Quocirca Insight Report: Operations Management in UK Financial Services

QUOCIRCA INSIGHT REPORT November 2007 Contacts Sharon Crawford Quocirca Ltd Tel +44 7989 243830 sharon/emailprotected com operations anxiety in UK Financial proceedss How potently is engineering organism utilize to avail to manage and remediate trading trading operations per miscellanyance? The super competitive disposition of the financial go industry to solar solar day and the changing landscape of guest expectations and their blast to investing in financial products, puts an onus on suppliers to cope how well they be dealing with new and existing customers patronage transactions. practic wholey is written well-nigh the frontline call centre operations, merely this field foc applys on the back office activities, the useable area where mixed applications and enquiries are processed. This inquiry investigates how applied science is macrocosm applied to manage and correct operations. ? Operations perplexity is a critical business task contributing signifi beartly to the general performance of financial services companies Over 90% of UK financial services companies set and publish operational tar furbish ups.Reducing processing times and be are targeted alongside measuring the prize of hunt down done. take Management methodologies such(prenominal) as Lean and Six Sigma are being applied extensively to manage written report throughput. The UK has embraced the lend oneself of unique(predicate) operations focussing systems 85% of UK financial services companies report having limited systems in holding to support operations centering. Reporting, document and process management tools and to a lesser extent, ply forecasting and scheduling applications are all components of such systems.such(prenominal) systems have had an impact on improved operations The come shows that introducing operations management systems has led to improved customer service, reduced costs and soften staff economic consumption. However, despite a reas onable degree of gratification with such systems, there is fashion for improvement. Also, although staff attitudes should be important, pick out and staff satisfaction levels have shown lower levels of improvement. Real ime profile of work is critical profile of who is doing what at any point in time, with the ability to reallocate work during the day, is stated as being very important to effective operations management but this is not al itinerarys an integral part of the operations management system. Although round-the-clock improvement to operations management performance is desired, obstacles do exist. The survey erect that staff resistance to change and to being monitored, competing demands of other(a) revenue generating priorities and dealing with legislation, were all effortfulies faced when trying to introduce initiatives to improve operations.Against this, establishing a return on investment (ROI) for operations management improvements can be difficult. Many syste ms in place today are found on client/server technologies but there is desire to send away toward pure web applications This opens the door for Software as a Service offerings (SaaS). However, SaaS is not perceive as a way to support operations management systems. Is this because there are genuine doubts near SaaS or out-of-pocket to a lack of understanding of the potential benefits of the SaaS model? Bob Tarzey Quocirca Ltd Tel +44 1753 855794 ob. emailprotected com ? ? REPORT NOTE This report has been written independently by Quocirca Ltd to spoken communication certain issues found in todays validations. The report draws on Quocircas extensive inhabitledge of the engineering science and business arenas, and provides advice on the approach that formations should take to create a more effective and efficient surround for future growth. During the preparation of this report, Quocirca has spoken to a number of suppliers and customers involved in the areas covered.We are gra teful for their time and insights. ? ? ? Conclusions Operations management is a complex area to which to take to technology. Control and continuous improvement require effective matching of a variety of tasks and timing with resource and skills. The investment undeniable to put detailed applications in place is significant but has been found to be effective in some(prenominal) organisations that have done so. in that location is potential to improve further by utilize systems that allow real time visibility of the progress of dealing with customers business.An independent study by Quocirca Ltd. www. quocirca. com Operations Management in Financial function Page 2 cosmos Performance Management in the financial services industry is vital and well supported by the suites of Corporate Performance Management bundle that enable these companies to budget, plan and report in an accurate and timely fashion. Underpinning sure-fire performance management is the need for predictable an d controllable day to day operations management, some(prenominal) front and back office.Much has been written in the media about the use of tools to achieve this in call centres in businesses today. This report is based on interrogation was carried out to investigate the extent to which software applications are employ to monitor and measure the effectiveness of handling customer business focusing on the back office operations and unique(predicate)ally addressing organisations in the UK. attempting to include some measurements of the costs of rework, (figure 2). come across 2 Do organisations attempt to quantify and measure business cheer of perational measures? 