Whatever be the size of your business, the most serious dent to your reputation can come from a single highly motivated individual armed with a $100 laptop and an internet connection.
Digital world has opened up a situation where businesses are constantly exposed to threats to their reputation. And the opposition may not be a competitor, or another business; a disgruntled customer, a sacked employee or even an imposter (see my earlier blog “Do you have a digital strategy in place?) , armed with a computer and an internet connection can cause serious dent to your business. Internet, and the profusion of digital forum has dramatically changed the rules of engagement. It has levelled the playing field between large businesses and single individual. What is required is the dedication and perseverance to post disparaging and (often) damaging contents about a business on key sites, stroking the flame the keeping it alive for a minimum time for it to start raging. And business leaders do not have any advance warning or time to reflect!
If your company comes into disrepute for any reason, you can expect
• A media grilling
• Negative public opinion that is hard to reverse
• Punitive fines, if applicable
• Unwanted attention from pressure groups
• Disastrous sales
• Reduced profits and revenue.
In this economic climate, can you afford it? How can you be prepared and be able to identify and kill these sparks early? What new tools or techniques do you need in your business to counter these sniper attacks?
The permanence of web comments makes the internet a challenging place for corporate reputations. There was a time when bad news that surfaced in traditional media might be expected to blow over in a couple of days. These days, however, just about every google search for a business’ name can dredge up gripes from years past. This is a good reason for communicators to take control of their online destiny and ensure they are in driving seat when it comes to steering their corporate reputation.
With a meaningful digital strategy in place, it can go a long way to keep you prepared for such situations. How does it work?
A digital strategy helps you think through the different future scenarios/events that your business can be exposed to. Let’s take the example of insurance industry. The industry has been at the receiving end of criticisms, since the onset of economic crisis. Websites, discussion forum, tweets are full of criticism on products, processes and people in the industry. Be it remunerations, bonuses, measly returns or unsettled claims, people get a (almost) perverse delight in posting criticisms on the digital forum. What is conspicuous is an almost lack of response of any kind from the companies. I am not trying to defend the insurance companies. But I cannot believe that they do not have a point of view which they would not like to share. And sometimes the insurance companies do share their points of view. But by the time, the response is written, re-written, reviewed and whetted by compliance, legal, marketing, communications etc, the number of ‘re-tweets’, post-shares and comments have far exceeded the response. The response is often apologetic, light and lost in the storm of responses.
In the current landscape you cannot afford to be reactive. Most often, you are aware of future events/triggers which have potential disruptive impact on your business. You need to have canned responses ready for it. Or, better still; offset the negative response by publishing your view point ahead of the reaction. Let’s take a hypothetical case. An insurance company has been imposed fines by a regulator for a breach. The business is aware of the fine days before it is made public by the regulator. The business can do well by identifying potential scenarios (read responses) to the news, the potential sites where the reaction would be published (for example, trade journals, blog sites of industry commentators, financial discussion forum and not to forget, their own Intranet). The marketing/PR/Strategy depart has pretty good idea of the extent of criticism that the news would generate. Armed with this insight, the business could prepare ‘wire frame’ responses to the (potential) reaction which could be quickly customised and posted, as the reactions are being aired. Or, even better, pre-empt the reaction by breaking the news themselves with details on the steps the company is taking to ensure that the breach is not repeated in future!
Planning ahead helps – this is a well known fact. Building and nurturing a mechanism to plan for such situations will relieve the business of herding the stakeholders into their war room every time there is a crisis. The mechanism to plan for such scenarios is your digital strategy team. It is a small group drawn from various key functions who understand the potential impact of various digital forum, and who are empowered to issue responses as the reactions are posted, or as an event unfolds! What helps them to perform this role is your digital strategy.
Today having a meaningful digital strategy is not less important than a business strategy. Digital space is emerging as the de facto place for sharing ideas and opinions. And, shaping them as well. In a recent survey conducted by @equalman production suggests that 78% of the consumers trust peer recommendations as against 14% who trust adverts! The various forum give you a perfect opportunity to be in touch with the popular discussions on your products and services, engage with the participants and help shape the opinion. If 78% of the users trust a peer review, there cannot be a better business case of having a presence on the digital space and engaging with them.
Your presence on the digital space also ensures that any disparaging comments/observations made are picked up and dealt with swiftly. A demographic analysis of the users can reveal wealth of opportunities for the business participating on the digital space. Analytics and insight forms a separate topic itself, which (hopefully) I will cover in a later blog.
In this world of mega-connectivity, businesses need to rethink their marketing/communication strategy to engage the customers and help shape opinion and nudge them into a buying scenario. The population is willing to listen and form an opinion on your products and services. Have you been engaging with them recently?
