GDS International - Open Connect Comprehend Work Event Monitoring and Analytics Provide End-to-End Process Transparency
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GDS International - Open Connect Comprehend Work Event Monitoring and Analytics Provide End-to-End Process Transparency

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As enterprises increasingly focus on improving the performance of their processes, there is growing demand for new types of software that continuously monitor and analyze process performance. In ...

As enterprises increasingly focus on improving the performance of their processes, there is growing demand for new types of software that continuously monitor and analyze process performance. In particular, there is a need for precision in defining, characterizing, and measuring work — whether that work is performed by employees, by customers via self-service, or by fully automated systems.

This white paper discusses:
- The need for tools that deliver intelligence about processes, particularly those
that involve employees and customers
- Use of Comprehend as a work event monitoring and process analytics solution
- Case study that illustrates successful use of Comprehend to improve process
performance and profitability

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GDS International - Open Connect Comprehend Work Event Monitoring and Analytics Provide End-to-End Process Transparency Document Transcript

  • 1. WHITE P APER OpenConnect Comprehend Work Event Monitoring and Analytics Provide End-to-End Process Transparency Sponsored by: OpenConnect Maureen Fleming Brian McDonough Jeff Silverstein March 2009 IDC OPINIONwww.idc.com OpenConnect is a privately held company based in Dallas, Texas, that marries clickstream technology with process analytics to help enterprises better understand the nature of work. In particular, the software automatically captures details about theF.508.935.4015 on-screen interactions of employees and customers and links this work to process performance. Key findings in this white paper include the following: ! As payroll costs grow faster than gains in productivity, there is an increasing emphasis on improving worker productivity. However, enterprises areP.508.872.8200 increasingly frustrated by their inability to define, characterize, and measure work. This lack of transparency means it is extraordinarily difficult for enterprises to make fact-based decisions about employee-related process improvement. ! OpenConnect Comprehend captures IP-based communications and converts thisGlobal Headquarters: 5 Speen Street Framingham, MA 01701 USA traffic into a stream of work event data. Comprehend analytics aggregates work events and produces continuously updated process dashboards. Users can drill down into the details of each step in the process and can also look at the processing history of a single transaction. Users are also able to replay work events to see how an employee or a customer interacted with applications during a session of work. ! OpenConnect customers use Comprehend for process efficiency by identifying improvements that can be implemented through changes in policies, modifications in best practices, and automation. ! The ease with which data is captured without impacting processing workloads is an attractive feature of the software, according to customers. In addition, the relatively low cost of data capture and the decision-making value of the process intelligence are allowing customers to reduce their processing costs by millions of dollars within short time windows. ! IDC believes process analytics will be one of the fastest-growing new types of analytics software over the next few years. In our opportunity model, we believe there is enough demand for process analytics to eventually reach $3.5 billion in annual revenue.
  • 2. IN THIS WHITE P APERAs enterprises increasingly focus on improving the performance of their processes,there is growing demand for new types of software that continuously monitor andanalyze process performance. In particular, there is a need for precision in defining,characterizing, and measuring work — whether that work is performed by employees,by customers via self-service, or by fully automated systems.This white paper discusses:! The need for tools that deliver intelligence about processes, particularly those that involve employees and customers! Use of Comprehend as a work event monitoring and process analytics solution! Case study that illustrates successful use of Comprehend to improve process performance and profitabilitySITUATION OVERVIEWEnterprises invest heavily in automation to improve their business processes. Overthe past five years, they have spent more than $600 billion in software alone toautomate business processes and to measure business and process performance.Those investments have dramatically changed the role of many employees:! Enterprises are using fewer people to process work and increasingly transitioning former transaction processors to knowledge-centric, decision-centric jobs focused on problem resolution.! Employees have greater latitude and more autonomy to sell more products and services and to immediately solve customer problems.Process automation investments have contributed to increasing productivity.According to U.S. economic census data from 1997 and 2002, revenue per employeegrew 11% over the five years. However, payroll costs significantly outpacedimprovements in productivity, rising 29% from 1997 to 2002 and an additional 10%from 2002 to 2005.Growth in payroll costs significantly impacts profitability because they are a large Depending on the industry, payroll-contributor to operating expenses. Depending on the industry, payroll-related related expensesexpenses account for 20% to more than 50% of total operating costs. account for 20% to more than 50% of total operating costs.In the past, many organizations turned to outsourcing to reduce labor costs. Now,many of the employees in an organization are tied to mission-critical work that isdifficult to outsource.Therefore, improving employee productivity is critical for organizations focused onimproving profitability as they weather the current recession.2 #217586 ©2009 IDC
