AAA

Business Process Transitions & Reengineering

AAA

Business Process Transitions & Reengineering

2

Critical Success Factors for Migration

•Mobilising joint project team•Preparing and delivering the appropriate training•Constant communication

•Selecting the right processes•Re-engineering the process for remote working•Delivering continuous improvement post migration

•Developing and testing an effective technical solution•Thorough testing pre migration•Full BCP/DRP

•Strong executive sponsorship•Structured outsourcing methodology •Partnership model with customer•Accelerated migration for greater benefits

•Consistent service delivery•Stakeholder management•Process improvements for “discontinuous benefits”•Constant monitoring of performance to effect mid-course corrections

AAA Business Services advocates accelerated migration for greatest benefits to the customer. The right people, processes, systems, strategy and a strategic sourcing partnership based on commercial disciplines are essential for successful migration.

AAA Business Services advocates accelerated migration for greatest benefits to the customer. The right people, processes, systems, strategy and a strategic sourcing partnership based on commercial disciplines are essential for successful migration.

Ongoing Perfromance

Strategy

Technology

Process

People

3

From Concept to Delivery…..

Feasibility Study

MigrationService Delivery

• Identification of outsourcing opportunities

• Detailed Operations, IT, Financial feasibility

• Training of personnel and IT implementation

• Monitoring performance and ongoing process improvements

Opportunity Identificatio

n

AAA Sales Pitch to

Customer &

outsourcing concept

Identify processes

that can be out-

sourced at a high

level and the need to

be examined further

Sign -off for Feasibility

Study/Solution Design

stage

Detailed analysis of

processes and

interdependencies Process Mapping Technology linkage

Proof of Concept Firm costs, savings

& Benefit estimation Sign off for Migration

Design Operating

Model Training of AAA

personnel on client

processes Implementation of

technology

infrastructure for

remote processing Validation of Process &

Productivity metrics. Service Level

Agreement

BAU at AAA.

Process is monitored

on the basis of

customer defined

Service levels

Customer Feedback

Ongoing process

improvements at AAA

Ongoing training and

knowledge

management

BSG Project Manager+ IT

Project Manager + IT

Project +Operations Manager

Process Owner + Project Manager

Operations Manager

Process Owner

BD + BSG Biz Leaders/ AAA

Relationship

AAA

Client

Stages

Activities

Involvement

4 – 6 months

4

Executive sponsorship and stakeholder involvement ensure successful and rapid migration

Strategic Partnership

Company-wide SponsorCompany-wide Sponsor

Steering Group (Joint Team)Steering Group (Joint Team)Decides business requirementsDecides business requirements

Strategic Considerations

Migration Methodolo

gy

TacticalConsiderations

Departmental Resources

ProjectManager

CentralProject Team

Champions and Business Facilitator

AAA Transition Resources

Functional Experts - Training, IT

Scoping Design

Implementation Delivery

AAA Operations TeamDay to day operations

Management TeamManagement Team

SLAReviews

Continuosimprovement

5

Analysing Processes

Complexity Extent of manual calculations Definitive work procedures/ rule sets Number of variations to standard process Extent of supervisor/ technical expert involvement Time criticality Business Risk

Complexity Extent of manual calculations Definitive work procedures/ rule sets Number of variations to standard process Extent of supervisor/ technical expert involvement Time criticality Business RiskHandoffs Extent of interaction with external parties

(agents/customer) Number of output documents generated Need to refer to offline/physical documents (internal/

external)

Handoffs Extent of interaction with external parties

(agents/customer) Number of output documents generated Need to refer to offline/physical documents (internal/

external)

Training effort Training time to reach competence and full

productivity Availability of talent

Training effort Training time to reach competence and full

productivity Availability of talentTechnology & systems availability Type of system used (mainframe, client/server)

Bandwidth requirements Hours of access

Technology & systems availability Type of system used (mainframe, client/server)