Thursday, 5 May 2011
Tuesday, 3 May 2011
Building Meaningful Digital Strategy
Issue: If consumers are spending 30% of their time online, why does marketing department spend only 5% of their budgets online?
We are amidst the second wave of excitement around digital. In the ‘90s, there was a lot of excitement around the new way of selling products and services to the customers. The euphoria was short-lived. There was nothing wrong with the channel – what we failed to realise that it takes a long time for habits to change.
Over the decade, as Internet grew, our target customers have become more active online, embracing all manner of new digital media habits—from social networks to smart phones—and they are continuing to spend more time and money online despite the economic meltdown. Unfortunately, digital marketing has been largely unable to benefit from this shift. The reason is simple: People no longer need what we offer to them. We continue to dish out what we had created in the ‘90s (or micro-improved variants of the same content) and expect our consumers to lap it up.
What gets passed around as Digital Way of engagement - spam emails, banners, commercials, pop-ups – no longer catches the fancy of customers. In fact, they are actively taking steps to get rid of them. Today, customers actively take part in selection of the content, presentation and audience.
And this is not a passing fad. Digital connectivity is here to stay. It will radically change the way a business engage with the world (consisting of customers, prospects, defectors and critics). As the ‘digital way of life’ sinks in people’s psyche, it is important that businesses recognise this trend and build strategies for it.
So what is a meaningful Digital Strategy?
Digital Strategy is NOT about Social Media. Social Media is – at best - a part of digital strategy. Neither are mailers, banners or pop-up. A mere presence on the web – be it website, or a presence on the social networks – does not constitute a digital strategy. There exists a wide divergence on the exact definition of Digital strategy. For the purpose of this blog, I have used a generic definition of digital strategy as a process of specifying an organisation's vision, goals, opportunities and initiatives in order to maximise the business benefits digital investments and efforts provide to the organisation. These can includes customer intelligence, collaboration, new product/market exploration, sales and service optimisation, enterprise technology architectures and processes, innovation and governance using marketing and customer-focused efforts such as web sites, mobile, eCommerce, social, site and search engine optimization, and advertising.
The profusion of social media sites, fuelled by easily accessible tools for content generation has put customers in the centre-stage. Connected customers have become ‘prosumers’ (borrowing a term from Alvin Toffler), producing and consuming information as they surf in the digital space. They actively seek to engage with the businesses for a variety of needs. They seek information, they provide feedback and are willing to be consulted. Being empowered, and equipped with the tools, they definitely not appreciate being ignored! If they have a point of view, they post it, share it and invite comments on it. Be it a product, service, provider or an event. They can be cryptic and post their views in less than 140 words (on Twitter), and/or provide details in greater length (on a blog), and/or provide visual evidences (Flicker) or even videos (YouTube). And the list does not end there! If your website does not provide enough information on your products/services or if they do not agree with your view, they can leave comments on your website using sidewiki!
This empowerment of the prosumer poses a great risk and an opportunity for businesses. The risks are pretty obvious. A serious (and malicious) campaign against your business can be launched with little effort and, if directed carefully, can cause serious damage to your brand. After the explosion of BP’s Deepwater Horizon drilling platform, for example, Leroy Stick (an alias) began publishing the tweets of a totally made-up representative of a similarly bogus BP global public relations division. While crude oil spilled into the Gulf of Mexico, devastating the regional ecology and economy, the satirical Twitterer (@BPGlobalPR) tweeted about the division’s lunch menu and other inane matters. Tens of thousands followed his updates—far more than the number who followed the real BP Twitter account. Through this low-cost effort, Stick helped keep Americans’ rage boiling as BP scrambled to plug the well and restore faith in its brand.
On the other hand, a well-thought strategy to engage with the prosumers on digital space, can provide new business opportunities, insights and opportunities to collaborate more actively with your customers and prospects alike. And that too, at a fraction of cost.
The prosumer seeks connectivity. The prosumer is looking at ways to engage with you. So why are businesses shying away from this opportunity to work closely with their customers and prospects. For one, they have little idea on the composition of the prosumers – who are they, what is their profile, are they my potential customers or just ‘teenagers wasting their time on the Net’. Second, businesses are (most often) unaware of what is being talked about them. Third, they are unclear how to channelize the prosumers into meaningful conversation, and for what purpose.
A meaningful digital strategy provides answers to precisely these questions, provides insight to the popular sentiments on your business and helps you build activities to enable you to engage with your market, build meaningful dialogue and prepares you to counter any negative sentiments arising out of internal or external factors.
