Twenty billion dollars in new claims from Hurricane Isabel, lowered reserve levels, and other bottom line-threatening factors are prompting insurance companies to strongly consider the benefits of rules-based Business Process Management to save money and deal with new competitive threats.
“Process is not something new,” noted ebizQ Vice President for Strategic Services Beth Gold-Bernstein, who described how better technological tools enabled three large software, apparel and high-tech manufacturers to realize impressive ROI through reduced errors, better inventory control and improved B2B processes, respectively.
“Business Process Management is becoming so important in organizations that it's like the word ‘snow’ for Eskimos. We have many acronyms now, and it's important to understand that they're not all the same thing,” Gold-Bernstein said.
She then melted some of that snow, defining and distinguishing from one another BPM (Business Process Management), BPI (Business Process Integration), WSO (Web Services Orchestration), BPA (Business Process Automation), BAM (Business Activity Monitoring), Workflow and Document Management.
In smart BPM, explained Gold-Bernstein, “the underlying application performs the base functions, but the flow of control across components and applications in the end-to-end process represents the way the way the business is conducted.”
Managing a dynamic enterprise’s processes from a central repository keeps costs down but can be difficult, especially when multiple managers or controls from outside the organization are involved, she added.
IBM Vice President for Insurance Rob Spencer described how insurance companies are struggling to adapt their numerous multi-step, paper-based, error-prone, manual-labor-intensive procedures to a challenging business environment, highlighted by the enormous potential claims stemming from Hurricane Isabel.
“We see real transformational change through the elimination of as many manual processes (as possible), and by automating these processes through the use of rules engines that support complex decision processes,” Spencer noted. He cited one company that realized a 15 percent annual savings by automating worker compensation claims.
To drive processes, decision-making, execution, and fulfillment to complete “real, real work,” Pegasystem’s Founder and CEO Alan Trefler advocated a “Six R’s” approach that entails: receiving work from a variety of channels, routing it to the right person with the right priority, reporting that enables proactive management to Six Sigma standards, and researching that lets the system find the data necessary to solve a particular project and respond to the correct parties.
“And finally, the most important R is the R of resolve, where you can actually get the system to do the transaction,” either via straight-through processing or by asking relevant parties “only the questions that are relevant to getting that particular piece of work out.
“The result of this again is significant savings, but it's also business agility, because when you make a decision that you want to percolate through your business, you get to make it in the engine and have the engine drive it through the company, as opposed to having to go through the training of some of the other manifestations of more traditional models where the system really isn't smart,” Trefler observed.
“We actually want to make decisions that otherwise you might require experts for, or require a lot of training, and where the process complexity is high.”
Trefler explained how an ideal balance of “process and practice” was achieved at companies such as AllState via the PegaRULES Process Commander, which facilitates what Pega calls “Simply Smart BPM”: an easy-to-use system that decides what work needs to be done, and does it.
“You can get the sort of deep-down business process management, business process analysis that you need to be able to understand what you're doing, control it, and evolve it. That's what we think it means to have "Simply Smart" BPM,” he maintained.
To find out many more ways to gain the benefits of an intelligent implementation of Smart BPM in your company, watch a replay of the"Simply Smart BPM Difference".
About the Author
Gian Trotta is ebizQ's managing editor. Before joining ebizQ, he developed a wide variety of virtual news and community features for Newsday, Prodigy, Time Inc., Excite, About.com and MSNBC.
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