, Business Sales & Delivery Executive: Business Analytics & Strategy (jekelley@us.ibm.com).

The Marketing Reengineering Mandate for Financial Services

Image-Blog-Study3aFinancial Services CMOs face challenges from multiple fronts. Non-traditional, ”born on the web” competitors are gaining market share, customer expectations are increasing, the regulatory environment keeps evolving and changing while budgets are shrinking year on year. Insights from the IBM Global C-suite Study “Stepping up to the challenge” show that CMOs feel increasingly under prepared for market and technology shifts – where four years ago, close to 30% felt prepared, that has now dropped to below 20%.   They must juggle all of the initiatives that the modern CMO owns – strong traditional marketing channels, digital marketing, build data-driven marketing competency, synthesize and act upon big data, develop personalized content – and all within a regulated industry. According to “Gartner for Marketing Leaders”, financial services companies spend an average of 10.6% of revenue on marketing – that’s counting staff and program spend. On average, about 25% of this budget is spent on digital initiatives. Most CMOs, however, have made limited progress towards executing key digital marketing strategies. Marketers need to ensure that they understand their target customer’s behavioral patterns and use the data to their advantage. One of IBM’s financial services clients had similar challenges. Marketing departments were working in silos across multiple business units – affinity marketing, alliance services, credit card, P&C, life, banking, investment management, among others, each with their own approach. IBM’s Managed Marketing Services helped the client centralize campaign planning and execution, standardize the roles and marketing processes, making it all faster, and with higher quality performance. They are now seeing dramatic results, including:

  • 30% increase in campaign tactic delivery per FTE
  • 50% decrease in cost per campaign tactic
  • 16% reduction in campaign cycle time

While digital transformation is at the top of the CMO agenda, most enterprise marketing organizations have a distributed structure. To take full advantage of marketing automation, they must first centralize and standardize work and reengineer how marketing is done. (Not unlike transformation of other business disciplines, experienced for example in the move to ERP systems). CMOs are quite accustomed to the notion of “outsourcing”, as this has always been the case with print and broadcast media buys, agency relationships and the like. Already, an estimated half of digital marketing activities are outsourced, often times to multiple providers within the same organization – an area of sub-optimization.  IBM can serve as a change agent to help clients to overcome the challenges in internal matrixed organizational structures, which are inhibiting collaboration across marketing, sales and customer functions. IBM has developed an approach for helping financial services institutions to reengineer the work of marketing with process rigor, IT expertise and marketing know how. We provide services around the new workloads at the intersection of marketing and IT, freeing up marketing departments to focus on the “what” not the “how”. The key components of IBM Managed Marketing Services are:IBM ManagedCMOs have three co-dependent choices to be made:

  1. Approach to analytics
  2. Technologies to facilitate the digitally engineered experience
  3. Future operating model

Digital transformation is analogous to the transformations other departments went through in their transition to ERP systems.   To be successful, the entire processes associated with marketing must be viewed holistically. The focus must shift to customer experience, detailing the specific vision for real-time, interactive engagement, the data requirements to set the strategic intent and the software tools to drive automation and standards. New operating models must be defined to get the work done in the most efficient and effective manner, standardizing work models globally and strategically centralizing selected processes. If this is not done, there is a risk of losing most of the value that marketing automation can deliver – detecting patterns, improving cross-selling and retention and ultimately realizing the vision of delivering the real-time, interactive experience across each customer touch point. IBM’s Managed Marketing Services is proven to help our clients successfully make this transition while freeing up 20-35% of their budget to go after new strategic initiatives.  Click here to know more. For more information about IBM Managed Marketing Services, write to me at pamstan@us.ibm.com .

An integrated consulting and business process operation powers finance transformation and business growth for Consumer Product CFOs

Growing internal and external challenges are forcing CFOs of leading Consumer Products (CP) companies to evaluate their current operating model and improve business performance.