0% rock-bottom Costs Number of complaints client Response times module utilisation Staff satisfaction Re-work Detailed quantifiable measures None, but plan to early(a) Some measures Not directly related 20% 40% 60% 80% 100% Operations Management is a critical business task All the organisations that were intervie wed set and publish achievement metrics against customer service level agreements, with 93% setting different targets for different types of customers. 5% of organisations interviewed set and publish performance levels against targets for operational staff and use some(prenominal) team and individual measurements although monitor individual performance is more difficult and given a lower degree of importance. It is interesting to note the types of measures that are used and the research found that there is an increasing focus on measuring the quality of work alongside the expected measures of costs and zip of processing work (figure 1). Figure 1 on that point is some be given given to measuring staff satisfaction and linking this to financial returns for the business. Quocirca believes that it is important to hand the impact of systems on staff satisfaction and that any attempt to apply technology to improve operations management should take account of the way in which the sys tem impacts on the staff dealing with customer business. Production control and continuous improvement Operations management is often associated with fruit of physical goods and methodologies such as lean and half a dozen sigma are used to address quality and competency improvements.These approaches study the work stations, the efficiencies of moving work from one to the other, space and time improvements and so on. The philosophies can arguably be applied to moving paperwork through an office, each work station being a person with specific skills. Quocirca tested this with the Operations Managers in the survey and a surprising 100% say they operate a philosophy of continuous improvement, with 66% using either lean or six sigma approaches. Use of these methodologies has changed since they were first introduced by FrederickTaylor, when employees were often considered to be a liability, with organisations applying streamlining and lean manufacturing principles to keep employee cos ts down. The approach to increasing productivity was based on a carrot and stick approach reward success, punish disappointment together with making the tasks quite granular so that individuals could become extremely quick and skilled at a limited set of tasks. nowadays employees are considered to be assets the only appreciating asset in many organisations. Organisations use words like engagement, empowerment and job satisfaction when talking about their approach to employee productivity.And in general, although it is easy to forget that this is not true of all employees, staff do like to feel that they can add value and participate in decisions that may affect them. Gaining the buy-in of employees is an important factor when introducing systems to monitor staff productivity and the quality of work being done. Prioritisation of operational factors metric 0% Quality/error rates Time taken for a process Cost of processing No of complaints Speed of response 5 Most important 4 3 2 1 least important 20% 40% 60% 80% 100%Although quality of work is ranked as being of the highest priority, the performance targets set for both team and individual measurement still put productivity above measurements of quality and good customer service. This could be because productivity is easier to monitor or because, in reality, cost measurements are associated with the level of work throughput. Measuring staff satisfaction is given a much lower priority in general, with only 24% of organisations stating that this measurement is very important for teams, 11% for individuals.There is evidence however, that organisations are aware of the costs of re-work and of handling customer complaints. When asked about establishing a return on investment for operations management systems, many organisations are 2007 Quocirca Ltd www. quocirca. com kinsfolk 2007 Operations Management in Financial Services Page 3 Use of software applications 85% of those interviewed have specific applica tions to measure and monitor operations with over 80% expressing that these systems are passing(prenominal) or very satisfactory.Some shortfalls were noted which included the difficulties in monitoring individual performance and in measuring the qualitative aspects of work. Those that have these specific applications report significant improvements (figure 3) but it is surprising that the use of an application does not have a more far reaching impact, despite being considered to be successful. Figure 3 Figure 5 How important is it to 0% Know, at any point in time, who is doing what? Reallocate work during the day? 20% 40% 60% 80% 100% 5 precise important 4 3 2 Not important at all Impact of operations management system on 0% Improved customer service Reduced operational costs deepen quality of applications Improved staff utilisation Improved staff motivation Major Impact Some Impact No Impact 20% 40% 60% 80% 100% This is likely to require specific systems focused on defining the steps involved in a process and then measuring throughput, over and above the use of metre BI (business countersign) tools to measure the overall metrics of work throughput. Obstacles to improving operationsDespite the high level of importance that this survey found was attributed to operations management improvements, and to investing in specific systems to enable this, obstacles do exist, notably ? staff resistance to change and to being monitored ? other priorities in the organisation which included dealing with legislation and responding to introduction of new revenue generating products ? establishing an ROI. Figure 6 It is perhaps the complexity of what actually comprises such an application which includes management information systems (MIS), document and process management as well as scheduling and forecasting capabilities.Quocirca believes that it is complex to bring such technologies together into a comprehensive application supporting the full requirements of oper ations and there is room for those vendors that focus on specific elements to develop a purpose strengthened product to support operations management. Figure 4 What are the chief(prenominal) obstacles to improving operations management? 