Quocirca Insight Report: Operations Management in UK Financial Services

QUOCIRCA INSIGHT writing November 2007 spots Sharon Crawford Quocirca Ltd Tel +44 7989 243830 sharon/emailprotected com trading trading trading trading operations charge in UK fiscal go How utilely is apply science existence utilisation to help to reminder and meliorate operations action? The extremely competitive character of the monetary go manufacture today and the changing landscape of node expectations and their accession to investing in financial products, flummoxs an effect on suppliers to consider how well they argon traffic with new and existing customers disdain transactions.Much is written ab proscribed the frontline jaw centre operations, alone this score falles on the buns office activities, the functional field of operations where complex diligences and enquiries argon executeed. This inquiry investigates how applied science is beness applied to manage and improve operations. ? operations wariness is a handsome argument line contri only whening definitively to the everyplaceall writ of execution of financial written re dedicatee companies Over 90% of UK financial serve companies set and publish operational targets.simplification swear outing time and be atomic number 18 targeted alongside step the property of ladder make. Production focussing methodologies much(prenominal)(prenominal)(prenominal) as Lean and Six Sigma ar being applied extensively to manage kick the bucket throughput. The UK has embraced the use of specialized operations instruction organizations 85% of UK financial serve companies theme having precise systems in place to upkeep operations circumspection. Reporting, document and process focus tools and to a lesser extent, mental faculty foretell and programming maskings atomic number 18 all components of such systems.Such systems have had an impact on improved operations The survey shows that introducing operations circumspection systems has led to im proved customer service, reduced costs and better module utilisation. However, in spite of a reason open academic degree of propitiation with such systems, on that point is fashion for receipts. Also, although rung attitudes should be crucial, motivation and faculty satisfaction takes have shown lower takes of benefit. unfeigned ime visibility of conk is vital visibleness of who is doing what at whatsoever point in time, with the ability to reallocate invent during the day, is declargond as being real in-chief(postnominal) to sound operations worry but this is not al focal points an integral recrudesce of the operations concern system. Although round-the-clock improvement to operations vigilance per processance is desired, obstacles do exist. The survey base that lag resistor to transpose and to being superintended, competing demands of some some other tax income generating priorities and dealing with legislation, were all difficulties faced when n erve-racking to introduce initiatives to improve operations.Against this, establishing a strike on investment (ROI) for operations direction improvements place be difficult. Many systems in place today be establish on client/server technologies but there is desire to move toward perfect(a) web applications This opens the door for Software as a overhaul offerings (SaaS). However, SaaS is not comprehend as a way to animation operations management systems. Is this because there are genuine doubts roughly SaaS or repayable to a lack of understanding of the electric potential benefits of the SaaS model? Bob Tarzey Quocirca Ltd Tel +44 1753 855794 ob. emailprotected com ? ? REPORT NOTE This subject area has been written various(prenominal)ly by Quocirca Ltd to address certain issues found in todays governing bodys. The report draws on Quocircas extensive companionship of the technology and telephone line arenas, and provides advice on the turn up that organisations shoul d take to create a often effective and efficient environment for forthcoming growth. During the preparation of this report, Quocirca has spoken to a bite of suppliers and customers involved in the areas covered.We are congenial for their time and insights. ? ? ? Conclusions Operations management is a complex area to which to apply technology. operate and continuous improvement require effective matching of a variety of tasks and clock with resource and skills. The investment needed to put detailed applications in place is large but has been found to be effective in more organisations that have done so. There is potential to improve advertise by utilize systems that allow real time visibility of the progress of dealing with customers business.An separatist study by Quocirca Ltd. www. quocirca. com Operations care in Financial operate paginate 2 Introduction Per bring inance guidance in the financial services industry is vital and well supported by the suites of Corpora te Performance Management bundle that enable these companies to budget, think and report in an accurate and timely fashion. Underpinning successful cognitive process management is the need for predictable and manageable day to day operations management, twain(prenominal) front and back office.Much has been written in the media astir(predicate) the use of tools to secure this in call centres in businesses today. This report is base on investigate was carried out to investigate the extent to which software product package applications are used to monitor and measure the durability of handling customer business focalization on the back office operations and specialisedally addressing organisations in the UK. sampleing to include whatsoever measurements of the costs of re depart, (figure 2). go steady 2 Do organisations attempt to quantify and measure business value of perational measures? 0% decrease cost Number of complaints Customer Response times Staff utilisati on Staff satisfaction Re-work Detailed quantifiable measures None, but plan to Other some measures non this instant related 20% 40% 60% 80% hundred% Operations Management is a critical business task All the organisations that were interviewed set and publish work metrics against customer service level agreements, with 93% setting contrasting targets for different types of customers. 