Unfortunately, you cannot buy digital strategy off the shelf! Your digital strategy should reflect the uniqueness of your business. It should be based on a careful deliberation of the face that you want to present to the world, how you want to be perceived, the scenarios that you foresee and your typical response to the scenarios. These gets built and refined over time, as your digital engagement increases. Your digital strategy may get ‘dictated’ by the prosumers – they may disagree with your digital persona creating a situation for you to ‘think through’ the strategy again.
Scary as it may sound, building a digital strategy is as much simple (or complex) as thinking through your business/marketing strategy. The difference being, you work with ‘real’ insights gathered from the digital world, and the response to your strategy is far more quicker than any other strategy.
Before I end, one word of caution. Digital strategy is a one way street. You cannot decide to abandon it half-way. Once you have built your presence on the digital space and have decided to engage with the world, back-tracking can cause you more damage than before. In all my engagements, I do not fail to emphasise this over and over again. Before you start your journey, you need to be completely sure that this is the way forward, as it will radically change the way you engage with your customers and prospects going forward.
We are amidst the second wave of excitement around digital. In the ‘90s, there was a lot of excitement around the new way of selling products and services to the customers. The euphoria was short-lived. There was nothing wrong with the channel – what we failed to realise that it takes a long time for habits to change.
Over the decade, as Internet grew, our target customers have become more active online, embracing all manner of new digital media habits—from social networks to smart phones—and they are continuing to spend more time and money online despite the economic meltdown. Unfortunately, digital marketing has been largely unable to benefit from this shift. The reason is simple: People no longer need what we offer to them. We continue to dish out what we had created in the ‘90s (or micro-improved variants of the same content) and expect our consumers to lap it up.
What gets passed around as Digital Way of engagement - spam emails, banners, commercials, pop-ups – no longer catches the fancy of customers. In fact, they are actively taking steps to get rid of them. Today, customers actively take part in selection of the content, presentation and audience.
And this is not a passing fad. Digital connectivity is here to stay. It will radically change the way a business engage with the world (consisting of customers, prospects, defectors and critics). As the ‘digital way of life’ sinks in people’s psyche, it is important that businesses recognise this trend and build strategies for it.
So what is a meaningful Digital Strategy?
Digital Strategy is NOT about Social Media. Social Media is – at best - a part of digital strategy. Neither are mailers, banners or pop-up. A mere presence on the web – be it website, or a presence on the social networks – does not constitute a digital strategy. There exists a wide divergence on the exact definition of Digital strategy. For the purpose of this blog, I have used a generic definition of digital strategy as a process of specifying an organisation's vision, goals, opportunities and initiatives in order to maximise the business benefits digital investments and efforts provide to the organisation. These can includes customer intelligence, collaboration, new product/market exploration, sales and service optimisation, enterprise technology architectures and processes, innovation and governance using marketing and customer-focused efforts such as web sites, mobile, eCommerce, social, site and search engine optimization, and advertising.
The profusion of social media sites, fuelled by easily accessible tools for content generation has put customers in the centre-stage. Connected customers have become ‘prosumers’ (borrowing a term from Alvin Toffler), producing and consuming information as they surf in the digital space. They actively seek to engage with the businesses for a variety of needs. They seek information, they provide feedback and are willing to be consulted. Being empowered, and equipped with the tools, they definitely not appreciate being ignored! If they have a point of view, they post it, share it and invite comments on it. Be it a product, service, provider or an event. They can be cryptic and post their views in less than 140 words (on Twitter), and/or provide details in greater length (on a blog), and/or provide visual evidences (Flicker) or even videos (YouTube). And the list does not end there! If your website does not provide enough information on your products/services or if they do not agree with your view, they can leave comments on your website using sidewiki!
This empowerment of the prosumer poses a great risk and an opportunity for businesses. The risks are pretty obvious. A serious (and malicious) campaign against your business can be launched with little effort and, if directed carefully, can cause serious damage to your brand. After the explosion of BP’s Deepwater Horizon drilling platform, for example, Leroy Stick (an alias) began publishing the tweets of a totally made-up representative of a similarly bogus BP global public relations division. While crude oil spilled into the Gulf of Mexico, devastating the regional ecology and economy, the satirical Twitterer (@BPGlobalPR) tweeted about the division’s lunch menu and other inane matters. Tens of thousands followed his updates—far more than the number who followed the real BP Twitter account. Through this low-cost effort, Stick helped keep Americans’ rage boiling as BP scrambled to plug the well and restore faith in its brand.