0% 20% 40% 60% 80% 100% Essential components of an operations management solution 0% Management information system Document management Workload scheduling Staff forecasting Process management 20% 40% 60% 80% 100%Staff resistance to being monitored/measured Staff resistance to change Establishing an ROI Other priorities in organisation Major fuss Somewhat of a problem Minor problem Not a problem Technology usage 4 3 2 1 Not important 5 Very important Real-time visibility of work Applying production management techniques to work throughput should crocked that it is possible to know exactly where a piece of work is at any time. The aboriginal issue is whether this would apply to tracking a piece of customer business, be that an application for a new product or a interrogation or claim against a product.The survey found that having real-time visibility of work and being able to re-allocate to the appropriate person was important. This may mean an overhead of logging individual actions on an operations management system, but it is clear that this is perceived as beneficial. 2007 Quocirca Ltd The operations management systems in use today are predominantly client/server (61%) but when asked what technology would be expected to be in use in both years time, there was a shift to pure web technology (91%). Respondents were also asked about hosted offerings either as pure hosted or as software as a service (SaaS).Neither of these was perceived to be important to operations management delivery today or in twain years time. Technically there is nothing to prevent the hold out to SaaS applications and it could be a lack of awareness of what the benefits of SaaS are, that produced this response. However, it is likely that operat ions is perceived as very specific to each financial services organisation and that this would put it behind other areas of the business in the move to SaaS technologies. September 2007 www. quocirca. com Operations Management in Financial ServicesPage 4 Interview Sample Distribution The information presented in this report was derived from 75 interviews with senior IT influencers and Operations Managers completed in May 2007. It was important to get an even balance of views so 46% of the respondents were directly involved in operations management with 54% representing the IT function. The sizes of the organisations contacted, selected by the number of employees to be a representative sample of UK Financial Services organisations, were 5000+ employees, 57% 1000 5000 employees, 43%.The Financial Services organisations were spread over Insurance and Assurance, Retail and enthronization Banking, Pensions and Building Societies. About eg eg is the leading provider of Operations Manag ement solutions that form a rapid performance improvement programme to Improve Customer Service Delivery. Operations Management improvements are made through the deployment of two core products/services ? ? Proprietary operational intelligence software packages grooming and development for Managers and Team Leaders in Production management methodological analysis gs proprietary software package eg operational intelligence including eg work manager has been developed and refined over the last 15 years and form a comprehensive work, resource and performance reporting tool. It enables clients to gather information about the key factors affecting performance and, using egs operational management techniques identify appropriate decisions and actions that improve efficiency and reduce costs within weeks.When implemented with the eg principles of operational management methodology, eg operational intelligence provides the opportunity for egs clients to double their productivity and drama tically improve customer service levels almost immediately. It also forms a foundation for continuous improvements in subsequent years. For more information, please contact Sophie Goodwin Spreckley Partners Ltd T +44 (0)20 7388 9988 E emailprotected co. uk About Quocirca Quocirca is a primary research and analysis confederation specialising in the business impact of information technology and communications (ITC).With world-wide, aborigine language reach, Quocirca provides in-depth insights into the views of buyers and influencers in large, mid-sized and small organisations. Through researching perceptions, Quocirca displays the real hurdles to technology adoption the personal and political aspects of an organisations environment and the pressures of the need for demonstrable business value in any implementation. This capability to uncover and report back on the end-user perceptions in the market enables Quocirca to advise on the realities of technology adoption, not the promise s.Sponsorship of specific studies by such organisations allows much of Quocircas research to be placed into the public domain at no cost. Quocircas independent culture and the real-world experience of Quocircas analysts ensure that our research and analysis is always objective, accurate and challenging. Quocirca reports are freely available to everyone and may be requested via www. quocirca. com. Contact Quocirca Ltd Mountbatten House Fairacres Windsor Berkshire SL4 4LE United Kingdom Tel +44 1753 754 838 2007 Quocirca Ltd www. quocirca. com September 2007