Insuring success in paperless working

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Insuring success in paperless working

There can't be many industries where the back office is more traditionally paper-based than in the insurance business. So if any sector is ripe for workflow automation this is it. Julia Vowler reports

Could NatWest Life, the life and pensions business of NatWest bank, justify spending £6m on imaging and workflow technologies? The answer was yes, but only if the productivity gains achieved were significantly greater than those usually credited to the introduction of this type of technology.

That meant setting an extremely high target. Instead of being content with the standard 20%-30% productivity gain, Project Cormorant had to enable clerical end-users to do half as much work again as they used to. In insurance industry terminology, the ratio of staff to policies had to increase from 1:3,500 to 1:5,262, and the time spent executing each individual business process had to be reduced by a third.

"There was no way we'd have done the project if we hadn't aimed to get a 50% improvement," says Nick Thomas, head of product services at NatWest Life & Regulated Sales, and project manager of Project Cormorant.

For all that, it was still a difficult business case to make.

"The financial case was very marginal, and we set the payback period for three to four years. If we'd said we wanted payback within say 12 months we'd not have gone forward," says Thomas.

What complicated the return on investment equation was a factor that nearly every organisation encounters when making technology-led investments - the bigger picture. For NatWest Life, the bigger picture was framed by the fact that the bank's life assurance business was set up in 1993, but although it was a greenfield business, it was not an IT greenfield site.

To get to market fast, the company took existing life assurance IT systems from another company. This meant that it could start selling policies fast, but the trade-off also meant it had bought itself an instant legacy system.

"There's been various attempts to migrate us away since then," says Thomas, "but to replace all the back office systems would mean looking at spending over £20m."

Thus, implementing a workflow system to go between the end-users and the underlying back-office systems was seen as a means of strategically starting to unhitch the business from its core processing system, prior to its eventual replacement, when that makes financial sense.

"The workflow project was seen as an evolutionary step to migrate our systems forward," says Thomas.

As well as being part of a long-term technology strategy, Project Cormorant also, he says, had a significant infrastructure investment content - about £1m-£1.2m of the £6m budget would go on implementing NT desktops and servers. Justifying infrastructure spend is always a problem, and the return-on-investment equation is always uncertain and debatable. NatWest Life used two justifications, both familiar to those who have to make similar decisions. One was that an enterprise-wide NT platform represented prudent future-proofing, by upgrading to a flexible, higher-powered industry standard. The second was that the cost of the infrastructure spend was simply to be attached to the business benefits accrued from the workflow functionality.

The principle is, says Thomas, "the first one on the bus, buys the bus".

With a very tight business case and a non-trivial infrastructure burden to carry, the Project Cormorant team were under extremely visible pressure to do well. Although the products and partners - Eastman Kodak's Open Workflow, Open Image system, plus Unisys as systems developer and integrator - had been selected in the second half of 1996, and the requirements definition completed in the first quarter of 1997, the "go/no-go" business case review starting in the spring meant that the project finally kicked off at the end of June 1997.

Timetable

The design phase, divided into two, business and technical, took five months until November that year, although build got going in October and was complete by March 1998. Testing ran from March to June, and then a phased implementation began, with the first phase complete by the end of June, and the last complete by August. "Over six weeks we rolled it out to between 120-130 users, team by team," recalls Thomas.

The system was designed to focus on the business processes within the company's service area (dealing with existing policies and customers, as opposed to the new business division) which would yield the most benefit from being automated.

The 60-plus processes were divided into three categories. Those receiving the highest level of workflow were the high volume ones that could be most automated. The next level were the medium volume ones (the bulk of the processes), and the lowest was the collection of processes that were difficult to define, seldom used, and usually required human intelligence to make a decision on how to deal with them.

The top two categories were given full scripts and had lots of parameters. They had only one way of doing the work. The last was less automated, leaving room for human decisions.

When rolled out, users got the full functionality of the system in one go.

"Everything had to be there from day one," he says. "It was big bang in terms of functionality, but with a slow, phased turn on."

Right from the start of Project Cormorant there was very deliberate, highly orchestrated integration between business and IT. The project sponsor was head of customer services, and Thomas as project manager was himself a senior business manager.

Several key business users were seconded to the project for its duration and were actively involved in requirements gathering, conceptual and detailed design, system and acceptance testing and eventual training, roll out and post-implementation support.

NatWest Life took care to ensure that 'business involvement' did not just mean involvement at the level of managers. The system's end-users, whose way of working would be significantly changed by implementing workflow, were closely involved too.

"We identified one person in each end-user team of around 25 staff to be the team's representative," says Thomas.

Each team rep was then "on attachment" to Project Cormorant and was trained up on the new systems, heavily involved in system and user acceptance testing, and in drawing up the intensive three-day training the rest of their teams would go through.

Inevitably, this mean a degree of dissociation and diversion from their day jobs, but this had been allowed for up front in the project case, both at manager and end-user level.

Having an integrated project team - business and IT - did, however, throw up some issues, acknowledges Thomas. One was the familiar one that the very people you want to help on the project, he says, are the ones that are best at their jobs - the consequent "tug of love" can be tension inducing. Another, ironically, was that it was the IT contingent in the team who ran the danger of feeling dissociated from their own IT environment.