On the other hand, a well-thought strategy to engage with the prosumers on digital space, can provide new business opportunities, insights and opportunities to collaborate more actively with your customers and prospects alike. And that too, at a fraction of cost.
The prosumer seeks connectivity. The prosumer is looking at ways to engage with you. So why are businesses shying away from this opportunity to work closely with their customers and prospects. For one, they have little idea on the composition of the prosumers – who are they, what is their profile, are they my potential customers or just ‘teenagers wasting their time on the Net’. Second, businesses are (most often) unaware of what is being talked about them. Third, they are unclear how to channelize the prosumers into meaningful conversation, and for what purpose.
A meaningful digital strategy provides answers to precisely these questions, provides insight to the popular sentiments on your business and helps you build activities to enable you to engage with your market, build meaningful dialogue and prepares you to counter any negative sentiments arising out of internal or external factors.
Unfortunately, you cannot buy digital strategy off the shelf! Your digital strategy should reflect the uniqueness of your business. It should be based on a careful deliberation of the face that you want to present to the world, how you want to be perceived, the scenarios that you foresee and your typical response to the scenarios. These gets built and refined over time, as your digital engagement increases. Your digital strategy may get ‘dictated’ by the prosumers – they may disagree with your digital persona creating a situation for you to ‘think through’ the strategy again.
Scary as it may sound, building a digital strategy is as much simple (or complex) as thinking through your business/marketing strategy. The difference being, you work with ‘real’ insights gathered from the digital world, and the response to your strategy is far more quicker than any other strategy.
Before I end, one word of caution. Digital strategy is a one way street. You cannot decide to abandon it half-way. Once you have built your presence on the digital space and have decided to engage with the world, back-tracking can cause you more damage than before. In all my engagements, I do not fail to emphasise this over and over again. Before you start your journey, you need to be completely sure that this is the way forward, as it will radically change the way you engage with your customers and prospects going forward.
Monday, 29 November 2010
Do you have a digital strategy in place?
Odds are that a small-scale antagonist, armed with an internet connection and a $100 digital camera can pose serious threat to your business. Are you prepared for this?
After the BP disaster in Gulf of Mexico, a satirical Twitter (@BPGlobalPR) attracted tens of thousands of followers – more than the official BP Twitter account. @BPGlobalPR (mis)fed totally made-up stories on BP – from (supposedly) PR Division’s lunch menu to a lot of inane matters. @BPGlobalBP, through his efforts helped keep Americans’ rage boiling while BP was scrambling to cap the leaking well and salvage its reputation!
The rules of engagement have changed. Irrespective of your size, your strongest and most vicious critic can be a single disgruntled customer, an employee or even a self-styled crusader who has decided to launch his tirade against you. While some of the criticism may be based on truth, often a rumour or hearsay is enough to let loose a tirade and, fuelled by ‘page-hits’ continue to build the story. The most unfortunate part of the story is that the popular belief in such stories is inversely proportional to the size of the company/ public stature of the person against whom it is written!
Corporations have since long ignored the power of internet. The Internet has levelled the playing field between the large corporations and individual activists. This is not to say that traditional PR tactics are irrelevant. PR, media, advertisement still continue to influence a vast majority. However it is not enough! Companies need to integrate social media as a core building block in their strategy.
Social media does not have only a negative influence. The new generation – born and brought up in digital age – use it as a primary source of information and decision making. The traditional funnel metaphor has given way to customer decision journeys. Decisions are largely being influenced by social networking sites, product review blogs and other such forum. Another big leveller is You Tube which contains more than 50000 videos on product reviews ranging from cars, cosmetics, software, guns, financial products, mobiles.... you name it, it’s been reviewed on You Tube.
The proliferation of social media means that companies need to change the rules how they engage with their internal and external customers. You need to understand the demographics of the people who access these sites and tailor your message to help in decision making. Quite a few of us would recall ‘Second Life’ phenomenon and the advertising blitz of real-life (or first life?) companies on ‘Second Life’! It is interesting to note that most adverts on the Second-life were almost the same that you saw in real life.
Digital Strategy
So what constitutes a digital strategy for your organisation? Or better still, what is a digital strategy? Wikipedia defines Digital strategy is the process of specifying an organization's vision, goals, opportunities and initiatives in order to maximize the business benefits digital investments and efforts provide to the organization. These can range from an enterprise focus, which considers the broader opportunities and risks that digital potentially creates (e.g., changes in the publishing industry) and often includes customer intelligence, collaboration, new product/market exploration, sales and service optimization, enterprise technology architectures and processes, innovation and governance; to more marketing and customer-focused efforts such as web sites, mobile, eCommerce, social, site and search engine optimization, and advertising. Phew! Simply put, the extension of corporate strategy to include and harness the power of digital media is a simple definition of your digital strategy.
