By Vijay Balakrishnan of StratEx LLC
That we live in a wired (or perhaps more appropriately, a wireless) world is an oft repeated truism. As I work on this post, I am using the Internet. My mobile phone just beeped with a text message. An intrepid bunch of schoolmates are using Facebook to organize a high school reunion half a planet away. Reunion after how many years, you say? Well, let's just say it is enough for many grey hairs.
If the drumbeat of news is to be believed, consumers are leaping en masse to interacting with their financial institutions through mobile phones and other remote channels. You can now snap a picture of a check with your phone and deposit it in your bank from anywhere in the world. Remote Deposit Capture (RDC) allows businesses and consumers to scan checks from the comfort of their offices or family rooms, and zap across images for deposit. The perfect storm of convenience and technology should mean that very few people visit their neighborhood branch anymore, right? Wrong!
An item (no pun, honest!) in The 2010 Federal Reserve Payments Study caught my eye. Yes, the number of checks written has declined from about 30 billion to 24.4 billion. However, only 13 percent of checks deposited were received by financial institutions as images. That means a respectable 87 percent of checks were deposited physically. So, despite all the noise about check deposits getting virtualized, there still is a healthy number of people walking into branches to make deposits.
Now, your take on the physical branch versus self-service debate will dictate whether you see this glass half full or half empty of your beverage of choice. Proponents of RDC will point to the enormous growth potential in the remaining 87 percent. The same percentage will be looked at by some retail bankers as rationale to invest in branches.
At the risk of being a fence sitter (come to think of it, sitting on an actual fence can be acutely uncomfortable), let me say that both views are correct. RDC will continue its growth, albeit at its present course and speed- I don't see a "big bang" transformation in that direction. I do, however, see an opportunity for investment in technologies like teller capture and enhanced training for tellers to go beyond their current role as deposit takers. Teller capture uses technology to capture images, proof, and balance deposits at the teller station. It reduces keystrokes and data entry errors. It also provides more "heads up" time for tellers to interact with customers, where additional training can enhance the customer experience.
Transformation is a funny thing. Just when you think the new and different will swamp the world, something from the hoary past reaches out to remind us of its existence. Success will go to those who craft strategies to leverage both.
Vijay Balakrishnan is president of StratEx LLC. He can be reached at 770-598-5747.
Thursday, January 27, 2011
Saturday, January 22, 2011
A real-world AP automation journey
Posted by Mark Brousseau
It’s not often that an organization can reduce its workforce while significantly growing its volume, but that’s exactly what University Hospitals, one of the nation’s leading healthcare systems, did by rethinking and automating processes in its accounts payable (AP) shared services department.
The healthcare system’s shared services center has supported a 63 percent increase in invoice volume with a 17 percent reduction in full-time equivalents (FTEs), Jeff Lubbe, corporate finance director, University Hospitals, told attendees at Kofax Transform 2011 Americas this week in San Diego.
When University Hospitals set out to revamp its AP operations a few years back, several factors were driving its thinking: external pressure to improve profitability, its desire to reduce back-office costs and reinvest the savings in patient care, and its desire to improve satisfaction with AP processing. What’s more, the AP department’s old technology infrastructure presented several challenges:
• Lost and misplaced invoices
• High costs for non-value added tasks
• Lots of time focused on keying instead of analytics
• Lack of information for workload monitoring
• Lack of accountability to resolve problem invoices
• Difficult verifying non-PO invoice approvals
• Lag time to receive approval on non-PO invoices
• Issues around coding of invoices to invalid accounts
Against this backdrop, it’s not surprising that AP was blamed anytime an invoice was paid late.
With the implementation of an Oracle enterprise resource planning (ERP) system, University Hospitals felt it finally had a strong base that it could build on for its automation strategy.
The first phase of University Hospitals’ automation strategy was to consolidate its AP operations, consolidate invoices and suppliers, identify technology-ready suppliers with high invoice counts (“We wanted to see where we could use EDI [electronic data interchange] or spreadsheet uploads,” Lubbe said), and takea hard look at internally generated transactions for process improvements.
In the second phase of its AP automation strategy, Lubbe said University Hospitals implemented a document imaging and automated workflow solution, and began utilizing a self-service solution for expenses and non-PO invoicing. University Hospitals selected MarkView software from 170 Systems (now part of Kofax) for its document imaging and automated workflow solution.