An integrated consulting and business process operation powers finance transformation and business growth for Consumer Product CFOsCFOs need help across multiple fronts:

  • Improve working capital performance and cash flow position
  • Accelerate time to market, drive profitable growth and embrace direct-to-consumer sales channel
  • Collaborate across eco-systems to drive deeper collaboration with retailers & suppliers
  • Generate value from operation/customer data to compete with better business insights

Inability to address the above issues affects the growth potential of the enterprise and the ability to invest for the future.

An integrated consulting and business process outsourcing strategy powers finance transformation. It helps CFOs improve working capital performance by 25%, reduce daily sales outstanding by upto 60% and generate 35-50% cost savings. By combining cloud service delivery, digital services and embedded intelligence into source to pay, order to cash and record to report processes, CFOs are able to transform the operating model and drive business performance.

One finance function accelerates decision making and boost growth

Facing low top line revenues and an elevated cost structure, the world’s leading Consumer Products Company needed to make dramatic operational changes. IBM helped the client unify finance operation across 24 countries by standardizing business processes and systems and deploying a single ERP system. This approach helped the client transform into a more responsive, globally integrated enterprise with enhanced channels for faster decision making, continuous improvement and cost efficiency.

By deploying IBM ARCollect™ to manage order to cash process with cloud service delivery, the finance department is now able to access report, dashboard and dispute resolution cases via PDA’s and tablets. This has helped the client improve productivity and free up cash for other growth initiative. Click here to watch the client video.

Set-up the path for finance transformation

We help CP clients develop the path for finance transformation. We combine our deep consulting skills and knowledge with shared services operational expertise and know-how CFOs need to:

  1. Diagnose the problem: Conduct a rapid scan of your business process to analyze problems, identify and evaluate benefits of adopting industry best practices
  2. Set-up for success: Plan the finance transformation roadmap by bringing leading process, technology and tools to define and support change
  3. Deliver business outcome: Chart out the path to deliver business outcome aligned to client’s metrics to reduce bottom-line and grow revenue

Sign-up for the IBM Rapid Scan Assessment
by writing to me at ssapoli@us.ibm.com
Click here to know more about IBM finance & administration services

Part 1 – Smarter accounts receivables collection strategy improves collection rate by more than 15% and reduce delinquency rate by 50%

IBM RapidScan AssessmentIs your collection operation benchmarking with the best in the industry?

Most organizations have been able to drive process efficiency and cost reduction by centralizing and/or outsourcing operation. But, significant gaps exist in achieving optimal process effectiveness. According to the CFO insights from the Global C-suite Study, Value Integrators consistently outperform. They excel in two key areas: finance efficiency and business insight. They are effective at integrating enterprise-wide information, continuously improving processes and develop talent that partner with the business to drive integrated planning and forecasting, scenario planning and predictive modeling capabilities.

Commonly observed gap in accounts receivables collection process is the limited use of technology and analytics for decisions making, leading to lost opportunities to generate more cash. Conventional accounts receivables collection strategy for most organizations is based on the following:

  • Execution focus, driven by cash collection targets
  • Customers and invoices with higher value of outstanding targeted
  • Dedicated collections practitioners aligned by customers
  • One size fits all approach from a frequency and communication channel perspective

Conventional methodology has numerous flaws

  • Collector’s discussion with customers is at overall balance level, potentially ignoring invoice level issues which might impact likelihood of payment
  • Significant volume of low value invoices is ignored. Neglect and lack of regular follow-up leads to delinquency and write-offs
  • High dependency on people as source of knowledge about customer is not institutionalized. Contact strategy is not standardized across collectors, adding a lot of subjectivity to the process and sub-optimal outcomes
  • High cost of managing collections process and customer dissatisfaction

A smarter collection strategy takes into account end to end collection process, generating insights from past customer behavior including payment pattern, claims, deductions and judging the credit risk associated at a customer level. The smarter strategy enable organizations to

  • Develop risk model at an invoice level which could be rolled up to a customer / segment level and enable organizations to assess overall credit risk, payment behavior and identify high risk customers
  • Collection contact strategy leverages inputs from risk models to design effective communication strategy including optimal channel and frequency required to maximize cash collections. The strategy also eliminates the individual bias in how a customer with an outstanding receivables should be managed
  • Periodic strategy refinement based on recent data not only enables short term reduction in delinquency rate, but also drives change in customer payment behavior
  • By using a combination of risk based prioritization and optimal communication strategy, organizations can drive increased effectiveness in collection process and reduce operation cost

Multiple IBM clients across industries and regions have been able to reduce accounts receivables delinquency rate and improve cash flow through smarter collection strategy.