  • 3. Existing Measurement Does Not CaptureNeeded DetailOrganizations continue to struggle with employee productivity because they do nothave the tools to gain a reliable statistical understanding of how work is performed.Most enterprises know what percentage of transactions result in an exception. Theymay know that a particular salesperson has a higher win ratio following the samesales methodology than all other salespeople.But without transparently understanding exactly what is involved with a unit of work,executives will not have any statistical understanding of critical issues, such as:! How much work should employees be expected to accomplish?! What is an appropriate quota?! Are employees working as productively as they are able?! Do business process outsourcing (BPO) contracts accurately reflect work for pay?! Are employees gaming performance by meeting their quotas when they could be exceeding them?! Why are there discrepancies in employee performance?Enterprise applications provide production reporting data that produces metrics aboutthe business performance of the application domain. Business analytics software hasemerged to address the need to conduct more complex analysis. But neither of theseapproaches creates the necessary data for accurate analysis.While enterprises try to improve productivity, they also have difficulty in determininghow to improve the efficiency of a process. Some common areas that cant bepenetrated with existing analytics investments include the following:! Reducing the percentage of exceptions! Improving the speed to resolution of an exception! Determining how much an activity actually costs! Improving the outcome of efforts that involve collaboration across teams! Increasing the average performance of a roleEnterprises also struggle when they need to understand employee performance whentheir work crosses different application silos or when they extensively use personalproductivity tools to perform their jobs.©2009 IDC #217586 3
  • 4. Increasing Need for Data That Captures WorkActivitiesThe basic maxim about business process management (BPM) is that you cant The basic maxim about businessimprove what you cant measure. Enterprises maintain job descriptions with a general process managementunderstanding of tasks that need to be accomplished. Because there is no statistical is that you cant improve what youmeasure of work, however, it is difficult to build cost models and to individually value cant measure.employees. When enterprises lack facts, the person who is the strongest advocate fora particular approach to solving productivity problems wins."A lot of management is opinion based. You all have the same set of incompletefacts. Then youre working on the basis of whos the most credible in terms of theirpast decision making in a complex decision environment," according to Peter Alsberg,a former CIO who implemented OpenConnect Comprehend."What people think is going on in a company simply isnt the case. If you can just "What people think is going on in ashine the light as to whats really happening, people can address the problems and do company simply isntso quickly," said Alsberg. the case. If you can just shine the light as to whats reallyThis proved to be the case at WellPoint, the largest U.S. healthcare provider happening, peopleorganization. In its pilot project using Comprehend, the project team found that the can address the problems and do sotype of exception it thought was most costly was not nearly as expensive as other quickly."types.In a healthy economy, some enterprises have invested in automating worker-centricprocesses on faith that the investment will yield a better-performing process. Otherenterprises have performed so well that the loss of efficiency around maximizing workoutput was not as large an issue as other areas of concern.In the current climate, it is critical that enterprises optimize their scarce resources inareas of best return. By focusing on measuring worker efficiency, WellPoint isexecuting on a plan that IDC estimates will yield more than $6 million in cost savingsthat wouldnt have been available to the company without using Comprehend.OPENCONNECT COMPREHENDOpenConnect, based in Dallas, Texas, is a privately held company founded in 1981.Historically, it has provided software and services to 60% of the Fortune 500. Basedon its expertise in integrating mainframes into modern applications, it developedpatented process analytics software called Comprehend.Unlike most analytics software, Comprehend creates the data used for the analysis.The system taps into enterprise networks and collects traffic going to and from the IPaddresses of designated servers.Every keystroke, every screen, and every piece of information the user views, inserts,or modifies, in addition to communications between interfaces, is captured andmapped to user interfaces and application interactions. The events are aggregatedinto "work events" that, in essence, provide a recording of a unit of work — or step inthe process — as shown in Figure 1.4 #217586 ©2009 IDC
