Capgemini Transactional Services for Public Sector
 

Capgemini Transactional Services for Public Sector

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What can the Public Sector learn from Private Financial Services? ...

What can the Public Sector learn from Private Financial Services?

Public sector organizations today are faced with changing customer expectations and new technologies at a time of political and economic strain.

Drawing from the experiences in the financial sector, public sector organizations should implement new technological solutions in order to execute their tasks around:

- Monitoring inbound citizen communication
- Applying data in conjunction with agile business policies and business rules
- Designing and executing outbound public campaigns

Read our paper to find out more how government can tackle these issues through these measures.

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    Capgemini Transactional Services for Public Sector Capgemini Transactional Services for Public Sector Presentation Transcript

    • Global Public Sector the way we see itRising to the New Challenges ofTransactional Services in the Public SectorA FRESH PERSPECTIVE SETTING THE CONTEXT PUBLIC SECTOR TRANSACTIONS LEVERAGING PRIVATE SECTOR EXPERIENCE SUMMARY
    • Global Public Sector the way we see itA FRESH PERSPECTIVE SETTING THE CONTEXT PUBLIC SECTOR TRANSACTIONS LEVERAGING PRIVATE SECTOR EXPERIENCE SUMMARY HOME CONTACTA Fresh Perspective Previous | Next
    • Global Public Sector the way we see it A FRESH PERSPECTIVE SETTING THE CONTEXT PUBLIC SECTOR TRANSACTIONS LEVERAGING PRIVATE SECTOR EXPERIENCE SUMMARY HOME CONTACTIntroduction: A Fresh PerspectiveThe following is an abridged version of of view on the most recent trends and So why the need to refresh our thinking?Capgemini’s recently updated paper on the what can be learned from the comparable Much has changed since we published ourfinancial transactional services in the public challenges that exist between the financial paper in 2008. Due to the financial crisis,sector. This is designed to provide you with services industry and the public sector. For governments in the developed countriesa summary of the findings and thought example, the financial services industry has now need to balance the cost cutting withleadership,which is included in a full- the challenge of multi-channel customer maintaining or even improving servicelength paper that you can download from interaction and shareholders seeking levels. Developing countries face thewww.capgemini.com. efficiency. In the public sector there is growing challenge of having to deploy new, pressure from the public and the politicians complex and scalable transactional serviceOur latest paper updates the findings of our to cut on the budgets and spending while capacity for their citizens.2008 paper1, in which we have explored and improving the customer interaction andcompared the general trends of transactions experience. Both sectors have industrialized Companies and government agencies alikein the public and private sectors to see what processes with transactions that are replicated have continued to move their activitieslessons might be learnt. for billions of events, with a similar need to online. The rising curve of the online service reduce the cost of these processes. delivery adoption has raised the expectationsThe updated version brings in a fresh point of the service levels. Yet many transactions inRising to the challenge of Financial Transactional Services in the Public Sector, Capgemini, 20081 Previous | Next
    • Global Public Sector the way we see it A FRESH PERSPECTIVE SETTING THE CONTEXT PUBLIC SECTOR TRANSACTIONS LEVERAGING PRIVATE SECTOR EXPERIENCE SUMMARY HOME CONTACTthe public sector are often still provided by Services strategies moving away fromsystems that were not intended, designed and pure cost reduction to transformationalbuilt to support the exponential user and data outsourcing; andgrowth. Subsequently, the rise of online servicedelivery not only requires new investment but • The rapid rise of Cloud technology, withalso adds new risks in making these legacy dramatic changes to delivery models.systems secure for an online world with itsincreasing levels of cyber crime.Both the private and the public sectorsare still under pressure to reduce thecosts associated with the delivery of thetransactional services. But since 2008 threeother significant trends have emerged, theseinclude:• The increased urgency to reduce fraud and non-compliancy;• The changing nature of Business Process Outsourcing (BPO) and Shared Previous | Next