“Our strategy was to select an Oracle application – since we are an Oracle shop – and if one didn’t exist, to select an Oracle partner that had a solution that was intuitive, cost effective and scalable,” Lubbe told attendees. “We chose 170 Systems because of MarkView’s integration with Oracle, the company’s proven track record of best-practices implementations, its extensive financial automation experience, and MarkView’s breadth of out-of-the-box functionality. It was a really great fit for us.”
Today, University Hospitals has automated about 75 percent of the invoices that come into its enterprise, Lubbe said. The final phase of the medical system’s original AP automation plan will include deploying an optical character recognition (OCR) solution, and refocusing AP staff on analytical tasks, such as problem and hold resolution, statement reconciliation, and discount capture.
To automate its data capture, University Hospitals began deploying Kofax Capture and Kofax Transformation Management in December, and expects to complete the implementation in March. Lubbe said the medical system selected the Kofax products because of their integration with MarkView and Kofax’s leadership position in the intelligent data capture market.
While data capture is sure to provide additional benefits, Lubbe said he’s already pleased with the progress the medical system has made in automating its AP processes. “We have improved internal control, improved productivity of the AP department and its manager, increased visibility, avoided AP headcount increases, and improved the perception of AP and finance,” Lubbe concluded.
It’s not often that an organization can reduce its workforce while significantly growing its volume, but that’s exactly what University Hospitals, one of the nation’s leading healthcare systems, did by rethinking and automating processes in its accounts payable (AP) shared services department.
The healthcare system’s shared services center has supported a 63 percent increase in invoice volume with a 17 percent reduction in full-time equivalents (FTEs), Jeff Lubbe, corporate finance director, University Hospitals, told attendees at Kofax Transform 2011 Americas this week in San Diego.
When University Hospitals set out to revamp its AP operations a few years back, several factors were driving its thinking: external pressure to improve profitability, its desire to reduce back-office costs and reinvest the savings in patient care, and its desire to improve satisfaction with AP processing. What’s more, the AP department’s old technology infrastructure presented several challenges:
• Lost and misplaced invoices
• High costs for non-value added tasks
• Lots of time focused on keying instead of analytics
• Lack of information for workload monitoring
• Lack of accountability to resolve problem invoices
• Difficult verifying non-PO invoice approvals
• Lag time to receive approval on non-PO invoices
• Issues around coding of invoices to invalid accounts
Against this backdrop, it’s not surprising that AP was blamed anytime an invoice was paid late.
With the implementation of an Oracle enterprise resource planning (ERP) system, University Hospitals felt it finally had a strong base that it could build on for its automation strategy.
The first phase of University Hospitals’ automation strategy was to consolidate its AP operations, consolidate invoices and suppliers, identify technology-ready suppliers with high invoice counts (“We wanted to see where we could use EDI [electronic data interchange] or spreadsheet uploads,” Lubbe said), and takea hard look at internally generated transactions for process improvements.
In the second phase of its AP automation strategy, Lubbe said University Hospitals implemented a document imaging and automated workflow solution, and began utilizing a self-service solution for expenses and non-PO invoicing. University Hospitals selected MarkView software from 170 Systems (now part of Kofax) for its document imaging and automated workflow solution.
“Our strategy was to select an Oracle application – since we are an Oracle shop – and if one didn’t exist, to select an Oracle partner that had a solution that was intuitive, cost effective and scalable,” Lubbe told attendees. “We chose 170 Systems because of MarkView’s integration with Oracle, the company’s proven track record of best-practices implementations, its extensive financial automation experience, and MarkView’s breadth of out-of-the-box functionality. It was a really great fit for us.”
Today, University Hospitals has automated about 75 percent of the invoices that come into its enterprise, Lubbe said. The final phase of the medical system’s original AP automation plan will include deploying an optical character recognition (OCR) solution, and refocusing AP staff on analytical tasks, such as problem and hold resolution, statement reconciliation, and discount capture.
To automate its data capture, University Hospitals began deploying Kofax Capture and Kofax Transformation Management in December, and expects to complete the implementation in March. Lubbe said the medical system selected the Kofax products because of their integration with MarkView and Kofax’s leadership position in the intelligent data capture market.