To build your digital strategy you need to identify the specific opportunities (or challenges) that digital media imposes on your business, develop a vision on how to exploit digital media to address those opportunities/challenges and prioritise a set of initiatives to deliver them. I have come across some companies who have ‘done’ their digital strategy! As with their corporate strategy the digital strategy is ever-changing. You need to constantly monitor your digital strategy and improvise it.
Digital involvement is viral – it can go extremely well for your business and create an altogether different level of branding (heard of Blendtech? If not search them on YouTube. Remember to see the page views for each of their posts!) or can go horribly wrong. If you have got your digital strategy right you are prepared for the latter!
Monday, 25 October 2010
Solvency II – Does BPM hold the key to painless compliance?
Solvency II has forced insurance companies to relook at the business in a holistic manner – an end-to-end value chain consisting of internal and external business processes comprising of risk, finance, policy admin through to sales and distribution. No longer can executives afford to think of their functions as ‘islands’. There is an urgent need to stitch the disconnected systems, processes and stakeholders in a single ‘eco-system’.
Insurers since long have been having a flirtatious relationship with Business Process Management (BPM) tools. I guess, the time is ripe for BPM tools to shine and rescue the insurance companies from their plight.
So, how can BPM help insurance companies meet their Solvency II compliance?
Solvency II, in a nutshell, is about creating transparent processes across the organisation, which would help executives to get a pan-enterprise view of risk. The three pillars are built around identification, quantification and reporting of the risk to the regulators. In order to achieve this, insurers are building/revising their risk management frameworks. A Risk Management Framework (RMF) in a nutshell is an integrated view of risk management including consistent processes for analysing, evaluating, mitigating and communicating risks. RMF will enable an insurer to bring together a risk-based procedure, governance structure and integrated methodologies where the relationships between processes, risks, controls and regulations are made more visible.
BPM tools can help companies meet this challenge effectively. The formal processes, once approved by the regulators can be built using BPM and deployed in the organisation. Workflows are best placed to build governance structures to manage risks with built in triggers to escalate to appropriate roles in the organisation, should the need arise. Reporting (Pillar 3) can be delivered with greater certainty using the dashboards.
Solvency II is not ‘one-off’ compliance. CEIOPS expects insurance organisation to embed a culture of risk within the organisation, using Internal/Standard Model and Use tests to validate their risk management frameworks and constantly improvise the results for better quantification of risks. Building a ‘one-off’ compliance for Solvency II would entail repeated enhancements to the systems and processes. As against this, BPM tools provide the flexibility to dynamically change the processes with minimal costs and minimal down-time.
Documentation is another area of concern for insurers and regulators. CEIOPS has published guidance on this topic and insurance companies are expected to maintain comprehensive documentation on the processes with detailed explanation. While companies have been exploring Sharepoint and similar tools for this, I strongly recommend using the document management capabilities in BPM for this purpose. The document management capabilities in a BPM tools provides for scenarios where documents need to be accessed by a large group of people who need to collaborate on them. Another point in favour of BPM!
Many insurance companies have successfully deployed BPM in some functions (or majority of functions) in their organisation. It is the perfect time to extend the deployment to cover critical areas which would also help them comply to Solvency II.
Insurers since long have been having a flirtatious relationship with Business Process Management (BPM) tools. I guess, the time is ripe for BPM tools to shine and rescue the insurance companies from their plight.
So, how can BPM help insurance companies meet their Solvency II compliance?
Solvency II, in a nutshell, is about creating transparent processes across the organisation, which would help executives to get a pan-enterprise view of risk. The three pillars are built around identification, quantification and reporting of the risk to the regulators. In order to achieve this, insurers are building/revising their risk management frameworks. A Risk Management Framework (RMF) in a nutshell is an integrated view of risk management including consistent processes for analysing, evaluating, mitigating and communicating risks. RMF will enable an insurer to bring together a risk-based procedure, governance structure and integrated methodologies where the relationships between processes, risks, controls and regulations are made more visible.
BPM tools can help companies meet this challenge effectively. The formal processes, once approved by the regulators can be built using BPM and deployed in the organisation. Workflows are best placed to build governance structures to manage risks with built in triggers to escalate to appropriate roles in the organisation, should the need arise. Reporting (Pillar 3) can be delivered with greater certainty using the dashboards.
