Category: Blog

Digital Experience Platform: A Key Lever for Insurer Differentiation and Growth | Blog

The challenge: insurers need an effective digital experience for their customers

As insurers cope with the impact of COVID-19 on multiple fronts, effective digital communication with their customers has become more important than ever. Transparent, relevant, and crisp customer communications are key differentiators. While insurers have historically relied on intermediaries to communicate with their customers, they have made significant movement toward direct-to-consumer communications; however, the pandemic has highlighted just how far they still have to go.

Insurers have to balance a wide variety of public-facing and back-office demands, challenging in any time, but especially so during a pandemic. On top of the ongoing work of claims intake and management, sales and distribution, new policy onboarding, business continuity, etc., insurers need to efficiently and effectively answer custom questions and solve problems, proactively communicate about pandemic-related initiatives (such as premium relaxations and rebates, relief programs, and flexibility around policy renewal) – essentially, support and service their policyholders in a time of great stress.

Insurers need to arm their agents with information and content, as well as a complete view of each customer, including content from a variety of sources and analytics to pull it all together and make sense of it. To do so, insurers need to collect and consolidate customer data from multiple sources, run AI-enabled analytics, and curate digital content assets for honest, empathetic, and relevant communication with customers. From there, they need to determine how to disseminate personalized content with an omnichannel approach to reach the customers in the ways best suited to their needs.

The potential answer: the Digital Experience Platform (DXP)

Digital experience is the key lever for insurers to pull to effectively communicate with clients and prospects, to offer the desired customer experience, and to meet the challenge posed by digital-native companies and InsurTechs. A successful digital experience strategy, driven by a fit-for-purpose product that can meet customer needs, impacts and enhances the entire customer journey, and is a strategic imperative for insurers. An effective digital experience platform can provide an omnichannel personalized experience to the end customer, offer a single view of the customer, innovate service delivery, and provide a smoother experience for agents.

At the center of the digital experience solution is the Digital Experience Platform (DXP). See Exhibit 1 for Everest Group’s vision of a DXP for insurers.

Everest Group’s vision of a DXP for Insurance

 

To orchestrate insurers’ digital content management needs, the DXP should offer

  • A configurable and structured content value chain with centralized content / digital asset management and templatized content creation
  • Responsive web design with an intuitive UI/UX for consistent omnichannel content delivery
  • Effective Search Engine Optimization (SEO) and Search Engine Marketing (SEM) to identify prospective customers

To meet customer expectations and maintain high levels of customer experience, the DXP needs to

  • Provide consistent and seamless omnichannel interactions
  • Map the customer journey and offer personalized experiences leveraging meaningful customer data analytics
  • Offers self-service portals to enable policy, billing, and claims management
  • Monitor customer feedback through internal metrics and external sources and identify and rectify pain points in the customer journey

To enable agents, brokers, and advisors to have meaningful customer interactions, the DXP must

  • Generate a unified, 360-degree view of the customer through internal and external data sources
  • Optimize workflow with a digital portal that provides self-service capabilities, simplified document management, a holistic view of the customer, relevant product information, and channels to communicate with underwriters to provide quick quotes
  • Provide sales support and leverage customer data to identify effective interaction levers, cross-/ up-sell opportunities, and win probability scores to help prioritize sales

To meet insurers’ technology needs, a DXP should offer

  • A robust Application Programmable Interface (API) framework for integration with the insurer’s systems
  • Internal and external data aggregation with AI-driven analytics to provide personalized experiences and enable agents
  • An app marketplace with insurance-focused apps and integration frameworks to enable product enhancements
  • Low-/no-code development features for minimal re/upskilling of the insurer’s workforce and enable automation to enhance operational efficiencies

The DXPs that can curate superior customer experiences, enable both customers and agents, and provide digital enablers to drive business impact lead the pack in Everest Group’s assessment of DXP vendor landscape for insurance, illustrated in exhibit 2.

Everest Group’s assessment of DXP vendor landscape for insurance

In our recently released report, Assessing Digital Experience Platforms in Insurance and Vendor Profiles 2020 – Building SUPER Insurance Experiences to Drive Differentiation and Growth, we take a closer look at digital experience trends in insurance and explore the impact of an effective digital experience strategy. The report includes a detailed analysis of 13 leading technology vendors on their DXPs’ capabilities and abilities to meet insurer needs.

Please feel free to reach out to [email protected] to share your experiences.

