connecting your people, process and technology...alignment of services and functional processes...

© 2012 McGladrey LLP. All Rights Reserved.© 2015 McGladrey LLP. All Rights Reserved.© 2012 McGladrey LLP. All Rights Reserved.© 2015 McGladrey LLP. All Rights Reserved.

Tuesday, October 20, 2015

Connecting Your People, Process and Technology

© 2012 McGladrey LLP. All Rights Reserved.© 2015 McGladrey LLP. All Rights Reserved.

Session Overview

Methods for adopting a holistic approach to the evaluation of your people, process and technology

Identifying opportunities to increase efficiency, reduce cost, and effect sustainable organizational changes that will optimize operational performance

Recommended metrics for evaluating internal and external IT functions and then aligning those metrics with the organization’s strategic vision


Alignment of your organization structure, span of control, activities and roles for each functional process area

Alignment of services and functional processes based upon geographies, strengths, current and planned technologies

People

Key Components of Performance

Performance & Capabilities

The reengineering of functional processes, which is typically designed to overcome current challenges and to align with leading practices

Process improvements are powered by technology enhancements for maximum efficiency gain (not vice versa)

The implementation of a leading practice application to better enable and automate functional business processes

Technology enabled transformations are typically process led and efficiency gains are created by maximizing the use of the application features and functionality

Identification of controls in place to mitigate risk of errors

Data, process and reporting and governance

Identification of key business drivers

Data driven decision support and actionable analytics

Enables critical reporting needs driving business insights


Organizational MakeupAs Seen Through an Improvement Lens

Achieving Vision and Mission

Technology

Processes

People

Economy• Costs of

Operations

Efficiency• Methods of

Operations

Effectiveness• Results of

Operations

Organization

with


What Does That Mean?

Performance improvement goals:

Become more efficient to drive improved financial results

Rethink performance to encourage innovation

Increase productivity, reduce costs

Position for growth

Link opportunities to strategic goals


Why Do Organizations Care About Continuous Improvement?

Desire to grow the organization Outgrown technology solutions; unhappy with current

technology Improved competitive advantage? Customer satisfaction Employee satisfaction Be more profitable Want to fix “broken” processes


Cost of Confusion

Consider a typical workday for one of your employees. Is that employee always completely clear on the “who, what, when, where, why, and how” of the task at hand?

Conservative estimates are around 25% for the time wasted on confusion.

For an organization of 100 people with an average salary of $50k per year, the cost of that confusion is $1.25M per year.


Could Your Organization be More Efficient?

Do you have timely and actionable financial and operational reports?

Is your company concerned with spending controls? Does it seem like you have a lot of manual processes? Do you have reoccurring errors or bottlenecks? Do you have the capabilities and scalability in your

organization to support expected business growth? Do you have ongoing projects that never seem to be

completed? Is your organization prepared for M&A events and related

integration efforts? Do you have good visibility into the efficiency and

effectiveness of how work is done? Do you know what your people are doing?


Optimization Framework


Real Life Examples


Loan Process Optimization


Loan Process OptimizationSituation

$500M bank in the Central US Restructure lending processes and workflow to improve

efficiency and reduce operating costs Develop metrics and implement measurement systems for key

lending functions and tasks Maximize the use of technology to eliminate redundancy and

simplify operations Lower operating and compliance risks (meet the expectations

of the board and regulators) Design processes that support the bank’s relationship banking

strategy and maintain or improve customer service levels Position the bank for continued, profitable growth Provide bank management and staff with knowledge and tools

to support ongoing efficiency improvements


Loan Process OptimizationOutcome

Developed:- Process flows - Updated training process- Single forms in the place of multiple data inputs

Eliminated redundant data entry Streamlined processes Reduced turnaround time Worked with software vendor to better understand options Changed the processes to better use their technology Implemented document imaging Reduced staff Reviewing automated underwriting system


IT Organizational Design


IT OrganizationSituation

$1.3B bank in the Central US Growing quickly Lack of appropriate IT staff Large number of applications and user base Downtime and continual outages In process of implementing HRIS applications Heavy regulator presence


Non-IT Department

• Utilization of business applications

• Selection of Systems• Simple tasks• Project Management (in

conjunction with IT Department and Technology Partner)

• Company wide Technology Training

IT Department

• Network availability & security• Application delivery• Technical troubleshooting• Technical partner collaboration

& communication• Application integration

resource coordination• Continual IT skills

development• Business Analysis• Facilitation of system

selections• Project Management (in

conjunction with non-IT Departments and Technology Partner)

External Expertise

• For vision / planning• Implementation of

advanced technologies• Essential projects• Defining and/or

implementing foundational processes

• Project Management (in conjunction with non-IT and IT Departments)

IT Support FunctionRecommended Leverage Model


IT OrganizationOutcome

Development of IT Committee Requested external resource to sit on committee Added a CIO and ISO to help manage the process Direct linkage to the CFO Developed an IT plan with measurable results Overall increase in customer satisfaction Still in process of improving but headed in the right direction


Enterprise Content Management


Enterprise Content ManagementSituation

$3.5B Bank in the Central US Looking towards growth Paper is stored in attics, basements, and

offsite locations Information is hard to find in a timely

manner Develop and implement a document

management strategy that covers both electronic and hard copy documentation

Reduce costs related to data and paper usage

Improve efficiency Primary driver is risk management Maintain compliance, while allowing

appropriate access


“I understand and have faith in our document management policies,

and I know exactly how/where to find the

documents I need when I need them.”