Solvency II is not ‘one-off’ compliance. CEIOPS expects insurance organisation to embed a culture of risk within the organisation, using Internal/Standard Model and Use tests to validate their risk management frameworks and constantly improvise the results for better quantification of risks. Building a ‘one-off’ compliance for Solvency II would entail repeated enhancements to the systems and processes. As against this, BPM tools provide the flexibility to dynamically change the processes with minimal costs and minimal down-time.
Documentation is another area of concern for insurers and regulators. CEIOPS has published guidance on this topic and insurance companies are expected to maintain comprehensive documentation on the processes with detailed explanation. While companies have been exploring Sharepoint and similar tools for this, I strongly recommend using the document management capabilities in BPM for this purpose. The document management capabilities in a BPM tools provides for scenarios where documents need to be accessed by a large group of people who need to collaborate on them. Another point in favour of BPM!
Many insurance companies have successfully deployed BPM in some functions (or majority of functions) in their organisation. It is the perfect time to extend the deployment to cover critical areas which would also help them comply to Solvency II.
Mobile BPM - Why do we have to wait so long for it?
Let’s face it. Mobile applications are here to stay. And they mean business! Gone are the days when iPhone Apps or Google Apps were for fun, or social networking. Increasingly, companies are building apps meant for serious business, designed to help their work-force and customers alike to improve their touch-point experience with the business.
Mobile apps face a serious challenge in being ‘too restrictive’. To quote Medhat Galal, If Business Process Management (BPM) is going to do for process what Google did for information, BPM must be mobile and always on. A good example is UPS or FedEx who have built their own ‘mobile BPM’ applications to meet their customers’ demands. Why can’t other companies do the same. The personnel working in the field only carries local information on his device (Laptop, Blackberry or even IPad). To a large extent they still remain locked out from the data which could help them access the most up to date information and close the meeting/sale successfully. “I will get back to you”, has a history of missed opportunities – ask any salesperson!
So what has prevented Mobile BPM to develop and be available for adoption. For one, the differing standards – Apple, versus Android versus Symbian versus RIM versus Windows Mobile versus.... has been a major barrier to adoption. Very recently Cordys has shown previews of mobile BPM for Google Apps that supports Smartphone. The smartphone support is enabled via a new Mobile Apps Composer offering, which allows users to design business processes for their smartphone. A good place to start building Mobile apps would be typically administrative and HR processes as they involve the review of limited amount of data that can be easily handled by mobiles. Imagine a senior executive logging on to the enterprise applications while waiting in an airport terminal or commuting to a meeting, and approving all the pending requests, leaves etc!!! Such a saving on time!
I believe the time is ripe for BPM vendors to take the step towards Mobile BPM. I hope to see that happening in the next couple of years!
Mobile apps face a serious challenge in being ‘too restrictive’. To quote Medhat Galal, If Business Process Management (BPM) is going to do for process what Google did for information, BPM must be mobile and always on. A good example is UPS or FedEx who have built their own ‘mobile BPM’ applications to meet their customers’ demands. Why can’t other companies do the same. The personnel working in the field only carries local information on his device (Laptop, Blackberry or even IPad). To a large extent they still remain locked out from the data which could help them access the most up to date information and close the meeting/sale successfully. “I will get back to you”, has a history of missed opportunities – ask any salesperson!
So what has prevented Mobile BPM to develop and be available for adoption. For one, the differing standards – Apple, versus Android versus Symbian versus RIM versus Windows Mobile versus.... has been a major barrier to adoption. Very recently Cordys has shown previews of mobile BPM for Google Apps that supports Smartphone. The smartphone support is enabled via a new Mobile Apps Composer offering, which allows users to design business processes for their smartphone. A good place to start building Mobile apps would be typically administrative and HR processes as they involve the review of limited amount of data that can be easily handled by mobiles. Imagine a senior executive logging on to the enterprise applications while waiting in an airport terminal or commuting to a meeting, and approving all the pending requests, leaves etc!!! Such a saving on time!
I believe the time is ripe for BPM vendors to take the step towards Mobile BPM. I hope to see that happening in the next couple of years!
Tuesday, 12 October 2010
Have you analysed the business implications of Solvency II?
In a recently published report by Morgan Stanley and Oliver Wyman, the impact on Solvency II on an insurance organisation becomes increasingly clear.
The report uses their proprietary QIS5 model to analyse the impact of Solvency II on four fictitious companies – a life company, a non-life, a composite and a reinsurer. The key findings were:
The solvency ratios for the non-life oriented insurers show sharp declines under QIS 5;
Reinsurers are likely to see a major decline in reported solvency ratio, but demand for reinsurance should increase;
Being one of the largest regulatory programme till date, it is important to view Solvency II as a major catalyst for changing the traditional business models on insurance companies. An industry beset by declining investment returns, inefficient processes and legacy IT systems, need major overall in the way they do business in the future. The report rightly points out that the pace of strategic change will dramatically improve in the Solvency II world with the transparency brought about by the regulation. However at the same time, there exists a risk of the European insurers’ competitive advantage threatened by their ‘non-Solvency II’ competitors across the Atlantic!