"The IT group attached to us lost their home base and their roots," says Thomas.

He had to assure them that once the system was running, it would be business as usual for them back in the IT department.

NatWest Life also ensured that any lack of mental buy-in to the project by operations managers whose business processes were being workflowed was avoided by changing their budgets in line with the project's expected effects on productivity.

"From the moment we said we'd do the project, all the operational budgets for the areas to be impacted were changed in line with the benefits," says Thomas.

It was therefore up to the operational managers to ensure that co-operation with the new system enabled the benefits to be harvested, or else, says Thomas, "they'd be looking at cost overruns on their own budgets."

There was also a significant degree of change management involved. The way that end-users worked would be changed and they had to be prepared for that, rather than discovering it once the system had been rolled out.

"There would be a very different way of working - for example, far more sitting down rather than wandering around manually passing on files," points out Thomas.

End-user involvement

The outcome of this comprehensive attention to end-user preparation and involvement was that the company not only did not see the expected deterioration in productivity during the implementation phase, but that the productivity improvements started to come in significantly faster than had been envisaged. Instead of there being more than 12,000 work items outstanding within two months of the end of the roll-out, there were only 2,500 - 21% of the projected total.

"We'd expected it to take until six months after implementation to get back to the level playing field - pre-project work throughput - but we experienced nothing like that," says Thomas. "Within about a month of rolling the system out we were level again, and had achieved our [productivity improvement] targets by November."

Since then, the workflow system has been continuously improved to implement corresponding improvements in the design of the underlying process, in order to make them ever more efficient and faster to execute. There has also been a follow-on in terms of change management, in order to defuse fears of deskilling amongst the end-user workforce now that so much of their job has been computerised, with the system pulling through the processes automatically.

"We did anticipate this reaction but we've been surprised at how quickly it developed," says Thomas.

In response, jobs have been re-skilled.

"We've started to merge different teams to make staff responsible for more processes," says Thomas. "Their work has become shallower, but broader."

With the image and workflow system now securely bedded down in the service section for processing the documentation of existing customers, "The next logical step," acknowledges Thomas, "would be to roll it out to the new business area and all the administrative functions such as sales."

Ironically, the new business area already has workflow, but an older pre-image implementation, which it is not cost-justifiable to replace yet. However, staff in this area can access imaged documents of existing customers where necessary, even though they cannot use the full workflow facilities.

However, whilst waiting for it to be worthwhile to replace the older workflow system, the company has gained further benefit from the new system by selling the intellectual property rights to Unisys, which has implemented an adapted version at another division of NatWest bank. This has given NatWest Life additional return on the considerable amount of bespoke code written jointly by its in-house developers and those at Unisys.

The final benefit is perhaps less tangible, but no less valuable. Part of the integration contract with Unisys, says Thomas, was that NatWest Life wanted a good representation of its own IT people on the Unisys team. The result is that NatWest Life now has its own experienced experts at designing, building, integrating and implementing an image and workflow system.

"We wanted the knowledge," says Thomas.

At a glance

The company: NatWest Life & Regulated Sales

The challenge: How does an insurance company introduce a new system that will deliver a step change in productivity (target 50% improvement) in less than two months, without alienating its staff?

The solution: By bringing in an image and workflow system and integrating it with existing systems with the close co-operation of both technology partners and key business users, working to a detailed change and benefit management plan

The Computer Weekly/Buy IT case studies offer an in-depth analysis of a successful IT project, with expert comment from a panel. BuyIT was launched in 1995 by the DTI and an alliance of top industry bodies. BuyIT has selected best practice examples on a range of projects. Each case study is scrutinised by the BuyIT team of experts who make their recommendations and comments. The BuyIT Computer Weekly Best Practice Series is endorsed by Fit for the Future, a CBI-led, government-backed campaign to get business learning from business.

Key benefits of the project

  • Clerical productivity is up by 50%.
  • The infrastructure has been upgraded to NT
  • Insulation from legacy core systems
  • A ready-made image and workflow system ready to roll out to other areas of the business
  • Revenue from selling the rights to the bespoke software to its system implementor
  • A skilled and experienced image and workflow in-house team with knowledge transferred from the systems implementor

The technology

Hardware: Dell desktops and Compaq servers plus Eastman scanners

Software: Microsoft NT client and server, running SQL Server 6.5; Eastman's Open Image, Open Workflow; bespoke Visual Basic front ends to provide the infrastructure development and customised business change aspects, such as "robots" to pass work along queues

Imaging hardware and workflow software: Eastman Kodak

Systems integrator: Unisys

Project management: NatWest Life

The workflow system

The new system takes in documents from several sources, including paper letters from customers, faxes and printed reports, which are scanned in batches, indexed and prioritised. The system then routes work to the appropriate team, each member of which processes the item, before the system passes it on, and pushes the next work item to the clerk, on a date basis unless there is an alternative priority - complaints are treated more urgently, for example. The system is also linked to the customer call centre, where operators can generate a telephone note which is passed to the workflow system for actioning as a work item.