“I don’t really think about where I store documents - I save everything I need

on my own drive(s) or in Outlook.”

“I never know if/when I might

need a document in the future, so I

save a copy just to be safe.”

“My department has special access or security needs,

so we have to keep our documents on

our own drive.”

Probably many others...

Mind Shift


Enterprise Content Management Outcome

Developed:- A policy and approach to handle both hard copy and electronic

documents, including emails- Selected tools to support document management activities- Ongoing communications and training

Reduction in storage space Able to reorganize space to better meet the needs of a

growing staff Reduced paper, shredding and rental costs As they are reducing double storage, offsetting online storage Better able to find documents as needed with increased

security


Finance Transformation


Finance Transformation ExampleSituation

$1.5B Bank in the Eastern US Evaluated Accounting, Finance, Payroll functions 15 days to close, limited reporting Lack of faith in data/validity of information Lots of manual efforts, exporting data from system to Excel for

manipulation Disconnect between accounting and management team


Finance Transformation ExampleOutcome

Reviewed/automated Journal Entries & reporting Implemented Closing Calendar/Meetings Reconciliation process Relocated processes to appropriate departments Implemented timekeeping software Implemented organizational changes Developed policies and procedures that met current needs


IT Outsourcing


IT OutsourcingSituation

$415M financial institution Bank growing significantly Issues recruiting and retaining IT staff Inconsistent technology roadmap IT managed in silos Security complexities, case by case basis Lack of monitoring and reporting systems


Outsourcing Options

IT Outsourcing: Instead of keeping your technology functions in-house, IT outsourcing involves farming out some - or all - of your IT functions to a third party provider. IT outsourcing can be designed to fit the technology needs of any organization, transitioning functions to a company with IT as its core competency.

Managed Services: Managed services is the most definable form of outsourcing with specific, detailed costs and expectations, as well as inherent flexibility. This strategy is very attractive as it provides scalability and defined expectations at a consistent month-to-month expense.

Staff Augmentation: Staff augmentation provides the ultimate level of flexibility, filling a specific skill set in times of need such as extended staff absences, special projects or increased seasonal demand. Many companies also utilize this strategy after experiencing difficulty finding specialized talent or lacking the resources for full-time internal staff.


Cloud Computing ContinuumYo

u M

anag

e

Storage

Servers

Networking

O/S

Middleware

Virtualization

Data

Runtime

Applications

Traditional On-Premise Computing

AC/Cooling

Facilities

You

Man

age

Storage

Servers

Networking

O/S

Middleware

Virtualization

Data

Runtime

Applications

Co-Location aka CoLo

AC/Cooling

Facilities

You

Man

age

Storage

Servers

Networking

O/S

Middleware

Virtualization

Data

Runtime

Applications

AC/Cooling

Facilities

Infrastructure as a Service

(IaaS)

You

Man

age

Storage

Servers

Networking

O/S

Middleware

Virtualization

Data

Runtime

Applications

AC/Cooling

Facilities

PaaS/PaaS/Private Cloud

Storage

Servers

Networking

O/S

Middleware

Virtualization

Data

Runtime

Applications

AC/Cooling

Facilities

Software as a Service

(SaaS)

Heavy Capital to Heavy Operating Expenditure

Serv

ice

Prov

ider

Serv

ice

Prov

ider

Serv

ice

Prov

ider

Serv

ice

Prov

ider

27


IT OutsourcingOutcome

Outsourced day-to-day service capabilities Managing IT enterprise wide Established single threaded security Bank has been able to increase customer and employee

satisfaction. Benefits include: Consistency in service for end users Improved ability to predict how and when technology dollars are

spent, reducing the likelihood of surprise expenditures Alignment with the rest of the business Reduced technology expenditures, resulting from a common

strategy and lower turnover in IT personnel


IT Outsourcing


System Optimization


System OptimizationSituation

$900M bank in the Western US Maximize use of technology to achieve business goals Obtain best value from technology vendors through

successful contract negotiations Design and maintain a technology framework that can

efficiently and effectively expand as the bank grows Position the bank for profitable growth through greater

efficiency and business process automation Determine if the current key vendor relationships for

core processing and network maintenance are adequate to support future goals and objectives of the bank