From Compliance to Competitive Differentiation: The Open Banking Journey | Blog

A sustained low-interest rate environment is compelling banks to diversify their revenue mix and reduce their dependency on interest-based products. In this scenario, banks’ scaled adoption of open banking – or offering data and services to third parties and customers via Application Programming Interfaces (APIs) – provides them with a unique opportunity to expedite the development of innovative products and services in collaboration with other financial institutions.

The open banking concept emerged in 2015 through a regulatory push for consumer autonomy and transparency, with banks in the UK and other European countries mandated to comply with the standards set by the Competition & Markets Authority (CMA) and the European Commission, respectively. However, as our second Open Banking PEAK Matrix® Assessment 2020 (which analyzed 110+ production-grade open banking use cases) reveals, open banking has fast evolved from a compliance-mandated initiative to a growth strategy focused on experience and product differentiation.

In our first open banking assessment carried out in 2018, we found that more than 40% of banks viewed open banking largely as a compliance mandate. In 2019, however, their priorities seemed to have shifted, with more than 35% of banks focused on driving business value and growing revenues from their open banking initiatives. The use cases have also evolved in line with this shift – from payment processing to complex processes such as cash management, financial wellness, credit scoring, and insurance.

The exhibit below highlights the key differences between a compliance-led open banking initiative and one driven by competitive differentiation.

The next step in the open banking journey – moving from compliance to competitive differentiation

Currently, several leading banks are creating differentiated experiences using open banking to build the next-generation banking model. For instance, Bank of America is building a financial services-compliant cloud that will allow the bank and its partners to host all their services and data on the cloud platform, which will enable Bank of America’s customers and third parties to build applications that leverage these services and data to create differentiated experiences and manage end-to-end business operations. Another notable example is DBS, which has established travel, car, and property marketplaces by building robust ecosystems in collaboration with external partners. For example, the company’s payments-enabled travel marketplace brings flight booking, accommodation, and travel insurance partners onto the same platform, ensuring minimal customer churn from its banking platform. As the marketplace offers new customers as well as a payment processing functionality to its partners, DBS can earn commission revenue from these partners.

As banks move to a business value-driven approach to open banking, they need to identify the avenues to monetize their open banking investments and unlock a new model to create and deliver differentiated experiences to their customers.  A cloud-enabled platform can greatly assist in this regard, as it provides seamless access to banking APIs and services from a broad range of partners to build and deploy new products in a marketplace model.

Open banking IT service providers can help banks build the capabilities they desire. To do so, they are investing in business advisory assets to help financial services firms plug the gaps in their business change management initiatives. They are also investing in FinTech partnerships, talent and solutions across the API management life cycle, data and analytics, use case libraries, and virtual sandboxes to maximize the value from open banking.

Leading IT service providers, such as Accenture, HCL Technologies, NTT Data, TCS, and Wipro, have created open banking Centers of Excellence (CoEs) to drive a coordinated effort to help BFS firms eliminate any gaps in communication and realize the objectives of product development and open banking technology. They are also investing in cloud offerings to facilitate their BFS clients’ cloud transformation journeys.

If you’d like to more about open banking and its evolution, please read our recently published report Open Banking IT Services PEAK Matrix® Assessment 2020: Moving Beyond Compliance to a Platform-based Operating Model of Ecosystem Orchestration and Value Creation – Services. We’d also love to hear about how you are advancing on your open banking journey. Do share your views with us at [email protected] and [email protected].

Understanding the Commercial Construct of a Build-Operate-Transfer (BOT) Model for Your Global Business Services | Blog

Transformation has become an imperative for all industries, more so during the unprecedented COVID-19 pandemic. A majority of our clients have highlighted the increasing pressure to manage their margins and balance their long-term vision and strategy with short-term needs in a post-COVID-19 landscape. One way for enterprises to achieve this objective is by re-assessing the setup model for their future Global Business Services (GBS) centers.

This blog focuses on one such setup option – Build Operate Transfer (BOT) – and its commercial underpinnings. In these uncertain times, BOT seems to be an especially relevant option, as it offers the unique advantage of lower short-term investment and a better long-term business re-prioritization opportunity. But only if the price is right.

Let’s take a closer look.

Can BOT be your business’ panacea?

In a BOT sourcing model, an enterprise can partner with a third-party service provider to build a delivery center (which includes investing capital, leasing the facility, and sourcing talent), operate it for a pre-defined period (based on the operational agreement), and allow the enterprise the option to transfer the center back to itself. The model helps avoid upfront capital investment, reduces operational risk, limits the burden of managerial and operational oversight, promotes new capabilities, and expedites speed-to-market. As it comes with an exit option, enterprises can also test the model without fully committing to it.