Bandwidth requirements Hours of access

Savings potential Number of FTEs Volumes

Savings potential Number of FTEs Volumes

Indicative list of criteria to be scored against

1

2

3

4

5

Opportunities can be identified at various levels

Opportunities can be identified at various levels

Money

Claims

Enterprise

Level 0

FunctionLevel 1

ProcessLevel 2

Sub-process

Level 3

TaskLevel 4

AAA AAA

Customer Services

Customer Services

Policy Servicing

Corporate, SME and Personal

• Increase premium

•Reinstatement

•Annual single premium

•Transfer value

•Pay invoices

•Set up cases

•Changes to static details

•Medical referrals

Examples

•Process-centric organisation

structures facilitate easier

migration than product-centric

organisations structures

•Product-centric structures normally

involve several sub-systems and

sub-processes, leading to

heightened complexity

•For e.g. in PPP, over XX% of the

claims will be processed at AAA by

XXXX and only a small percentage in

AAA SL

6

Re-designing Processes to Facilitate Migration

Invoice sent by Garage

Check invoice against AMECS

No

Yes

Yes

Pass Invoice to Engineers Assistant

Check with

Engineer

Does invoice

meet rules

Send Back to Garage

Contact Garage

Discuss with Garage

Issue resolve

d

Pay Invoice

No

Yes

No

Send Invoice to IM Site

Payment ProcessUpdate Diary at

all stages

and Systems

on payment

AS - IS process map

To - Be process map - post migration

Invoice sent by Garage

Check Invoice against AMECS

No 25%

Yes 75 %Does invoice

meet rules

Pay Invoice

Send Invoice to

IM Site

Payment Process

Invoice Scanned to AAA

AAASupport

TeamYes

Pass Invoice to Engineers Assistant

Check with

Engineer

Send Back to Garage

Contact Garage

Discuss with

Garage

Issue resolved

No

Yes

NoUpdate

Diary at all stages and

Systems on

payment

Op Co Process

AAA ProcessSupport Team in Op Co process

Defining Procedures and Protocols to Manage and Control the Offshore Location As Part of the “To Be” Operating Framework.

Outgoing Correspondence • Print Customer / Adviser

correspondence• Collate and Envelope• Mail out

Print requirement sentData Centre

Offshore CS Admin

Image Server

Incoming Correspondence

Mail/Fax

Mail Room

Scanning

Registration

Processing System

Image Server(Filenet)

Workflow Server

CSR completes predetermined handoffs and exceptions from offshore

Contact between Adviser and Offshore CSR via Adviser MemoAdviser

Offshore CSR uses onshore systems for work allocation and product system access

Remote CSR accesses local offshore image server for images

Handoffs from Offshore to Onshore CSR via workflow system

• Monitor exception percentages

• Monitor Quality• Maintain and update

Knowledge Management

• Maintain and update training materials

Onshore CS Admin,

Onshore Customer Service Activities AAA

Onshore Remote Site Support Team

Images sent daily - prior to the start of processing in Bangalore each day

• Adviser has contact with offshore CSR via Adviser memo.

Onshore Systems Offshore Systems

Contact between Onshore Support and Offshore CSR via email/phone

Work Tracking System

Allotment of work to individual processors

Client AAA Business Services

• Identify exceptions• Assign Work flow code that

identifies item as a Bangalore Handoff

• Log exception to Onshore CS via workflow system

• Process non-exception items• Handle follow-ups• Communicate with Adviser via

Adviser memo if necessary• Communicate with Onshore

support team• Access Knowledge

Management and Training materials

Queuing

8

Indicative Costs and Benefits

Year 0

Year 1

Year N

Recurring Annual Benefits

Set-up Costs

NPV @ 15%

Payback Typically 12-18 months

Typically discounted over 5 years

Process improvements can cause non-proportional increase in recurring benefits

Net recurring annual benefits, including non-payroll cost savings, are in the region of 40-50%

*Some costs are semi-fixed, most notably property, and savings in these cost categories may only be achieved after 1-2 years if migration size is small

Recurring Annual Benefits•Payroll cost saving (management & staff)•Non payroll cost savings (IT, property, o/h)•Recruitment & Training cost savings

Set-up Costs• Project team (Op Co & AAA)• IT costs (application development costs, hardware, licences)• Telecom costs (bandwidth & firewall installation)• Accommodation and travel (project team, trainers, trainees)• Parallel running costs

Recurring Annual Costs•AAA FTE cost •Support Team Cost•Bandwidth Cost

9

Service Delivery - Continuous Improvement

Typical 3 Phase evolution from Service Delivery to Excellence

* Indicates typical time at each stage

Phase I (3-6 Months *)