Reinsurers are likely to see a major decline in reported solvency ratio, but demand for reinsurance should increase;
- For life, the major impact is for participating (with-profit) policies;
- The majority of the industry's capital requirement would come from a combination of market risk and participating contracts;
- Diversification benefits will also be a key driver of the Solvency II capital requirements; and
- European insurers may become competitively challenged in markets with "non-Solvency II equivalent" regimes.
Wednesday, 6 October 2010
Managing Solvency II Programme: There’s more to it than a RAID!
Solvency II is by far the largest finance change programme undertaken by insurers in recent years. And, probably the most complex till date. But the complexity does not end there. Given the nature of change involved in delivering Solvency II and the timelines, the Solvency II Programme Director finds himself at loggerheads with other Business As Usual (BAU) projects and finance projects managers. An organisation cannot afford to wait for Solvency II to deliver compliance before it can initiate other changes – most changes need to happen simultaneously! And often, the deliverables are at cross purposes to each other.
The finance teams of UK insurers are grappling with some key changes in their current operating model – IFRS, MCEV proposed changes around reporting; implementation of TAS standards for actuarial reporting to name a few. These changes are directly impacting the deliverables of Solvency II workstream. Unless the proposed changes by the respective teams are discussed and agreed, insurance companies will waste significant time doubling the deliverables at the best case, or undoing previous deliverables at the worst.
The Solvency II programme suffers from an inherent weakness of not being able to define the exact deliverables for each of their work stream, as the requirements are still emerging. Two weeks ago, CEIOPS has delivered another set of documentation which are currently being analysed for impact by the actuaries. This ambiguity is of no great help to either the Solvency II Programme Director or the other finance change directors! The BAU functionaries have to perform their day-to-day role and they cannot wait indefinitely for Solvency II.
So how does one go about efficiently managing the change portfolio within finance?
My experience suggests developing an Impact Management Framework for this purpose. The framework is a simple tool to identify the current the future ‘conflicts’, map the conflicts and the overlapping areas, broker a possible mitigation plan and continually assess the tool and update it to the conclusion of the impact / dependency.
Impact Management Framework for Solvency II
Given the nature of Solvency II deliverables, it is potentially impacted by, and, in turn could impact a number of BAU functions/projects in an organisation. The proposed framework is a methodology to identify and manage the impacts. The framework is shown in a diagram below.
The framework consists of five steps:
Step 1: Identify
Identify a list of all current and future projects in the organisation. A good starting point is the Change Board or Portfolio Governance function which has a most up-to-date list of the projects. It is useful to validate the list with key functions such as IT, Business Change to ensure that the list is complete. The change function also has a list of future projects which have been approved.
Step 2: Investigate
Typically the starting list will be fairly long. It is not unusual to have more than 100 projects on the initial list. Use a first filter to eliminate those projects which has no potential impact on Solvency II. For example, system upgrades, site enhancements, version upgrades, changes in client facing documentations, changes impacting distributor commissions. Having put the list through the initial filter will give you a manageable list to begin.
Step 3: Assess
For the shortlisted project, investigate the scope of the project, the products/processes/systems impacted to assess if they have interdependence with Solvency II. This is the second filter. During this stage, I do an initial investigation, followed by a quick conversation with the Project Lead to validate my understanding.
At the end of Step 2, you will have a definite list of projects which have potential interdependence on Solvency II.
Step 4: Plan
During this stage, identify the exact areas of overlap between the two projects. The areas could be one of more of the following:
1. Impacting product valuations
2. Impacting financial reporting
3. Impacting financial processes
4. Modifying risk categories
5. Modelling changes
6. Changes to finance data mart
The list above is not exhaustive. You will need to modify the above list based on the functional organisation and the prevalent project life cycle in your organisation.
For the external projects (i.e., those other than solvency II), identify the areas of overlap, their delivery time line and the resource utilisation. The delivery timeline needs to be compared with that of the relevant work packet of Solvency II programme. The comparison should result in a mitigation plan with defined activities at pre-defined time to ensure that the interdependencies are tracked. Given the evolving requirements of Solvency II, a typical mitigation plan can be to reassess the interdependence. For those work packets within Solvency II where the requirements are clear, a mitigation plan can be picking up relevant deliverables of external project and including it within Solvency II deliveries.