    • Global Public Sector the way we see itA FRESH PERSPECTIVE SETTING THE CONTEXT PUBLIC SECTOR TRANSACTIONS LEVERAGING PRIVATE SECTOR EXPERIENCE SUMMARY HOME CONTACTSetting the Context Previous | Next
    • Global Public Sector the way we see it A FRESH PERSPECTIVE SETTING THE CONTEXT PUBLIC SECTOR TRANSACTIONS LEVERAGING PRIVATE SECTOR EXPERIENCE SUMMARY HOME CONTACTSetting the Context: twice as good, in halfthe time, for half as muchPublic sector organizations today are faced a time when revenue streams that are open government services and there is anwith changing customer expectations and to governments have become tighter. The opportunity to take advantage of this by:new technologies at a time of political and fiscal situation of almost all the advancedeconomic strain. The rapid growth in the economies has deteriorated and economic • Re-examining the current businessinternet usage and social media proves that downturns are now limiting on how much processes that support transactions, forthe customer requirements, which includes the tax burden can be increased. So, the instance the back office functions;the exchange of information, accessibility of taxpaying public is shrinking as populationsthe government services, data re-usage and so are aging worldwide. This has resulted in • Looking at how embracing newforth are fundamentally different than what the multiple challenge of delivering services technologies, can reduce the costs perwas a decade ago. Public sector agencies are better, faster and cheaper. transaction and improve the customertransforming themselves in an attempt to experience; Efficiency & Effectivenesskeep up with the expectations of the moderncitizens around rapid, customized and secure The public sector has to look at how it • Looking at how standardizing and sharingonline transactions with the government. can take out cost and drive in efficiencies. of the business processes and IT can create For example, staffing typically takes up a economies of scale with other governmentYet this transformation needs to take place at high percentage of the costs for running agencies; and Previous | Next
    • Global Public Sector the way we see it A FRESH PERSPECTIVE SETTING THE CONTEXT PUBLIC SECTOR TRANSACTIONS LEVERAGING PRIVATE SECTOR EXPERIENCE SUMMARY HOME CONTACT• Looking at the option of outsourcing certain integrated ‘produce-to-deliver’ or ‘doing routine tasks so that efforts can be redirected everything’ payments model is no longer to more specialized, effective tasks. optimal. Traditionally, banks handle everything, from developing propositionsHigher value through specialization to producing payments, managing client relationships, and offering a whole seriesGiven the pressures that governments of other services to their clients. Throughare faced with, it is possible to foresee a a number of procedures (regulation,fundamental change to the way government liberalization, commoditization andservices are structured. In essence it will be technological development) banks nowa move from government agencies ‘doing adapt their business models by specializing,everything’ to a new role consisting of ‘being outsourcing or sharing certain services.2focused, efficient and better’. Specializationallows for a level of investment in creating Global sourcing has also allowed insurershigh quality services for users that is difficult to lower administration cost-per-policyto achieve when governments need to compared to insurers with in-houseoperate multiple smaller services. operations. By outsourcing back office functions such as policy administration,A similar role change can be observed insurers are able to focus more on theirwithin the private sector. Many banks have core competencies of sales and marketing,found that the efficiency of the traditional underwriting and asset management.32 World Payments Report 2011, Capgemini, 2011 Previous | Next3 Global Trends in Life Insurance: Policy Administration, Capgemini, 2011
    • Global Public Sector the way we see itA FRESH PERSPECTIVE SETTING THE CONTEXT PUBLIC SECTOR TRANSACTIONS LEVERAGING PRIVATE SECTOR EXPERIENCE SUMMARY HOME CONTACTPublic Sector Transactions Previous | Next