While data capture is sure to provide additional benefits, Lubbe said he’s already pleased with the progress the medical system has made in automating its AP processes. “We have improved internal control, improved productivity of the AP department and its manager, increased visibility, avoided AP headcount increases, and improved the perception of AP and finance,” Lubbe concluded.
Wednesday, January 19, 2011
Outsourcing hits plateau?
Posted by Mark Brousseau
Given the slow economic recovery, outsourcing hit a plateau for most industries in 2010, though there were a few important bright spots, including financial services, which witnessed a number of large IT deals, and also the travel industry, as more hotel chains sourced their key technology functions, according to research from law firm Morrison & Foerster.
Following are a few highlights from Morrison & Foerster’s research:
... Market uncertainty continues: nagging high unemployment and near-bankruptcies of some European countries have left companies unsure about the value of entering into long-term outsourcing arrangements.
... As Business Process Outsourcing picks up, companies will increasingly demand innovation from providers, hoping to ensure more long-term and embedded value in the sourcing relationship. “Successful innovation can have a multiplier effect which can lead to increased savings going forward,” the report says.
... Cloud computing has become the biggest money-saving sourcing tool – but privacy concerns have generated industry-specific “private clouds.” Morison Foerster expects the development of a new niche market devoted exclusively to cloud computing security.
... Financial services bounced back in 2010 due to large restructurings and the adoption of outsourcing by middle market institutions. Regulators’ close watch on the industry means banks and insurance companies will insist on stable and creditworthy sourcing providers – who might even be called upon to assume responsibility for system failures at banks. Financial services outsourcing should also get a boost from implementation of the Basel II and III and Solvency II international finance accords.
... Heathcare and pharma deals hardly budged in 2010 but the new U.S. healthcare legislation should spur activity in the near future.
... As the recession eases and short-term cost-cutting is replaced by a longer outlook, “green IT” will become more popular, driven by corporate social responsibility agendas, government requirements, and bottom-line savings. More companies are holding sourcing service providers to green standards of energy efficiency and minimizing waste.
... In the U.S., a significant exception to outsourcing’s relatively tepid performance in 2010 was Legal Process Outsourcing, which law firms are adopting at an unprecedented rate. Further, the types of work being outsourced continues to increase in complexity and sophistication, suggesting a rosy future for LPO – something investors and other strategic buyers have noticed.
How do these findings compare to what you are seeing in the market?
Given the slow economic recovery, outsourcing hit a plateau for most industries in 2010, though there were a few important bright spots, including financial services, which witnessed a number of large IT deals, and also the travel industry, as more hotel chains sourced their key technology functions, according to research from law firm Morrison & Foerster.
Following are a few highlights from Morrison & Foerster’s research:
... Market uncertainty continues: nagging high unemployment and near-bankruptcies of some European countries have left companies unsure about the value of entering into long-term outsourcing arrangements.
... As Business Process Outsourcing picks up, companies will increasingly demand innovation from providers, hoping to ensure more long-term and embedded value in the sourcing relationship. “Successful innovation can have a multiplier effect which can lead to increased savings going forward,” the report says.
... Cloud computing has become the biggest money-saving sourcing tool – but privacy concerns have generated industry-specific “private clouds.” Morison Foerster expects the development of a new niche market devoted exclusively to cloud computing security.
... Financial services bounced back in 2010 due to large restructurings and the adoption of outsourcing by middle market institutions. Regulators’ close watch on the industry means banks and insurance companies will insist on stable and creditworthy sourcing providers – who might even be called upon to assume responsibility for system failures at banks. Financial services outsourcing should also get a boost from implementation of the Basel II and III and Solvency II international finance accords.
... Heathcare and pharma deals hardly budged in 2010 but the new U.S. healthcare legislation should spur activity in the near future.
... As the recession eases and short-term cost-cutting is replaced by a longer outlook, “green IT” will become more popular, driven by corporate social responsibility agendas, government requirements, and bottom-line savings. More companies are holding sourcing service providers to green standards of energy efficiency and minimizing waste.
... In the U.S., a significant exception to outsourcing’s relatively tepid performance in 2010 was Legal Process Outsourcing, which law firms are adopting at an unprecedented rate. Further, the types of work being outsourced continues to increase in complexity and sophistication, suggesting a rosy future for LPO – something investors and other strategic buyers have noticed.
How do these findings compare to what you are seeing in the market?
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