System OptimizationOutcome

Core system contract negotiation Network outsourcing review and RFP Fully implement electronic document management system Evaluate the mortgage LOS Redesign consumer loan process Evaluate compliance outsourcing opportunities Formalize training program Expand call center performance measures Create documentation standards for report creation Review enhanced security options in core Reevaluate branch profitability strategies and assumptions

and implement analysis of additional delivery channels


Don’t Forget Alert Systems

BSA optimization … think about fraud- Focused on cash and wires- Sends alerts when there are inconsistent behaviors- Need to optimize or tune the system - Disparate systems looking for fraud in different channels

(card payments, checks, wires, online, ACH) makes it hard to see overall patterns

Fraud systems - Looking more carefully at checks

Both are needed to have a successful program


WAN/Telecom Assessment


WAN/Telecom AssessmentSituation

$1.1B bank in the Central US Merging two bank entities each with multiple carriers Issues with connectivity among locations, no ability to

transfer or record calls, as footprint is increasing so are fees

Bandwidth issues throughout network, slowness occurs with many of the locations and outages

Provide management team with a plan to upgrade the phone network, possibly VOIP, consolidate carriers and increase banwidth

Help management develop a cost benefit analysis, risk to organization and timeline


WAN/Telecom Outcome

Finalized a design to optimize networks and use new wide area network (WAN) technology

Decoupled carrier connections from using one network provider – leveraged best local fiber solution in each market

Introduced new phone line technology – Session Initiation Protocol (SIP) to replace old analog lines and T1s

Built redundant communication lines for voice and data networks

Increased capacity to allow for efficient digital communications - went from 3meg to 100meg between branches

Connected network to backbone of cloud for better connection to Office 365, core provider, etc.


IT Alignment & Metrics


Technology Steering Committee


Why have one?

Technology is the most expensive resource in the organization, outside of human capital

It is the backbone of the organization’s ability to conduct business

Technology safeguards customer information Creates the link between the Executive Management,

Functional Users and IT Aligns the organization’s strategic plan to IT’s plan


Technology Committee Mission

The financial institution technology steering committee is responsible for overseeing the technology related functions of the financial institution with particular attention to operational risk management. The committee is responsible for setting the information technology strategic direction, recommending information technology policies, procedures and standards; the committee also reviews and recommends priorities for the development of applications and for capital requests; and serves as an information-sharing forum.


Technology Committee Members

Include representatives from each of the various business units Administration Branch operations Deposit operations Finance Loan operations IT Leaders Mobile banking Marketing


Corporate Performance Management


CPM: What Are The Benefits?

Improve decision making. Business executives are provided with in-depth analysis of their business functions as it pertains to their business strategy, enabling them to make smarter decisions, faster.

Raise accountability. Whether your organization is small to mid-sized or at the enterprise level, CPM holds business functions accountable for achieving their long and short term objectives.

Operate more efficiently. Organizations that have adopted a CPM strategy are able to streamline business processes like planning, budgeting, and forecasting.


CPM

Reduced the time and costs associated with processes Allow for quicker decision making Spent less time collecting data and more analyzing Tied objectives and performance to key performance

indicators Linked compensation to Key Performance Indicators (KPIs) Encouraged and empowered employees to act Delivered the right information to the right people at the right

time


In Conclusion


Performance Improvement Focuses on:

TechnologyUsability, integration and adaptability

People Teams, productivityand innovation

ProcessConsistency, accountability and efficiency


Identifying Common Operational Issues

When these are aligned, process productivity increases dramatically

• Mismatched skill sets• Unclear objectives• Corporate cultural factors• Siloed departments, teams, and individuals

People

• Lack of process definition or documentation• Bottlenecks• Inadequate organizational structure• Manual efforts• Loose internal controls

Process

• Aging or under-utilized systems and tools• Few integrated systems• Reliability of data in systems• Limited performance reporting

Technology


Continuous Improvement Culture

Optimization never ends Encourage innovation Challenge… “We’ve always done it this way.”

Implement

Evaluate

Ask


Questions

Discussion? Questions? Other Examples?


Ron Beck, PrincipalMcGladrey, LLP

Email: [email protected]: 319.360.9104Blog: http://www.mcgladreyconsultingpros.com/blog/

Speaker Information


This document contains general information, may be based on authorities that are subject to change, and is not a substitute for professional advice or services. This document does not constitute assurance, tax, consulting, business, financial, investment, legal or other professional advice, and you should consult a qualified professional advisor before taking any action based on the information herein. McGladrey LLP, its affiliates and related entities are not responsible for any loss resulting from or relating to reliance on this document by any person.

McGladrey LLP is an Iowa limited liability partnership and the U.S. member firm of RSM International, a global network of independent accounting, tax and consulting firms. The member firms of RSM International collaborate to provide services to global clients, but are separate and distinct legal entities that cannot obligate each other. Each member firm is responsible only for its own acts and omissions, and not those of any other party.

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© 2015 McGladrey LLP. All Rights Reserved.

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connecting your people, process and technology...alignment of services and functional processes...

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