    • Global Public Sector the way we see it A FRESH PERSPECTIVE SETTING THE CONTEXT PUBLIC SECTOR TRANSACTIONS LEVERAGING PRIVATE SECTOR EXPERIENCE SUMMARY HOME CONTACTPublic Sector TransactionsPooling and Sourcing of Services All these examples show that traditional services operated in some of the key delivery transactional services, administered and units of the government and it is clear thatIn the UK, the Netherlands and soon the processed by separate government entities, there is a great potential for sharing andUS the tax agency is now the provider are increasingly being pooled and blended aggregation of services. This would naturallyof social security benefits, tax credits together. Importantly, technological result in cost efficiencies and economies ofand other payments. In Denmark the developments (such as Cloud) now allow a scale.tax agency is responsible for the vehicle fundamental acceleration in the delivery ofregistration and related road taxes, while joined-up transactional services. Those financial transactions that makeFrance is currently preparing a vehicle the best targets for improvement are areastax to be collected by the Ministry of Types of Transactional Services such as invoicing and, tax and benefitEcology. The UK has recently announced payment, both of which are highly repetitivethe merger of around 50 separate social Looking across the public sector we have and occur frequently. The transactionalbenefits into one Universal Credit system, found that there are significant overlaps services that qualify for industrialized pan-while also merging the operation of income in the back office functions responsible government solutions (when looking at costtax and National Insurance Contributions. for transactional processes. There is efficiencies) are those that are repetitive and commonality among the transactional undertaken by multiple agencies. Previous | Next
    • Global Public Sector the way we see it A FRESH PERSPECTIVE SETTING THE CONTEXT PUBLIC SECTOR TRANSACTIONS LEVERAGING PRIVATE SECTOR EXPERIENCE SUMMARY HOME CONTACTThe scale of the transactional processes agencies involved with transactions have existing businesses, generate additionaloperated by advanced industrialized already taken the business approach of revenues, and/or facilitate new businessnations is enormous and growing rapidly standardizing and merging their underlying models.4in developing countries. At this level, any processes. And it is not only financialimperfections in individual processes are transaction processes that are merging in Breaking down transactional servicesamplified by numerous factors. When the public sector. For example, France has into their basic building blocks showsmultiple agencies replicate financial successfully created core business data for its that they are standardized and commontransactional departments, there are vast citizens and businesses, leading to a single in organizational and process terms andopportunities to be more cost efficient and and universal data view of the taxpayer. The that their lowest common denominatoreffective. And when government agencies single view has allowed the tax agency to be is information and its processing. Ando not effectively share information, it a data hub for the citizens, businesses and information-centric approach to optimizingwill be inevitable that citizens will have to other government agencies. an organization’s people, processes andsubmit their personal information over and technology is the only way to guaranteeover again when transitioning with their Standardization and merging of transactional that structures and processes will be ablegovernment. processes can also be observed in the financial to drive the performance and efficiency sector, the reasons include improving efficiency, improvements in both the financial industryMoving towards Standardization reducing costs and streamlining the more and the public sector. automated elements of the payments valueGovernment transactional services have chain. Standardization is fueled by banksmore in common across countries than is that are (sometimes jointly) seeking to boostthought. In many countries governmental transaction volumes and scale to expandWorld Payments Report 2011, Capgemini, 20114 Previous | Next
    • Global Public Sector the way we see itA FRESH PERSPECTIVE SETTING THE CONTEXT PUBLIC SECTOR TRANSACTIONS LEVERAGING PRIVATE SECTOR EXPERIENCE SUMMARY HOME CONTACTLeveraging Private Sector Experience Previous | Next
    • Global Public Sector the way we see it A FRESH PERSPECTIVE SETTING THE CONTEXT PUBLIC SECTOR TRANSACTIONS LEVERAGING PRIVATE SECTOR EXPERIENCE SUMMARY HOME CONTACTLeveraging Private Sector ExperienceApart from generic observations, we can or higher, if they are repetitive, and if they and protect profits. Banks are also looking atsee that both the private and public sectors can be learned in no more than six weeks other aspects of their financial transactionalare reacting to the three trends we have given a certain skill level, then they can processes, including risk management,described in our introduction. These be outsourced. Private sector experiences asset management and securities. In thisinclude, the BPO/Shared Services, the have shown that