Editor's Note: Anyone interested in how BPM is transforming the insurance industry should definitely attend the 'BPM for Insurance: Are You Staying Competitive?' Webinar coming this Tuesday, October 28th. Sign up here.
What follows is my podcast with Samir Gulati, Vice President of Marketing for Appian. Samir has 15 years of enterprise software experience and in this podcast we discuss how BPM is transforming the insurance industry, and we also offer a quick glimpse at what will be covered at Appian's upcoming Webinar, BPM for Insurance, which will be moderated by Deb Smallwood, ebizQ's Community Manager for Insurance.
Listen to or download the 7:45 minute podcast below:
How should companies new to BPM first get started?
So Peter, we normally give advice around three dimensions. First of all, pick small projects that can be completed in 60 to 90 days, so you can show rapid results and then bite off a bigger project, many time companies get involved in trying to improve a very big business process end to end and get stuck in internal politics.
So the first advice we give is start small and show quick results again. The second one is big projects with a lower risk and high impact. So we normally plot projects around an axis so when we’re first talking to our customers and we say pick the ones that have low risk but have medium to high impact so that if they go astray you can quickly fix them.
And then finally, we say pick something internal which is customer facing just so you get familiar the technology and the methodologies and get by internally. So a typical process might be HR on boarding, or your internal procurement process, or some other purchase order approval process. Something that you have relatively well defined internally but you want to automate and improve and sort of picking something which is immediately customer facing. And once you have experience with the internal process becomes so much easier to then take on projects that are more customer facing.
That makes a lot of sense. Now, why are so many companies in the insurance industry now focusing on improving their business processes?
So there are two primary reasons. I think that processes are ineffective and their inefficient. So let's just talk for a second about each one. They're ineffective because most of the processes today are kind of linear and sequential but were design many years ago to be the paper-based or phone base with kind of a single thread.
What's happening today is that exception handling is becoming much more complex with all the industry rules and regulations that have to be incorporated and the processes are becoming multithreaded in order to improve cycle time. So that is why a lot of these processes need to be re-architected.
And then finally, they really lack flexibility in the way that they been implemented so that's one of the reasons why insurance companies need to focus on improving in the process. On the inefficiency side, there are multiple handoffs.
Many of the steps are unautomated and the more handoffs you have, the more chance of literally work falling between the cracks, falling on the floor as Forrester calls it. So that's where they need to make sure a lot of these processes are automated and insurance companies who’ve done that immediately see a lot of cost savings and impact to the bottom line.
Now would you agree that the insurance industry is one of the industries that has the most to gain from BPM and what would you say those gains would be?
Yeah, absolutely. Across the assurance industry, people are now looking at some of the key business processes, and I'll talk about that in a minute, and really looking at their end-to-end process and saying how can I improve this. And most of the time, there is significant IT savings upfront. But more importantly, the return on investment from a business perspective, cycle time, reductions, productivity savings, customer service improvements are things that they begin to see over a period of time.
So they're both IT cost savings due to productivity as well as reusability but more importantly, a lot of the key business metrics that they focus on from a customer perspective has started seeing significant gains. And so all across insurance, I think insurance is one of the industries which has been at the forefront of actually using process management technology
Interesting. Now, what types of processes are many insurance providers focusing on in their BPM initiatives and what sort of results have they realized?
Sure. So they're both processes that are kind of back office and customer facing. So let me start with the back office ones first. Claims management is something that's very commonly used for improving using BPM technology, how they handle their customer claims in the back office. And more importantly, how they handle exceptions to those customer claims because many of them are routed straight through a process but a few of them have exceptions and normally it takes a while to make sure those exceptions are handled appropriately. So claims management is one that is improved using BPM.
A new product introduction, many insurance companies have improved their new product introduction cycle times and more importantly, new product introduction trials. So if they want to try, for example, a new insurance product in a particular geography or particular demographics, very often they’ve used BPM to try that and see if it works, implemented more widely otherwise roll it back to the previous process. And a lot of BPM technologies can actually do it. So both new product instructions and kind of new product trials is an area that insurance companies have used.
And finally, customer service, at the end of the day, insurance companies are looking for consistency and reliability in their customer service operations and a lot of BPM tools help the customer service reps either manage the call appropriately, get routed internally to the right people, document the customer service issue, and then report back to the customer. So BPM tools are being used widely in the customer service area as well
Right. Now what you see for the future of BPM in the insurance industry?
Peter, the future is very strong. I think the more insurance companies are aware of some of the benefits that other companies have begun to see, the more that they’re jumping on the process management bandwagon. I'll give you one example. A very, very specific process in the reinsurance space is something that we are looking at Appian with the partner called SMART that we will be talking about during the Webinar.
They have built a reinsurance application using BPM. So there’s so many different areas that BPM can be deployed to help insurance companies. And more importantly, they're beginning to use BPM to better align business and IT because BPM does it very well and promote reusability.
And finally, I think what business leaders in the insurance industry are beginning to see is that while their core gain might be productivity improvements, or better cycle time, or better customer service, all of them are getting better visibility into their business and they can run reports and see exactly where their -- what processes are working well and what need to be improved.
And BPM is giving them the flexibility to change their business process to respond to changing market conditions. In today's economic climate, with the financial crisis and so on, financial services industry crisis, its becoming more and more important that they have the flexibility to change their business processes on a dime and that's really, what BPM provide to the insurance industry.
Very interesting. This is ebizQ’s Peter Schooff. And I want everyone listening to make sure they sign-up for the BPM and Insurance: Are You Staying Competitive? Webinar coming up this Tuesday, October 28.