Thoughtful teams develop products that are useful and valuable to their target users.
Introducing large innovations in a company is a spectacular event. It’s an opportunity to boast to our colleagues and superiors that we have implemented something fantastic and to make the competition jealous. I’m also convinced that without innovative action, which results in creating new services and value for the customer, it is impossible to think about the progress of our company. In this article, however, I’d like to focus on a different direction of change than these spectacular innovations. On something that often makes for a worthwhile start of our digital transformation. It is often mistakenly treated by many people as proper innovation. On the other hand, it might be underestimated and overlooked. We are talking, of course, about large and small process optimisations.
As my background is mostly in the financial industry, especially leasing and lending, I’ll show examples of optimisation taken from companies with this profile. Internal processes in large corporations and medium-sized companies are similar, regardless of the industry, so the described situations apply to other sectors. Let's start by thinking about what optimisation is and how it can be implemented.
Nowadays, processes are excessively complicated, mainly due to constant changes. In law, taxes, the financial environment, customer requirements. This results in even more activities within companies, especially on the back-office (operational) side. They can overlap, slow down someone's work and, above all, require using multiple systems. Everyone who has worked in customer service, accounting or a debt collection department at a large company for a few weeks, knows that processes show some discontinuities. You are constantly waiting for something, resulting in big workload peaks. Sometimes the data goes to the wrong people, some documents are missing and you have to log into various systems. It would be best to have three pairs of hands to "grasp" it all. This situation causes inefficiencies and frustration for employees and lower-level managers.
If management wants to improve the company's performance, they should not simply increase sales and (possibly) hire more people in operations. Each new product will result in even more complex processes and cause greater inefficiencies "behind the scenes". Therefore, in addition to innovative services for new customers on the sales side, process optimisation and digital solutions should also be introduced for the internal customer (individual departments of the company), as well as customers who are already in our portfolio. It’s no news that closing another transaction with a customer, who we have acquired in the past, is several times cheaper than acquiring a new one. In this article, we will define optimisation as changes in already existing processes, aimed at reducing labour costs, but which might also generate additional revenue.
Well, they haven’t always been, in historical terms. A company famous for process optimisation, Toyota, where the lean management method was developed, introduced its optimisations in production without the use of computers. They consisted in better work organisation and its remodelling so that there were no wasted resources and, above all, no overproduction. The goal was to deliver individual parts on time and in the exact number needed for further production.
Later on, lean management shifted from production to offices. Many techniques were successfully introduced there. Flow mapping, proper arrangement of the workplace (including the positioning of desks and marking out communication routes), proper distribution of departments (and close cooperation), order management system (kanban), eliminating jams in the flow of documents and so on. It was, and still is, important that one team should not hoard documents (contracts, invoices) so others don’t wait for them unproductively.
Of course, the quality of data is also important. This is how the lean six sigma method evolved from lean management. But we won’t be focusing on analogue solutions here. We all know that nowadays almost everything we do in the office is based on digital technologies. Therefore, if we want to make a profound change in the company and adapt it to current requirements, sooner or later we will lay our hands-on digital transformation and process digitisation.
First, you need to decide whether you have sufficient resources, knowledge and time to conduct the process mapping yourself. If so, it is necessary to create a team whose main (or preferably the only) tasks will be going through a given business process or several related processes, creating a graphic representation of the entire workflow and marking all stages and actions. After the initial map of the process, you can often already see the inefficiencies. It turns out that some actions repeat, are being performed in the wrong place or are a relic of the past (no one has removed them, although the situation has changed).
You can try following common sense and do the job yourself or you can entrust the mapping to a specialized company that will use tools from a specific methodology, e.g. agile management. Since the business process in the financial industry almost always takes place using IT systems, its simplification or automation will ultimately require programming work. Therefore, if we decide on external analysis, it is good to cooperate with a company that also provides development services.
1. The use of data. Are we only collecting necessary data or is it redundant or insufficient for further contract/order processing?
2. The quality of data. Is the data validated, secure and controlled according to company policy? Data quality at the input is paramount and analogue processes do not provide it.
3. The number of control checks. Is each check necessary, does it not involve comparing the same data packages with each other or is it not followed by a change of data?
4. Process touchpoints. Does one process delay the other, and if so, what could be the cause? For example, one process is digitised and the other is not.
5. Loops and return arrows. Why do some actions take place several times or need to be checked or authorized again? Why isn’t the flow smooth?