sourcing can be applied to environment, going forward it is imperativeFraud and Yield Management and Cloud transactional activities, but far less to high for the payment providers to distinguishComputing, which are rapidly affecting the value-adding activities such as decision their propositions and demonstrate theirway transactional services are delivered. making, strategy or policy. Private sector value through increased specialization. experience has also shown that transactionalBPO and Shared Services activities account for 80% of the headcount. So the response to the changes in the payment landscape has been to reassess how services-The pooling of business functions into silos for It is not a surprise that banks have back, middle and front office-are structured.greater standardization, automation and control particularly looked at how they can take out But the underlying trend has been towardsis an ongoing trend in the private transactional cost in their operations. The focus has been BPO, Shared Services and specialization.service sector. The rule of thumb has been that, on the repetitive, highly manual processesif tasks can be documented to an 80/20 level that can be automated to lower overheads If government transactional agencies apply Previous | Next
    • Global Public Sector the way we see it A FRESH PERSPECTIVE SETTING THE CONTEXT PUBLIC SECTOR TRANSACTIONS LEVERAGING PRIVATE SECTOR EXPERIENCE SUMMARY HOME CONTACTa similar approach of BPO, Shared Services Fraud and Yield Management bolster consumer confidence. The adoptionand subsequent specialization this would of new chip technology on payment cardsimply that: Transactions in the private financial sector (EMV chips) has already proven to be effective closely resemble paying benefits and credits with a massive drop in fraud cases. Attention• Core policy, regulation, assessment and in the public sector. For example, as is the is focused most, however, on e-commerce fraud management functions will remain the case in the insurance sector, the processes of transactions, especially as electronic thefts are core responsibility of government agencies registry, assessment and transaction are beset increasingly hitting the headlines.5 that provide transactional services, with a growing challenge of fraudulent claims. The public sector is under political pressure to The current challenges related tobut protect or even increase the tax yield and to cut fraud detection have driven increased (benefit) on spending. So for the public sector, implementation of advanced technologies in• Citizen-based functions - registry, transaction it is worth taking a close look at how the banks the life insurance industry. New investigation and all accompanying citizen contacts and and insurers tackle the similar issues of Fraud solutions based on risk scoring and predictive interactions, can be commissioned ‘as-a- and Yield Management. analytics allow more granular analysis of data service.’ This could mean sharing services to identify fraud patterns and thus allow for with other parts of the government (registry As the adoption of non-cash payment early fraud detection. The scoring models use services) and/or joining forces with the instruments grows, so does the potential for a combination of rules-based engines, data third-party providers to handle (bulk) fraud in the financial sector. The payments mining, database searches, predictive modeling, transactions. This will free up civil servants industry is pursuing various technological and network link analysis (including social to focus and specialize on core functions innovations to tackle fraud and ensure more media) to identify the possibility of fraud in an where they can add the highest value. secure non-cash transactions-and thereby insurance claim.World Payments Report 2011, Capgemini, 20115 Previous | Next
    • Global Public Sector the way we see it A FRESH PERSPECTIVE SETTING THE CONTEXT PUBLIC SECTOR TRANSACTIONS LEVERAGING PRIVATE SECTOR EXPERIENCE SUMMARY HOME CONTACTEnterprise-wide data warehouse systems that In general, the private sector’s main focus is credit card or insurance frauds) require acapture historical information from the fraud on fraud prevention by identifying high risk combination of upstream and downstreamcases and integrate information from the third- activities and by refusing the provision of a techniques in order to be successful.party sources have made the fraud detection service or product, or by flagging high riskprocesses more powerful.6 Better fraud cases for investigation before a transaction Drawing from the experiences in the financialdetection processes (Early Fraud Detection) is completed - so called upstream