Critical success factors

Why did this project succeed? Peter Duschinsky, secretary of the BuyIT Best Practice Group, lists his top 10 critical success factors:

  • A well-documented business case with a clear focus on delivery within budget and clear and unambiguous goals set to define and measure benefits
  • A very integrated, goal-oriented team focus between the in-house staff, Unisys and Eastman with successful skills transfer from Unisys
  • Strong project sponsorship by the executive steering group and good business buy-in
  • Good communication throughout - early user involvement and key stakeholders identified and well-briefed in advance of meetings
  • Operations managers financially committed to realising the productivity benefits from the new system
  • A well-managed roll-out. End-users knew what they were going to get before they got it. There were few surprises when the system arrived, and each user team had its own staff expert
  • Good post-implementation support provision to resolve any problems
  • Change management - issues were addressed early on and included local plans to control the impact of implementation upon the ongoing business operations - a degree of disruption to the day job was envisaged and allowed for
  • Training was intensive and comprehensive
  • Strict adherence to formal approval and review processes (including contract management reviews with the supplier) throughout the project

Coming soon

An important part of the rationale for doing business over the Internet is to cut costs and over-heads and pass these savings on to your customers. When you have over a quarter of a million customers these savings could be considerable. But how to achieve them? The solution: Sutton & East Surrey Water, with 260,000 (mainly domestic) customers, is looking to the Internet as the way to allow its customers to access their accounts and meter reading information, change payment options and pay their water bills, potentially saving an estimated £1 per bill in postage and stationery costs.

What the Buy IT experts say

Alistair Fulton

Chairman, BuyIT Best Practice Group

We selected this project from a number of workflow implementation case studies because we particularly liked the excellent way in which it was managed.

It is quite an achievement to be able to introduce and bed down new systems and processes to over 120 users in less than two months. And look at the results - within six months NatWest Life achieved step changes in productivity, major gains in process consistency and much lower running costs.

The Success Factors panel indicates some of the reasons for this success. NatWest Life's own post-implementation report shows up others. Like all projects this one had its problems, clearly identified in the post-implementation report, such as:

  • Sign-off of the business case took longer than planned
  • Incompatible standards resulted in some confusion
  • Detailed business requirements were (inevitably) too vague and led to a lack of clarity in later phases of the project.
  • But Nick Thomas was able to resolve these problems and learn from them. He should be congratulated on a job well done.

    Colin Thompson

    Deputy chief executive, British Computer Society

    NatWest Life won a well-deserved place as a finalist in the 1999 British Computer Society Management Awards for this project. Our assessors found it an exemplary implementation of workflow and imaging technology and gave high marks for each of the three aspects of the assessment criteria - business impact, relationship with users and management of the development.

    This was without doubt a challenging project. It was the largest in the company's history and it employed technology new to the business. Yet this would serve as a model for almost any aspect of project management and change control.

    The fact that the project was so clearly business-led was a major factor in its success. The early integration of business and IS teams, the focus on the preparation for change and the rigour and care with which a difficult business case was established and monitored, all gave confidence to business managers and users. In addition, the detailed analysis of business process provided a very clear picture of priorities, both for the initial development and for future enhancements.

    One other important ingredient was noted by our assessors - a total dedication to excellence at all stages, coupled with an impressive honesty in identifying, and learning from, any shortfalls.

    Daniel Dresner

    Head of standards, NCC

    Workflow applications are very much the systems that pump the business blood around the organisational veins and arteries. It is critical that suppliers are wholly in tune with the organisation's body rhythms, otherwise the new organ that they are supplying will be rejected with catastrophic results. This case study is exemplary in the way that NatWest Life:

  • Ensured that difficult targets were made achievable by give and take across the operation
  • Allowed for dips in productivity while the new system was grafted onto existing practices. This meant that it was able to come up to speed and accelerate in a planned and synchronised way to achieve business benefits
  • Integrated their approach to technology and operational procedures
  • Realistically managed expectations.
  • Recording problems for resolution and successes for repetition is a key practice that will engender a partnership between suppliers and their customers. Such teamwork is to be commended.

    NCC is currently involved with a number of these aspects within the standards arena - see the National Computer Centre's Web site at www.ncc.co.uk/standards/

    Steve Goodwin

    Managing director of The Houndscroft Partnership and vice-chairman of IEE's infomatics division

    Any project which has a relatively short timescale - especially a major one like this - will need very careful planning for all of its stages.

    There are many examples of good practice in this case, and Peter Duschinsky has already listed his top 10 on p23 - so let me bring out just a few others that, in my experience can make the difference between success and failure:

  • Vital to most projects is a close level of co-operation between business and IT and, in this example, it appears to have worked very successfully with both sides working well together at all levels
  • A second important concern in projects of this size is the effects they have on people, both during and after implementation. In this case, there has been involvement not just at management levels but across all the staff - a necessity if you want to get everyone on board and supporting the project
  • Similarly, the concerns of those assigned to the project about what would happen to them afterwards were considered, as were the concerns of end-user staff about de-skilling
  • Finally, the post-implementation phase has been reviewed well, so that lessons can be learnt for next time.

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    This was first published in February 2000

     

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