2009

Next Generation Warranty Systems James Taylor CEO, Decision Management Solutions

An Introduction I’m passionate about decision management I help companies boost business performance by improving key decisions – leveraging their expertise, data and existing systems I have 20 years experience in all aspects of software development and marketing including time as a VP at Fair Isaac, in PeopleSoft’s R&D and at Ernst & Young I speak and write frequently and you can find my blogs and articles at jtonedm.com ebizq.net/blogs/decision_management My company is DecisionManagementSolutions.com

I’m passionate about decision management

I help companies boost business performance by improving key decisions – leveraging their expertise, data and existing systems

I have 20 years experience in all aspects of software development and marketing including time as a VP at Fair Isaac, in PeopleSoft’s R&D and at Ernst & Young

I speak and write frequently and you can find my blogs and articles at

jtonedm.com

ebizq.net/blogs/decision_management

My company is DecisionManagementSolutions.com

Next Generation Warranty Systems Instant validation Auto-adjudication Pre-payment fraud detection Dynamic routing Automated recovery and accounting Precise reserving Plus IT resources freed up Data used to improve operations

Instant validation

Auto-adjudication

Pre-payment fraud detection

Dynamic routing

Automated recovery and accounting

Precise reserving

Plus

IT resources freed up

Data used to improve operations

Current Generation Warranty Systems Functionality Value Web-based front-end with hard-coded checks Lower data entry costs Workflow/Process Management with manual review and approvals Eliminates duplicate entry Integrates systems Warranty Claims analytics in the back office Understand fraud patterns Some integration with non-Warranty Systems 360° view of the customer

Limitations of Current Generation Warranty Systems Functionality Limitation Web-based front-end with hard-coded checks Limited scope, hard to change Every change incurs IT costs Workflow/Process Management with manual review and approvals Decision bottlenecks, delays More business, more staff Warranty Claims analytics in the back office No feedback loop Pay-and-chase fraud detection Some integration with non-Warranty Systems Inconsistent customer treatment

Warranty Claims Case Study “Before” Process and data entry automated But ensuring code was up to date was time-consuming and costly Programmers didn’t understand the complex warranty process resulting in delays, errors and additional costs Low rates of auto-adjudication – just 60% When claims were rejected, system provided a minimal explanation

Process and data entry automated

But ensuring code was up to date was time-consuming and costly

Programmers didn’t understand the complex warranty process resulting in delays, errors and additional costs

Low rates of auto-adjudication – just 60%

When claims were rejected, system provided a minimal explanation

Next Generation Warranty Systems Next generation warranty systems focus on the decisions in the warranty chain, recognize these decisions as reusable assets and make them widely available Results: Warranty experience integrated into the whole product life cycle Company’s know-how and expertise brought to bear at every step Closed loop for continuous improvement

Next generation warranty systems focus on the decisions in the warranty chain, recognize these decisions as reusable assets and make them widely available

Results:

Warranty experience integrated into the whole product life cycle

Company’s know-how and expertise brought to bear at every step

Closed loop for continuous improvement

Building Next Generation Warranty Systems

Decision Discovery: Warranty Decision Points Is Claim Valid? Is Claim Approved? Define Recovery Accounting & Reserving Risk of Fraud? Manual Claim Review Create Claim Pay Claim Invoice Claim Update Accounts Route Claim Allow Part Return? Define Service Response Report Problem Field Service Yes No No Yes Yes No Reject Claim Return Part Yes No

Decision Services: Agile, Consistent, Compliant

Decision Services: Business Agility Smart (Enough) Systems, Prentice Hall June 2007. Fig 2.11 Business users Today’s Systems Next Generation Warranty Systems Programmers Frequent code changes Warranty System Other Systems Frequent business changes Infrequent code changes Decision Service Warranty System Other Systems Programmers Business Changes Business users so r t ed=1: f or I y = I–I= y > 11; y – I t p r i n t ( y – Id ,y) : if [1a r r a y I y] < 1a r r a y I y -1]) t holder - [a r r a y[ y -1] | Ia r r a yl y -1]) = 1 [y]) 1 a r r a y = holder so r t ed=1: f or I y = I–I= y > 11; y – I t p r i n t ( y – Id ,y) : if [1a r r a y I y] < 1a r r a y I y -1]) t holder - [a r r a y[ y -1] | Ia r r a yl y -1]) = 1 [y]) 1 a r r a y = holder

Decision Analysis: A Closed Loop

Warranty Claims Case Study “After” Decision services handle critical decisions Validation, Adjudication, Recovery, Accounting Business rules constantly and rapidly updated By warranty administrators High rate of auto adjudication 90% and rising Integrated risk models Detect fraud before paying claims Decisions available to other systems Like Marketing Campaign Management IT costs reduced IT resources better utilized

Decision services handle critical decisions

Validation, Adjudication, Recovery, Accounting

Business rules constantly and rapidly updated

By warranty administrators

High rate of auto adjudication

90% and rising

Integrated risk models

Detect fraud before paying claims

Decisions available to other systems

Like Marketing Campaign Management

IT costs reduced

IT resources better utilized

Next Generation Adjudication Decision Service Apply business rules Improve the rules Predict claims risk Decision Analysis Web http://www.f Mail Call Center Service Coy.

Decision Service

Apply business rules

Improve the rules

Predict claims risk

Decision Analysis

Leading Companies, Impressive Results Decision Management delivers impressive results in companies with challenges like yours E.g. Banking, Insurance, Telco, Retail Well known adopters include:

Decision Management delivers impressive results in companies with challenges like yours

E.g. Banking, Insurance, Telco, Retail

Well known adopters include:

Uses Outside Warranty Recommendations Next Best Action Underwriting Fraud Detection Eligibility Scheduling Accounting Allocation Billing Dynamic Pricing

Recommendations

Next Best Action

Underwriting

Fraud Detection

Eligibility

Scheduling

Accounting Allocation

Billing

Dynamic Pricing

Next Generation Warranty Results 90% auto-adjudication and rising Reduced claims backlog by up to 80% Reduced adjudication turnaround by 85% Increased supplier recovery up to 100% $5M of fraud saved in 5 months 100% automation of recovery, accounting

90% auto-adjudication and rising

Reduced claims backlog by up to 80%

Reduced adjudication turnaround by 85%

Increased supplier recovery up to 100%

$5M of fraud saved in 5 months

100% automation of recovery, accounting

Delivering Warranty Strategy “ The essence of strategy is choosing to perform activities differently than rivals do.” Dr. Michael Porter, Harvard Business School

“ The essence of strategy is choosing to perform activities differently than rivals do.”

Dr. Michael Porter, Harvard Business School

For More Information Read the White Paper submitted to WCM Read the Warranty section of my blog: jtonedm.com/tag/warranty Download “Implementing Next Generation Warranty Systems” from my site: decisonmanagementsolutions.com/warranty Email me: [email_address] Thank You

Read the White Paper submitted to WCM

Read the Warranty section of my blog: jtonedm.com/tag/warranty

Download “Implementing Next Generation Warranty Systems” from my site: decisonmanagementsolutions.com/warranty

Email me: [email_address]