  • 5. FIGURE 1Work Event DetailSource: IDC, 2009OpenConnects approach to creating event streams is different from that of otherprocess visibility solutions. Most continuous monitoring systems require theinstallation of adapters on source systems that publish data to a collection server. Tocreate the event stream, databases then must create state change triggers. Thisapproach requires the buildout of expensive infrastructure, and there is some impacton server performance.Other non-event-driven approaches capture and parse log files to create data aboutprocesses. However, most do not produce detailed data about user interactions, andtherefore, the ability to replay a transaction or produce highly granular work statisticsis lost.Customers we interviewed for this white paper described initial deployments of a fewweeks to a few months before generating process intelligence, which is a fast cyclefor this type of technology. In addition, Comprehend was connected to claimsprocessing systems with high workloads without any impact on the performance ofthe systems Comprehend was monitoring.The following are examples of the types of analysis that OpenConnect customershave modeled with Comprehend:! Cost of an activity, including cost variations! Productivity of workers in outsourced processes! Assessments of quotas and whether they are set at the correct level! How high-performing employees work in order to adapt best practices and methodologies and retrain lower-performing employees©2009 IDC #217586 5
  • 6. ! What is repeatable in a work process that can be automated! What are the unnecessary or needlessly complicated tasks employees perform that can be streamlined or removed! Which employees would perform their jobs better with more targeted training in areas of weaknessSome customers are also using Comprehend to track customer interactions as theygo through a services life cycle that may begin in one channel, such as a Web site,and shift to a call center (see Figure 2).FIGURE 2View of Process PerformanceSource: IDC, 2009WellPoint Uses Comprehend to Increase Levelof AutomationWellPoint is the leading healthcare benefits provider in the United States, offeringservices to 35 million members. The publicly traded company has more than 40,000employees and reported $57.1 billion in 2008 revenue, of which nearly 84% was paidout as benefit expenses.Given the scope of this operation, WellPoints claims processing is a core processand improving efficiency is critical.6 #217586 ©2009 IDC
  • 7. Darren Ghanayem, vice president of information technology, has a vision about theimpact of a greatly improved claims process operation: Claims are the heart of a medical event. Its what happens when "If you can process the claim at a lower you are in a doctors office or the hospital or the clinic. If you can cost and increase process the claim at a lower cost and increase quality — while quality — while decreasing the decreasing the amount of time it takes to process a claim — that amount of time it lowers the cost for providers and members. Improving claims takes to process a processing performance effectively reduces healthcare costs for claim — that lowers the cost for providers everyone. and members. Improving claims processing It also opens up new opportunities for participants to benefit in new performance ways. Think about going into a doctors office and having a effectively reduces transaction similar to what you have at a store: Heres how much it healthcare costs for everyone." costs, heres how much you have on your credit card, lets perform the transaction or find less expensive ways to solve the problem. Making a transaction much more transparent and more timely, the doctors know how much they are going to get paid and members know how much they are liable for and can make informed choices. Thats the type of impact that increased automation could have in this industry.Goals such as those expressed by Ghanayem are compelling, but in his role, heknows the journey is complicated.WellPoint grew through internal growth in addition to acquisitions. Because thoseacquisitions created a broadly heterogeneous environment, any improvement mustbe able to surmount problems created by a wide variety of hardware and softwareplatforms, including mainframes, midrange systems, IBM WebSphere, .NET, third-party products, and custom-developed applications that, together with the sheervolume of transactions, create a highly complex environment.Continuously improving the auto-adjudication rate is one of the top priorities of thecompanys IT management. Increasing automation increases the consistency andaccuracy of claims processing and reduces the amount of time needed to processclaims. The incentives for automating claims are powerful. Costs decreasesignificantly with automation because of lower labor costs, improved quality, andfaster processing speeds.When the current automation improvement effort began in late 2007 with its largestvolume transaction system, WellPoint was auto-adjudicating well below 70% of its 8.2million monthly incoming claims.The claims processing group began its efforts to improve automation by compilingand analyzing claims processing statistics — how many times a claim was edited,how often a business rule was edited, how many times a human touched the process,and how long it took to complete the processing.©2009 IDC #217586 7