activities. sector, public sector organizations shouldleads not only to lower claims expenses, it also This is in stark contrast to the public sector implement new technological solutions inincreases customer satisfaction. approach which is mainly focused on order to execute their tasks around: detection, investigation and prosecution ofPublic sector agencies involved with large fraud that has already been committed - so • Monitoring inbound citizentransactional volumes also need (near) real- called downstream activities. In downstream communication to identify fraudulenttime insight into the possible fraudulent or processes, once repayment is made, recovery transactions through rules, heuristicnon-compliant transactions. Like insurers and of payment requires time and cost, mostly measures and forensics.banks, tax and welfare organizations handle for people concerned, and may not result inmillions of transactions on a daily basis. success, especially in identifying fraud cases. • Applying data in conjunction with agileFraudulent transactions account for millions Keeping this in mind, it may be tempting business policies and business rulesof Euros of uncollected tax and unjustly paid to take the radical approach of ‘prevention across:out benefits. As an example, the HMRC states being better than cure’ and limit investmentsthe UK tax gap to be around € 40 billion7 while downstream. However, in the public sector l Advanced data validationsocial benefit fraud is estimated to be around this is unlikely to be a successful strategy as€ 1.4 billion.8 many tax frauds (in contrast to many banking, l Predictive models and segmentation6 Global Trends in Life Insurance: Claims, Capgemini, 2011 Previous | Next7 UK tax gap narrows to £35bn, says HMRC, BBC, September 20118 DWP Website, December 2011
    • Global Public Sector the way we see it A FRESH PERSPECTIVE SETTING THE CONTEXT PUBLIC SECTOR TRANSACTIONS LEVERAGING PRIVATE SECTOR EXPERIENCE SUMMARY HOME CONTACT l Networks linking data items and with skilled and focused staff will significantly core business functional systems, such as customers enhance fraud detection capabilities. It also wealth management or core banking. demonstrates that better fraud detection l Risk and propensity models. capability lowers the cost of service delivery In the longer term, Capgemini expects the and enhances customer satisfaction. banks to have an application portfolio mix of• Using input from data and advanced on-premise and Cloud-based services delivered analytics to design and execute outbound Cloud Computing across a combination of private, hybrid, and public campaigns aiming at driving desired public Cloud-based deployment models. customer behaviors. Financial institutions are moving cautiously Cloud solutions are also becoming enablers towardsthe Cloud, with IT spending on Cloud for public sector agencies seeking to introduceThe likelihood of fraud in those developed technologies expected to be € 17 billion in standardization, cost efficiency and increasedcountries that are affected by the economic 2012. Capgemini’s analysis has shown that service levels.downturn is growing and all the governments banks tend to adopt a gradual evolutionarydesperately need the uncollected tax yields. approach to Cloud computing services, Typically, payments processing andSourcing and specialization can free up evaluating each project based on the type of underlying systems have been designedstaff to focus on assessment and fraud applications and nature of the data. Lower and implemented in isolation, all withmanagement. Private sector experiences show risk projects that are likely to move first to a their own separate applications andthat technological solutions can help staff to Cloud model include customer relationship maintenance. Cloud technology has thecompile customer ‘black’ or ‘watch’ lists and management and enterprise content potential to reduce the cost of these businessprofile risks ‘upstream.’ Combining technology management. Higher risk projects will involve processes and the IT that supports them by Previous | Next