Stabilisation•Stabilise process•Capture

Immediate Savings

•Build operational relationship

Standardisation•Develop

procedures jointly with business

•Strong Value Add•Efficiency gains &

benchmarking e.g. automation

Continuos improvement

•Further standardisation of procedures

•Cross training to gain operational flexibility and cost efficiency

•Generate value added MIS for the business

•Significant cost saves from higher efficiency

Phase II (6-12 Months *)

Phase III (12-18 Months *)

Continuos Continuos ImprovementImprovement

Management

sponsorship & focus

Resource manageme

nt

Measurement, analysis

& improveme

nt

Iterative developme

nt

10

Success Stories

Customer – AAA Life, India

Objective – To undertake a feasibility study across all AAA Life Operations departments to identify

processes that can be migrated to AAA Business Services and to develop a business case for each feasible opportunity with an overall migration roadmap. Also, to provide Project Management expertise and assist AAA Life in migrating the identified processes.

Approach – 2 Senior Associates from BSG worked jointly with the Operations Improvement Project

Team of AAA Life. Using BSG’s process evaluation and reengineering methodology and tools, the team not only delivered on all the initial project objectives, but also facilitated knowledge transfer to AAA Life team members.

Monetary Benefits for the Customer – The project delivered a capacity of 91 FTEs at AAAL

translating to an annual saving potential of £ 1.46 million from 2003 with break even in 2003.

Customer – AAA Dubai & Middle East

Objective – To conduct an organisation-wide feasibility study across the AAA operations in Australia

and New Zealand for migration of Adviser and Customer Service processes to AAA Business Services

Approach – Formed a joint project team consisting of a Senior Associate from BSG, AAA ANZ and

Accenture resources. Assessed migratability of processes, designed the operating model for integration of migrated processes with the upstream and downstream activities left at the client location by using AAA Business Services’ robust re-engineering and migration methodology and toolkit.

Benefits for the Customer – Prepared a comprehensive migration schedule encompassing 320

FTEs delivering an estimated benefit of AUD 8.4 million. Conducted pilot migration exercise for 41 FTEs, within 87% of the program budget demonstrating significant quality and process improvements.

11

BSG in Action  » AAA Life – Migrations

Process Migration Approach “Pull” Approach

Project team comprised members from AAA, India and AAA Life, Dubai

Structured migration approach using standardized tool-kit

Benefits – 116 FTEs in AAA ( net 91 FTEs savings at AAAL)

Annual savings of £ 1.46 million for AAA Life

Life Business processing vertical at AAA created

Consolidation of processes enabling knowledge sharing among AAA group companies viz. AAA L & AAA ANZ

Robust Methodology

Feasibility Migration

Define Scope Generate criteria Evaluate process Determine

operations, IT and financial feasibility

Map “As-is” process

Benefits sign-off

Preparation Re-engineer

process Map “To-be”

process Prepare training

manuals IT implementation

Training in Dubai/ India

“Train the trainers” Conduct accreditation

for India trainees Train new hires in India Conduct accreditation

for new hires

Parallel Run Parallel

processing Stabilize process Process Ramp

Down in Dubai

$

Service Delivery

Stabilized processes Business- As- Usual

12

BSG in Action » AAA Life – Process Re-Engineering exampleDepartment – Group Money Purchase Process – GPP New Business Quotes

New Process – “TO-BE” (simplified)

Existing Process – “AS-IS” (simplified)

Impact Higher productivity as processing unit-time reduced by 29 % from 35 to 25 mins

Faster turnaround as dependency on a Specialist relationship team eliminated

Smoother workflow as dependency on physical files eliminated

Re-Engineering initiatives Creation of database to hold

“specials” information

Data Digitisation

New Business Quotes request received at AAA

L

Check physical files for any “specials”

Verify information

from Relationship

teams

Process case as required

Prepare Quote and

correspondence letter

New Business Quotes request received at AAA

L

Scan the request to AAA

At AAA, Open database to

fetch “specials” details

At AAA, Process case as required

At AAA, Prepare Quote

and correspondence

letter

S E

S E

Thank You

Helping AAA in “setting the high standards in our business”

Helping AAA in “setting the high standards in our business”