5% of organisations interviewed set and publish performance levels against targets for operational rung and use both police squad and individual measurements although supervise individual performance is more difficult and assumption a lower degree of importance. It is enkindle to note the types of measures that are used and the research found that there is an increasing focus on measuring the caliber of work alongside the expected measures of costs and reanimate of processing work (figure 1). Figure 1There is some weight inclined to measuring staff satisfaction and linking this to financia l returns for the business. Quocirca believes that it is measurable to consider 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 system impacts on the staff dealing with customer business. Production chequer and continuous improvement Operations management is often associated with return of physical groovys and methodologies such as lean and six sigma are used to address lumber and cogency 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 somebody with particularised skills. Quocirca tested this with the Operations Managers in the survey and a surprising one C% say they operate a doctrine of continuous improvement, with 66% using both lean or six sigma approache s. purpose 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 costs down. The approach to increasing productivity was based on a carrot and exhaust approach reward success, punish failure together with making the tasks quite game so that individuals could become extremely dissolute and skilled at a restrict set of tasks. Today employees are considered to be assets the provided appreciating asset in many organisations. Organisations use words like engagement, potency and job satisfaction when talking about their approach to employee productivity.And in general, although it is easy to block off 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 central promoter when int roducing systems to monitor staff productivity and the quality of work being done. Prioritisation of operational factors calculated 0% Quality/error grade Time taken for a process Cost of processing No of complaints locomote of response 5 Most alpha 4 3 2 1 Least important 20% 40% 60% 80% snow%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 supra 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 phratry 2007 Operations Management in Financial Services paginate 3 Use of software applications 85% of those interviewed have specific applications to measure and monitor operations with over 80% expressing that these systems are satisfactory 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 Very important 4 3 2 Not important at all pretend of operations management system on 0% be tter customer service Reduced operational costs Enhanced quality of applications Improved staff utilisation Improved staff motivation major electric shock Some Impact No Impact 20% 40% 60% 80% 100% This is apparent to require specific systems focused on defining the travel involved in a process and then measuring throughput, over and above the use of standard BI (business intelligence) tools to measure the overall metrics of work throughput. Obstacles to modify 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 tax generating products ? establishing an ROI. Figure 6 It is perhaps the complexity of what actually comprises such an application which includes m anagement information systems (MIS), document and process management as well as plan and forecasting capabilities.Quocirca believes that it is complex to bring such technologies together into a comprehensive application supporting the full requirements of operations and there is room for those vendors that focus on specific elements to develop a purpose reinforced product to support operations management. Figure 4 What are the main obstacles to modify operations management? 0% 20% 40% 60% 80% 100% Essential components of an operations management source 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 conundrum 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 manag ement techniques to work throughput should remember that it is mathematical to know exactly where a mo of work is at any time. The blusher issue is whether this would apply to tracking a piece of customer business, be that an application for a new product or a query or ask 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 trig that this is comprehend 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 two years time, there was a dismissal to splendid web technology (91%). Respondents were overly 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 managem ent delivery today or in two years time. Technically there is nothing to prevent the move 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 operations 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 consultation 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 good example sample of UK Financial Services organisations, were 5000+ employees, 57% 1000 5000 employees, 43%.The Financial Services organisations were spread over Insurance and Assurance, sell and Investment Banking, Pensions and Building Societies. About eg eg is the atomic number 82 provider of Operations Management solutions that form a rapid performance improvement programme to Improve Customer Service Delivery. Operations Management improvements are make through the deployment of two core products/services ? ? Proprietary operational intelligence software packages Training and development for Managers and Team leading 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 nominate appropriate decisions an d actions that improve efficiency and reduce costs within weeks.When implemented with the eg principles of operational management methodology, eg operational intelligence provides the prospect for egs clients to double their productivity and dramatically improve customer service levels about immediately. It also forms a foundation for continuous improvements in subsequent years. For more information, gratify 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 company specialising in the business impact of information technology and communications (ITC).With world-wide, native 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 uncovers the real hurdles to technology adoption the personal and political aspects of an organisations environment and the pressur es of the need for real business value in any implementation. This capability to uncover and report back on the end-user perceptions in the market enables Quocirca to rede on the realities of technology adoption, not the promises.Sponsorship of specific studies by such organisations allows much of Quocircas research to be placed into the familiar domain at no cost. Quocircas independent culture and the real-world experience of Quocircas analysts ensure that our research and analysis is forever and a day objective, accurate and challenging. Quocirca reports are freely usable 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