    • Global Public Sector the way we see it A FRESH PERSPECTIVE SETTING THE CONTEXT PUBLIC SECTOR TRANSACTIONS LEVERAGING PRIVATE SECTOR EXPERIENCE SUMMARY HOME CONTACTdisaggregation, consolidation and sharing. • Increasing the flexibility of legacy systems services and a reduction in license costs forPublic sector agencies can enhance the and reducing the cost of introducing software because most Cloud software andtransactional and citizen-facing services (legislative) changes. platform solutions are sourced on a pay-of the banks by adopting Cloud. Using per-use basis. The concept also reduces the(private) Cloud technology to transform Cloud technology also has the potential to amount of infrastructure required because thisseparate transactional processes into a pan- make transactional services better and more too can be sourced from the Cloud, whichgovernment function is about: customized by improving communications means saving potential on IT maintenance with the citizens and other public sector capacity.• Streamlining the current application and agencies. Earlier we discussed how the BPO process landscape; and Shared Services allowed the public sector Cloud solutions ensure flexibility toward agencies to source and handle routine tasks changes in legislation, product portfolio and• Smooth migration, maintaining reliability jointly or ‘as a Service.’ The ‘as a Service’ political demands. The improved reuse of and consistency; concept of Cloud computing means that data, harmonization of processes through services, platforms and storage/infrastructure standardization, and the easier sharing of• Maintaining service levels within the same solutions are ordered, accessed and used over existing data ensure that fewer mistakes underlying process; the internet, eliminating the need for local are made. Massive cost reductions are also implementations, software management and anticipated on data entry, whilst improving• Moving towards virtualization, infrastructure. quality. consolidation and potential outsourcing; and Significant business benefits include reduced costs as a result of the virtualization of the Previous | Next
    • Global Public Sector the way we see itA FRESH PERSPECTIVE SETTING THE CONTEXT PUBLIC SECTOR TRANSACTIONS LEVERAGING PRIVATE SECTOR EXPERIENCE SUMMARY HOME CONTACTSummary Previous | Next
    • Global Public Sector the way we see it A FRESH PERSPECTIVE SETTING THE CONTEXT PUBLIC SECTOR TRANSACTIONS LEVERAGING PRIVATE SECTOR EXPERIENCE SUMMARY HOME CONTACTSummaryIn conclusion, the trend to source and/ in the developed and emerging countries. Although we do not believe that theor share business processes has been Since the public sector is facing fraud sectors are fully interchangeable, we doongoing since 2008, although the focus challenges similar to the private sector, feel that experiences can be transferred forhas shifted from pure cost savings to more leveraging new technologies to enhance mutual benefit. As a direct consequenceholistic business outcomes. Connected employee fraud detection and yield of the difficult fiscal situation, now andto this trend is the role shift by financial enhancement capabilities on urgent basis. in the foreseeable future, we believe thatservice providers, moving away from Finally, the promise of Cloud in terms of many public sector transactional servicedoing everything to more specialist roles. enhancing transactional service delivery is providers can benefit from private sectorWe foresee a similar evolution for the enormous. Private sector experience shows experiences. Capgemini has the experiencepublic sector delivery organizations, that customer relationship management and capabilities to help the public sectorcommissioning common processes and and enterprise content management has the agencies in their journey to enhance vitalbulk transactions ‘as a Service’ while policy most propensity for Cloud delivery. Public transactional service delivery, and makesetting and fraud detection remain at the sector organizations have a huge potential their services better, faster and cheaper.heart of the agency. to move their citizen interaction and transactional service to the Cloud, usingThe topic of Fraud and Yield Management ‘as a Service’ models for facilitating of costhas become more important than ever, both efficiency and specialization. Previous | Next
    • A FRESH PERSPECTIVE SETTING THE CONTEXT PUBLIC SECTOR TRANSACTIONS LEVERAGING PRIVATE SECTOR EXPERIENCE SUMMARY HOME ­About Capgemini ® With more than 120,000 A deeply multicultural organization, Capgemini people in 40 countries, has developed its own way of working, the Capgemini is one of the world’s foremost Collaborative Business ExperienceTM, and draws providers of consulting, technology and on Rightshore®, its worldwide delivery model. outsourcing services. The Group reported 2011 global revenues of EUR 9.7 billion. Learn more about us at Together with its clients, Capgemini creates www.capgemini.com and delivers business and technology solutions that fit their needs and drive the Rightshore® is a trademark belonging to Capgemini results they want.Contact our experts:Ian Prettyian.pretty@capgemini.comJan-Jaap Harkemajan-jaap.harkema@capgemini.comcapgemini.com/public Copyright © 2012 Capgemini. All rights reserved.