6. The location of the process. Should a given process take place in a given department or maybe it should be moved to another place or take place at a different time?
7. The rationale of the process. Is a given process necessary or does it not result from the company's "history"? Hasn’t it become outdated as a result of a change in the operating model or business environment?
8. Repetitiveness of work. Are there points in the process that require employees to perform the same activities? Those are most easily optimised and digitised.
9. Hot spots. Why do employees mention conflicts in a given process? Are they not due to poor design of the document flow, too long waits for the final result or, simply, aren’t too tiring?
10. The systems in use. Is it not necessary to repeatedly log into the systems, manually enter or transfer data between systems or perform tedious exports/imports throughout the process?
Sometimes a preliminary analysis is not necessary to decide about starting optimisation. Employees know where the inefficiencies are and they only lack a structured knowledge base and the right tools. You should then (on your own or with a consultant) review the ready-made applications available on the market or look for a partner who will design a tailor-made solution for you and, at the same time, integrate them safely into existing systems.
Below I list ten examples of optimisations that concerned various departments of companies in the financial sector. Their scope and weight vary but they provide a good overview of the possibilities offered by a critical approach to your processes. It’s also worth mentioning implementations that serve to introduce performance indicators (KPIs) and help manage teamwork.
1. Implementation of a customer portal. Reducing the number of calls to operational departments, thanks to issuing downloadable electronic invoices in the network, including notifications for issued invoices, making available payment schedules, concluded insurances, the current status of settlements (including arrears), etc. Each properly developed portal also enables customers to handle matters on their own (self-service), e.g. annexing contracts.
2. Automated credit decision. Shortening analysts' decision-making time, fully or partially automated data retrieval from credit information databases and their processing according to the algorithm developed, which allows them to focus on larger transactions requiring individual assessment and consultation.
3. Automation of the payment process. Introducing controllers in the system for concluding contracts, thanks to which it is possible to eliminate paper reports for checking data in contracts and shorten the time of payment to the supplier, as well as to abandon some controls in the case of repeating business. The paradox is that in semi-analogue processes, errors may occur in reports, not in the application.
4. Advanced telephone exchange. Building a call tree, directing customers to the right people and ensuring almost 100% of the calls are answered within the set time. Implementing a dashboard, which allows you to track response times, introduce performance indicators and quality assessment, thanks to call recording.
5. Change in the insurance process. Shifting the moment of reporting the financing subject to insurance from the prepayment stage to a later one when closing a contract and "wholesale" transfer of information to the insurer (instead of individual cases). This can shorten the payment process.
6. System of internal orders. Resigning from sending orders and requests to perform certain activities via e-mail between the departments, in favour of using the application to generate such orders; thanks to this, such orders will not get lost, it is possible to estimate their number, categorise them and track employees' reaction time.
7. Digitalisation of incoming documents. Scanning documents at the beginning and reading them using intelligent OCR systems, so that they are transferred to electronic circuits and archives, as well as — in the case of accounting documents — can feed the company's relevant system with data.
8. Electronic payments. Automatic generation of payment requests for delayed customers, sent by email or text message, with an attached link to the online payment. This speeds up the process of debt collection, reduces the number of calls, as well as prevents customers from making mistakes when depositing funds into the organisation's account.
9. Settlements with employees. Introducing forms to cost settlements related to official expenses, including delegations, so that they are settled automatically, booked to the appropriate accounts and not require multi-stage control. Electronic attachments (scans) can be stored in appropriate folders in the archive.
10. Electronic contract signing. Integrating the company's system with an external application enables signing sales contracts with the use of an advanced or qualified signature, thus abandoning paper circuits and shortening the time of contract conclusion from a few days to a few hours.
As you can see, you can optimise and digitise almost anything. Sometimes small shifts in the process are enough, and at other times it is necessary to create a whole application that will improve our work. You can design an interface for several systems that will allow you to use them in one place. You can (almost) give up expensive postal services. Even put up a "bot" that answers basic questions from customers and learns the best reactions. It is important to define the problem well and adjust the type and scope of implemented changes to it.
I hope that the digital transformation in your company will start as soon as possible and will be carried out according to the best practices. You can also learn more about how Siemens Financial Services started its digital transformation.
Would you like to find out how an external technology partner can help your company optimise processes and implement an innovation strategy? Contact our Head of Innovation Strategy for a free consultation.
Thoughtful teams develop products that are useful and valuable to their target users.
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