Step 5: Mitigation
This step refers to activities in the future where Solvency II work packet manager and the external project manager need to re-assess the identified interdependencies. The mitigation plan should be included in the main Solvency II programme Project Plan to ensure their monitoring.
I have found it a good practice to be in regular contact with the change board to ensure that new projects are brought to my attention immediately. It is a relatively simple task to communicate the potential dependencies early in an external project’s plan, than doing so at a later date.
The list of dependencies does not end here. Solvency II programme need to be cognizant about the forthcoming papers from the European Regulator, resource availability among a host of potential dependencies. I will cover them in a later blog.
The finance teams of UK insurers are grappling with some key changes in their current operating model – IFRS, MCEV proposed changes around reporting; implementation of TAS standards for actuarial reporting to name a few. These changes are directly impacting the deliverables of Solvency II workstream. Unless the proposed changes by the respective teams are discussed and agreed, insurance companies will waste significant time doubling the deliverables at the best case, or undoing previous deliverables at the worst.
The Solvency II programme suffers from an inherent weakness of not being able to define the exact deliverables for each of their work stream, as the requirements are still emerging. Two weeks ago, CEIOPS has delivered another set of documentation which are currently being analysed for impact by the actuaries. This ambiguity is of no great help to either the Solvency II Programme Director or the other finance change directors! The BAU functionaries have to perform their day-to-day role and they cannot wait indefinitely for Solvency II.
So how does one go about efficiently managing the change portfolio within finance?
My experience suggests developing an Impact Management Framework for this purpose. The framework is a simple tool to identify the current the future ‘conflicts’, map the conflicts and the overlapping areas, broker a possible mitigation plan and continually assess the tool and update it to the conclusion of the impact / dependency.
Impact Management Framework for Solvency II
Given the nature of Solvency II deliverables, it is potentially impacted by, and, in turn could impact a number of BAU functions/projects in an organisation. The proposed framework is a methodology to identify and manage the impacts. The framework is shown in a diagram below.
The framework consists of five steps:
Step 1: Identify
Identify a list of all current and future projects in the organisation. A good starting point is the Change Board or Portfolio Governance function which has a most up-to-date list of the projects. It is useful to validate the list with key functions such as IT, Business Change to ensure that the list is complete. The change function also has a list of future projects which have been approved.
Step 2: Investigate
Typically the starting list will be fairly long. It is not unusual to have more than 100 projects on the initial list. Use a first filter to eliminate those projects which has no potential impact on Solvency II. For example, system upgrades, site enhancements, version upgrades, changes in client facing documentations, changes impacting distributor commissions. Having put the list through the initial filter will give you a manageable list to begin.
Step 3: Assess
For the shortlisted project, investigate the scope of the project, the products/processes/systems impacted to assess if they have interdependence with Solvency II. This is the second filter. During this stage, I do an initial investigation, followed by a quick conversation with the Project Lead to validate my understanding.
At the end of Step 2, you will have a definite list of projects which have potential interdependence on Solvency II.
Step 4: Plan
During this stage, identify the exact areas of overlap between the two projects. The areas could be one of more of the following:
1. Impacting product valuations
2. Impacting financial reporting
3. Impacting financial processes
4. Modifying risk categories
5. Modelling changes
6. Changes to finance data mart
The list above is not exhaustive. You will need to modify the above list based on the functional organisation and the prevalent project life cycle in your organisation.
For the external projects (i.e., those other than solvency II), identify the areas of overlap, their delivery time line and the resource utilisation. The delivery timeline needs to be compared with that of the relevant work packet of Solvency II programme. The comparison should result in a mitigation plan with defined activities at pre-defined time to ensure that the interdependencies are tracked. Given the evolving requirements of Solvency II, a typical mitigation plan can be to reassess the interdependence. For those work packets within Solvency II where the requirements are clear, a mitigation plan can be picking up relevant deliverables of external project and including it within Solvency II deliveries.
Step 5: Mitigation
This step refers to activities in the future where Solvency II work packet manager and the external project manager need to re-assess the identified interdependencies. The mitigation plan should be included in the main Solvency II programme Project Plan to ensure their monitoring.
I have found it a good practice to be in regular contact with the change board to ensure that new projects are brought to my attention immediately. It is a relatively simple task to communicate the potential dependencies early in an external project’s plan, than doing so at a later date.
The list of dependencies does not end here. Solvency II programme need to be cognizant about the forthcoming papers from the European Regulator, resource availability among a host of potential dependencies. I will cover them in a later blog.
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