  • 8. The groups goal was to answer such questions as:! How many times did a particular claim stop because of a specific business rule?! What line of business was most affected?! Was there a geographic concentration of process problems? Did any states stand out?! Within those groups, were there product-specific problems?By making changes as a result of the analysis, the company achieved an auto-adjudication rate of 70% in May 2008. By the companys measure, improvementstranslated to:! Fewer claims processors! Fewer late processing penalty fees caused by regulatory violations! Lower costs from defective claims (When a claim is found to be defective, it is followed up with an adjustment, which compounds the processing cost.)Earlier Investment in Analytics Solution Failed Before Hearing AboutComprehendThe team looked at other analytical solutions and spent more than a year trying toimplement a third-party analytical framework without success. The software requiredthe WellPoint team to program in all of the process logic before the software was ableto produce any data about process performance. The effort was cumbersome andnever produced any significant improvement in performance.Ghanayem heard about Comprehend from a peer at WellPoint. He reached out toOpenConnect and then checked references with other affiliates of the Blue Crossnetwork. The team then executed a funded, three-week pilot in May 2008.Pilot Yields Statistical Surprise About CostsThe pilot was run on a live production system and was designed to determine whichclaims were costing the most money. The team was able to create statistics aboutwhich claims were stopping for manual intervention. It looked at edits (manual steps),such as those that require the most:! Amount of time! Human touches! InteractionThe team found that what it had assumed to be the most expensive manual editswere in fact not the most expensive. During the pilot, the team also took one of themanual steps and automated it.8 #217586 ©2009 IDC
  • 9. These results solidified WellPoints decision to move forward with purchasingComprehend.A larger rollout of Comprehend was funded in fall 2008, based on the success of thepilot in addition to the teams track record in making tangible progress in cost cuttingthrough process improvements.WellPoints Discovery ProcessGhanayem told us that his team knows it has limited resources. It has to makedecisions on where to invest those resources for the optimum return, and thosedecisions need to be based on data. Comprehend enables visibility into the entiretransactional experience and thus facilitates better decisions on how to allocateresources. WellPoint is investigating several areas of inefficiency using Comprehend.Determine Most Impactful InefficiencyUsing Comprehend, WellPoint analysts can compare two or more inefficient processsteps to determine which inefficiency is the most expensive.Determine Best Opportunity for Process ModificationUsing Comprehend, WellPoint can audit transactions as they move through a processand then analyze those transactions from multiple dimensions to determine the bestopportunities to make modifications based on the cost of the change.Compare Same Process Across Locations to Find Best in ClassWhen WellPoint has claims processors in three different locations with three differentcompanies performing a similar transaction, Comprehend can measure and comparehow efficient each of those locations is to determine which one has best-in-classperformance.Future Plans and PaybackUsing Comprehend, WellPoint has identified opportunities for automation and plans to The payback model for Comprehend isdo the automation on a staggered schedule throughout 2009. The payback model for within six monthsComprehend is within six months partly because of the magnitude of the volume of partly because of the magnitude of thetransactions. The company is projecting that it will boost its auto-adjudication baseline volume offrom 70% to 78% by the end of 2009. transactions. The company is projecting that it will boost itsIDC estimates that the payback for this level of improvement could range from auto-adjudication$6 million to $8 million within 12 months of the automation. baseline from 70% to 78% by the end of 2009.WellPoint created a 12-person department within a department to continually look atautomation opportunities with Comprehend, using it to analyze and automate claims-related processes. Ghanayem expects to keep that level of staffing through 2009.Comprehend is helping Ghanayems team identify opportunities faster than WellPointcan address them. The company has to control that based on priority, opportunity,and the capacity of its people.©2009 IDC #217586 9
  • 10. FUTURE OUTLOOKDespite more than three decades of progress in business process automation, manyenterprises are finding it increasingly difficult to become more efficient because theyhave no statistical understanding of how work is performed. However, in todayseconomic climate, with declining budgets to invest in automation, the issue of whereto focus scarce resources for maximum benefit is critical.While early in its maturity applied to processes, the underlying technology ofcollecting clickstreams from user interactions is well understood, and Web analytics iseffective in improving performance where it is currently applied.IDC believes process analytics will be one of the fastest-growing new types of IDC believes process analytics will be oneanalytics software over the next few years. In our opportunity model, we believe there of the fastest-growingis enough demand for process analytics to eventually reach $3.5 billion in annual new types of analytics software over the nextrevenue. few years.The early market will logically come from process-intensive, measurement-intensivegroups within an enterprise, such as claims processing, call centers, and departmentsthat manage large groups of workers focused on repetitive work.We believe the largest opportunity may well come from performance-intensivedepartments, where detailed understanding of the best performers can result in bettertraining to improve overall performance, changes in quota to generate more revenue,and awareness of the