Write to kamalesh.rao@us.ibm.com to conduct an IBM RapidScan Assessment. The assessment help you identify key opportunities, with recommendation for improvement by benchmarking your collection processes with the best in the industry.

Click here to know more about IBM business process outsourcing for Order to Cash

Are you one of the 71% moving your HR to the Cloud?

Do you feel like you’re hearing “cloud computing” and its synonym software-as-a-service nonstop these days? It’s not your imagination. It’s the 71 percent.

If you’re a CHRO, VP of Talent Acquisition or general HR buyer who hasn’t already migrated to the cloud or is seriously considering the option now, you may be surprised at how many organizations will most likely adopt cloud-based HR and how soon. According to a 2014 survey by Information Services Group (ISG), 71 percent of organizations will adopt cloud computing for HR – for example SAP SuccessFactors, Workday or Oracle Fusion — within two years. And based on what we’re seeing one year out from the ISG survey, that estimate may actually be higher.

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Why is the ground shifting under our feet so fast?

There are many drivers for moving HR to the cloud (also known as HR business-process-as-a-service or BPaaS), including:

  • Business process transformation
  • Lower cost of ownership
  • Faster technology innovation (for example taking advantage of faster release cycles)
  • Ability to integrate mobility
  • Maximize ROI on implementation

How IBM can help 

Assuming your organization is one of the 71 percent in the ISG study, what’s your plan to benefit from the cloud? While there are multiple, obvious advantages, including greater cost effectiveness and business agility, moving to the cloud and maximizing ROI can be a complex endeavor that you don’t want to leave to chance. You must have a solid plan not only for migration and implementation, but for continuing to reap savings and maximize ROI well into the future as HR BPaaS needs and capabilities evolve. You’ll want seasoned HR services experts in your corner who can also help you up your game with other disruptive technologies that go hand-in-hand with cloud, including analytics, mobile and social capabilities that the business and your workforce will increasingly demand.  

The IBM HR Services for Cloud offering provides ongoing HR services to employees and managers on SaaS platforms including SuccessFactors, Workday and Oracle Fusion.

We do not replace the vendor who implemented your SaaS platform. Instead we enhance your long-term results, providing ongoing managed services to help you deliver the business outcomes your organization requires. For example we can show you how to use analytics-enabled insights to deliver operational efficiencies and enable a Smarter Workforce.

The IBM HR Services for Cloud solution is helping clients:

  • Maximize returns and insights from their HR SaaS investments
  • Reduce operational and administration costs
  • Improve employee and manager self-service
  • Make better informed HR decisions through expert analytic insights
  • Increase business agility
  • Improve deployment flexibility, scalability and committed outcomes
  • Enhance data security

No matter your industry, we can help you maximize the benefits of cloud. For example, we provide multiprocess HR services that include employee data management, payroll and learning administration services for a client’s 25,000 employees across 10 countries. Benefits that our clients in Consumer Goods, Automotive, Engineering and other industries are realizing include:

  • Experienced, scalable resources available on demand to assist with complex transactions and fluctuations in client support requirements
  • Lower costs of service with lower volumes than the traditional ERP model
  • Better business decisions for improved outcomes via analytics and reporting coupled with cost-effective compliance services, greater accountability, and general HR efficiencies

Need to see an example of what IBM can do? After strategizing a phased global rollout of Workday for a global beauty supplier, we’re now helping support the client’s day-to-day HR services needs in addition to assisting them with longer-term strategies to sustain their ROI and evaluate future capabilities the platform may offer. You can read the details here.

