Calculating the true costs and risk assessment of business process management systems
by Elizabeth Smith

How often have you found yourself in an initial meeting with a service provider who claims their solution will increase your bottom line, streamline processes, and reduce risk? However, the service provider has yet to ask you a single question about your current processes. They assume to understand your need based on what they have seen elsewhere.

While past experience may give a service provider general understanding of the challenges facing an industry, it is impossible for them to properly grasp the impact that their solution will have on a particular business’ processes without first having invested the time and resources in diagnostic discovery. Likewise, without going through a diagnostic discovery process with a potential service provider, an organization may not be fully informed of the extent of their need. Therefore, the client may be unprepared to properly judge what impact the solution will have on their current processes. However, the lack of such information rarely stops some service providers and organizations alike from jumping to conclusions, thereby cutting short or negating the potential benefit they could mutually realize.

Such a scenario can be avoided by working through the diagnostic discovery process with a potential service provider prior to making final decisions. The recurring preparation of shareholder marketing and compliance documents produced by mutual fund companies is the focus of the following comments, however, the same logic and approach can be considered with any major business processes.

Much has been written about automation, enterprise content management, business process management, and document management solutions. For many of the people that these systems are designed to assist, these concepts come with a great deal of ambiguity. Standard industry terms are not used and system scopes can vary tremendously. The average non-IT business professional is disadvantaged in grasping the basic concepts before making a major business decision, as it is challenging to find documentation that explains the information in layman’s terms. Responses found in RFPs can use the same verbiage from one provider to the next, yet they are often speaking of completely different processes or functionality.

This ambiguity can lead to a confusing and inefficient procurement process as companies wade through the information submitted by a myriad of providers, which are all seemingly aimed at meeting the company’s needs. While there is most likely some measure of enhancement in each service provider's offering, the challenge is in breaking down this information to reach the decision that will have the greatest collective positive impact for the organization. Meeting with service providers committed to understanding your needs before assessing their products is frequently a missed critical step toward success. Organizations should focus on the extent of the challenges they face and assess a true value to each system. Discussing processes, listening to providers' responses, and understanding their systems in the context of the individual processes present or planned is more effective than focusing on a dollar-by-dollar comparison of systems and functionality provided in a vague RFP.

A key to the success of diagnostic discovery is to ensure that the proper individuals and groups are exchanging information with the service provider. It is critical to not limit the discussions or access to information. Representatives from the service provider, other departments, as well as currently contracted vendors should be able to offer guidance on additional processes and budgets that may indirectly benefit from a change. A key challenge to avoid is allowing one person within a department not involved in the business process to become the primary contact for the service provider. While this person may have educated themselves on the processes and work product, they cannot replace the value of having the involvement of those engaged directly in the day-to-day process. If the service provider does not conduct diagnostic discovery with the individuals involved in the work the client is looking to improve, the implementation and end solution are on track for complications, delays, and potentially failure.

Through Data Communiqué’s experience, we have discovered several areas of need with our clients that seem to be recurring in the marketing and compliance document preparation. Despite these commonalities, we do not presume to understand the need of any one organization. We recognize that each client introduces a unique element, whether it is their ownership structure, pending reorganizations, supplemental software, or generally just the unique dynamic of interplay between departments and personalities. We make it our business to spend the time with those involved and to do research so that the end product is a more complete solution.

With that said, we can categorically summarize some key issues that the majority of mutual fund complexes experience. The individual symptoms may vary, but the end result to their bottom line and level of risk are the same. One key business metric that Data Communiqué focuses on with clients is removing the costly and risky manual typesetting process from their compliance and marketing document preparation. While there is certainly a huge benefit to achieve in this area, on the implementations we have undertaken, clients soon discover that those benefits are simply ancillary to the much more significant values created by a larger process management solution.

The following are a few additional areas that some companies have considered in assessing the scope of their needs for a business process management solution.

Talent retention. What is the impact of the current process on the workforce? Once companies delve into discussions surrounding the topics of document creation and printing, relationship management and adaptability, they quickly realize an essential process that puts a high level of accountability and pressure on their teams. Doing diagnostic work with the core team to understand their process often leads to the discovery of how much time a knowledge worker spends on tedious administrative, repetitive, and often misplaced tasks. Are these mundane tasks causing habitual turnover? What is the cost of turnover? What is the cost and impact of being short-staffed? What is the cost and impact of the learning curve for new employees? An understanding of the role these play in the success of the company, and how delicately that success can hang in the balance, is crucial to what direction to take with the business management process solution.

Relationship Management. How efficient are internal and external communications? Consider how much time your knowledge workers spend chasing down information and then verifying that same information with multiple teams. Has the process ever been derailed from lack of responsiveness of a key contributor? It is important to identify the time spent on communications with various departments and service providers, such as printers, outside counsel and auditors, and to then associate a cost with that time.

Adaptability. How smoothly has the company navigated through industry changes and increased demand on resources? Have these demands been met with increased budget dollars or resources? The cost of compliance – and worse, the cost of non-compliance – continues to rise. These are important to factor in to the decision process and budget forecasts.

Document Typesetting and Printing. Many companies do not fully realize the extent of cost and risk associated with this process. We have experienced that the individuals involved in the document preparation are often not aware of these costs because they are not required to review invoices. Even when there is an invoice review procedure in place, the bills may be so complicated to decipher that it is difficult to cull the details for a true cost analysis. During discovery, we ask detailed questions of the print and fulfillment providers and do diagnostic work to discover the process for routine vs. non-routine months. These are the important details that are often overlooked and can significantly skew budgets and risk metrics. Once companies step back and consider how many months in the past year went smoothly with no missed deadlines, they may begin to realize that non-routine is the norm. While the end goal of filing with the SEC and/or delivery to shareholders may be met, the internal deadlines and vendor deadlines often slip. Such scheduling changes are important to assess in measuring the impact to budgets and increased risk, as they result in numerous additional charges and rushed procedures that may not be monitored as closely for accuracy.

These are but a few of the many factors to consider when calculating an accurate cost and risk assessment of keeping with the status quo, or moving to an improved process management solution. The information discussed above is just the tip of the iceberg and even these concepts are presented in a broad stroke. To truly make an accurate determination takes time to research down into the many sub-processes that culminate in document preparation, filing, and distribution. It is essential to work with a team that has the intellectual capital to assist with this diagnostic discovery process. Service providers must be willing to partner with you to ensure the success of implementing a business process management solution that will offer significant returns across multiple processes and departments.