contributors to revenue generation. This includes salesorganizations, outbound call centers, marketing-related areas, and knowledgeworkers/analysts focused on decision making around problem resolution.ESSENTIAL GUIDANCEThe following advice is for groups considering an investment in process workeranalytics software. It comes from the executives we interviewed for this white paperand from the many discussions weve had with enterprises that have alreadyembarked on analytics-centric process improvement initiatives:! WellPoints Ghanayem recommends that peers facing a similar situation focus on what their initiatives really are, what their target is, and what they are trying to accomplish. Comprehend will provide a massive amount of analytical data. It is a great tool for providing that data, but companies have to understand what they are going to do with that data and have a goal in mind in order to justify the expense of it.! WellPoint invested a great deal of effort in developing metrics before it implemented OpenConnect, allowing it to quickly materialize the return on investment. Ghanayems team already knew how to: # Measure the automation level # Measure what the improvement equated to from a dollar perspective10 #217586 ©2009 IDC
  • 11. # Identify the tactical metric it was using to guide Comprehend on which transactions to look at Comprehend can be used alongside metrics development, but if there is little understanding of metrics going into the project, there will be delays in gaining benefit from improved performance.! Another insurance customers advice for those implementing Comprehend or other process analytics tools is to be meticulous in mapping IP addresses and capturing data elements. The team thought that the initial two-month consultation was too long, but ultimately decided it was a good time frame. Coordination with various IT and business units in the organization is critical, and that takes time. This customers advice is to plan for the added time.! Once Comprehend was implemented, the insurers process improvement team found that the software should be used regularly. To maximize the benefits of Comprehend, resources need to be committed to using the tool consistently to mine the opportunities it presents. By extension, Comprehend is a logical tool for organizations focused on Comprehend is a logical tool for continuous improvement. BPM and business intelligence centers for excellence organizations focused should consider this type of tool to replace less effective approaches to on continuous improvement. understand worker activities within a process.! Another key to the insurers success with Comprehend was OpenConnects dedication to a rapid deployment methodology. Once an automation or process improvement opportunity is identified, the goal is to resolve it within 14 days. The team advises that groups shouldnt put a recommendation for improvement on a list, surround it with action criteria, and let it languish for six months. When a problem is found, it should be fixed quickly. That means process improvement teams must also understand ahead of time which tools they will need to improve the process.! Workers introduce process variance that a fully automated system does not. IDC clients that have successfully implemented process analytics recommend that process monitoring should follow process improvement to maintain process efficiency. Companies shouldnt assume that a process that has been fixed will always remain fixed.! Other clients have made observations similar to those of former CIO Peter Alsberg, mentioned earlier in this report. He emphasizes that executives tend to rely on rules of thumbs from past experiences that may no longer be relevant. Our clients also recommend using a product such as Comprehend to solve finger-pointing, where two or more process owners blame each other when there are performance problems. Winning an argument through political skills may be good for a career, but facts are better for performance improvement.©2009 IDC #217586 11
  • 12. ! Customers are starting to use Comprehend in their BPO relationships. They are finding the same and new types of process inefficiency, which, if corrected, can lower costs and provide better service. Therefore, organizations that have outsourced people-centric processes should consider implementing Comprehend to uncover ways to decrease short- and long-term costs.CONCLUSIONIn our interviews with Comprehend customers, we have found that the measurable In our interviews with Comprehendbenefits that come from the use of this type of software far exceed the initial cost. In customers, we haveaddition, the software is implemented rapidly and the improvements are able to be found that the measurable benefitsmade quickly in a highly targeted manner. that come from the use of this type ofWe believe that, in this current market, the ability to use tools to statistically identify software far exceed the initial cost.optimal areas of improvement is more critical than continuing to invest in software thatsimply automates a process. Planning should come before automation. Tools such asComprehend are important assets for this planning and also can be leveraged tosupport continuous improvement.Copyright NoticeExternal Publication of IDC Information and Data — Any IDC information that is to beused in advertising, press releases, or promotional materials requires prior writtenapproval from the appropriate IDC Vice President or Country Manager. A draft of theproposed document should accompany any such request. IDC reserves the right todeny approval of external usage for any reason.Copyright 2009 IDC. Reproduction without written permission is completely forbidden.12 #217586 ©2009 IDC