If you plan on joining the 71%, we can help. For more information on our HR Services for Cloud, contact us at hro@us.ibm.com. We welcome your comments and questions below, too.

Transforming revenue cycle management can be simpler, faster and inexpensive

Embedding technology enablers, analytics and process improvement into revenue cycle processes improve the financial performance while reducing cost of RCM operations by as much as 30%-70%

The revenue cycle management (RCM) process for healthcare providers is complex, and inefficiencies exist across activities like insurance verification, billing, cash collections or denials management. With increase in co-pays, audits and scrutiny of claims, the inefficiencies of the process are beginning to eat into the profitability and financial well-being of several healthcare providers.

1110x464_Image Blog Chart 1_72dpiHaving reviewed healthcare clients’ payor denial data over five years, we found 40%-70% of issues exist around the front-end benefit verification and documentation processes. Another 20% is caused in the way the billing process is implemented and barely 10%-20% fall in post billing collections life-cycle.

1110x696_Image Blog Chart 2_UPDATED_72dpiChart 1: Reasons for claims denial

On the patient co-pay end, there are often two reasons that drive almost 80% of process inefficiencies. The first is the lack of understanding of the patient obligation early in the billing life-cycle and the other is the delay between the actual service delivery and the billing or reimbursement request. Patients are often puzzled when they receive their bills and since the actual date is far gone, the patient does not have a high motivation to address the billing immediately.

There is often a temptation to engage in a significant technology transformation project (aka, let’s get a new system) to address these issues. This may involve changing the core billing system and tightening the processes around the new system. Unfortunately, in a landscape of over 400 EHR vendors with limited end-to-end capabilities, only a few technology solutions can address most of the critical issues around RCM life-cycle. Despite the additional time needed to realize the benefit of technology transformation, the very dynamic nature of the industry (for example regulatory change, new innovation, adoption of new standards by payors) also increases the time to benefit. We often find that providers come out with a solution after 18 months which brings them from a five year gap to a two year gap but never closes in.

In our experience, an approach which adopts agile principles and focuses on incremental change within the current technology environment yield better results at half the cost and time duration. Here are some recommendations to make such changes happen.

Adopt workflow solution that knits the front-end activities with back-end operation

While most billing systems have rudimentary workflow capabilities, their primary purpose is to support billing transactions only. The limitations caused by the basic nature of the workflow which coordinate transaction between the insurance eligibility and pre-authorization, the post service document requirements and the billing process become stark, given the urgency of the front-end processes and the nature of requirements across the payor spectrum. A workflow that takes into consideration the various payor rules increases the first time billing accuracy.

Embed analytics tied to the overall process improvement life-cycle

Given the dynamic nature of the industry, we have found that what worked six months ago may not work today. A closer analysis of denial data will show that while aggregates continue to be fairly static, at a payor level, there is significant variance. It is important to link the changes that we see at a payor level to the front-end processes. Changes in payor behavior should be reflected in the way provider handle insurance eligibility documentation and approvals.

Readiness to experiment and innovate to drive efficiency benefits

Several innovations around RCM solution have become obsolete within few years. We see new models of electronic claims submission (ICD-10 etc), payor portals and patient portals witnessing fast paced of change. As seen in other industries, the model of a core billing platform tied to the provider’s EHR must remain constant, but everything else must be evaluated for efficacy, on an ongoing basis.

A model that builds upon continuous improvement with the above as the core agenda will lead to significant benefits and help provide “world-class” performance without incurring both high cost and long lead time.

IBM has combined several of its offerings in healthcare industry including strategy, consulting and outsourcing, business process modeling and smarter analytics to drive towards targeted business outcomes. Click here to understand how Animas (a division of J&J) used advanced analytics to accelerate revenue cycle management.

For more information on IBM Revenue Cycle Management services, meet Jay Raju at HIMSS 2015 Conference Booth #1425 and set-up an appointment. You can call Jay at 1-609-647-1474 or write to him at jraju@us.ibm.com