In fact, as part of a recent engagement, we helped a global technology firm assess the best-fit setup option for its GBS center in India. The firm opted for BOT, preferring to partner with a local service provider to reduce financial and operational uncertainties. While the BOT model’s benefits were evident from the start, a key learning from the engagement was that these benefits come at a relatively high cost. Thus, understanding the price tag is key before committing to the model.

Understanding the costs involved

While the key cost components of a BOT model can vary based on the specifics of the service contract, we outline below standard commercial practices prevalent in the market across the build, operate, and transfer stages.

In the build phase, the enterprise is either not required to invest or invests a limited amount, and vendors typically provide most of the upfront investment. In most cases, the service contract stipulates that the service provider’s investment includes setting up the facility (which includes both real estate and technology infrastructure), establishing the hiring mechanism, and laying the ground for services delivery. The service provider recovers this investment in the next two stages.

In the operate phase, the service provider charges the enterprise an ongoing fee to meet all operating expenses and day-to-day operations and to track and maintain pre-determined Service Line Agreements (SLAs). The ongoing fee includes the service provider’s margins, which are typically 2-5% higher than those in a pure outsourcing construct. The additional margin is often dependent on the scope, scale, and nature of services, the service provider profile, extent of initial investment, and lock-in period.

In the transfer phase, the service provider typically charges the enterprise a one-time transfer fee, which could vary widely – 20-30% in some cases – based on other contractual agreements, in lieu of transferring back all services and procured assets. Typically, this fee is charged as a percentage of the ongoing annual fee in the build phase, and an enterprise can pre-determine this percentage in the service contract. Beyond this, if rebadging is required, the service provider charges the enterprise a one-time transfer fee to give up employer rights on resources that are successfully rebadged.

Considering these cost elements, a BOT construct can be about 15-30% more expensive than a de novo / fully owned GBS model. Hence, each enterprise needs to consider the cost-benefit trade-off when selecting a suitable setup option for itself.

Making the move

When evaluating future GBS setups, we urge enterprises to be mindful about the overall business case and assess both the financial and non-financial aspects of the setup model. Doing so will help them understand both the costs involved and associated benefits. Our research strongly suggests that enterprises are likely to find a robust business case for the BOT model to navigate these uncertain times.

Are you looking to understand whether the BOT model would be suitable for your next GBS setup? Connect with us at [email protected], [email protected], and [email protected]

Service Delivery Location Factors to Consider for WFH Model Adoption | Blog

Before COVID-19, most organizations were reluctant to adopt Work From Home (WFH), viewing it as a hard-to-govern delivery model relevant only for limited functions and employees. However, the pandemic has made WFH a requirement, at least for the short term, for most enterprises. Despite the massive disruption, we believe most organizations will make WFH a business-as-usual component of their “next normal.” But that means they’ll have to take a long, hard strategic look at the locations they use for services delivery, whether they operate in a shared services environment or leverage a third-party provider.

COVID-19 has challenged conventional thinking about location selection parameters

Historically, most location portfolio decisions were based on an evaluation of traditional factors including the talent landscape, market attractiveness and competitiveness, cost of business operations, and the business and operating environment. Now organizations need to factor in and evaluate a location’s business case for WFH adoption, including the interplay of additional drivers like infrastructure, restrictions for remote delivery, presence of strong governance mechanisms, employee security, data protection, intellectual property safety, and determination of additional benefits that can be tapped into.

We’ve developed a framework that assesses 20 additional factors that we have categorized into three buckets: viability, security, and potential benefits.

Each of these parameters plays a crucial role in an organization’s selection of services delivery locations for a WFH environment.

Understanding a given location’s WFH viability will not only help enterprises carve out their next wave of growth, but also help them tap into the additional benefits offered by the location.

Here’s a look at each of the three overarching buckets.

Understanding overall viability

This category is all about evaluating a location’s business ecosystem through a new WFH lens. It involves:

  • Having a detailed view of the overall WFH infrastructure, like broadband speed and penetration, power/telecom outages, network readiness, and reliability
  • Understanding nuances for local WFH restrictions as imposed by the law, such as regulatory concerns, data privacy issues, SEZ norms, and number of working hours
  • Assessing the overall ecosystem for WFH adoption, e.g., social/cultural acceptance and working from an established location as opposed to a greenfield location.

We believe all organizations should assess each location on these factors as they will play an essential role in WFH success.

Fighting security concerns

Another critical factor enterprises need to evaluate in each location they’re considering is the overall security of their employees and their data. Here, organizations need to look at the robustness and effectiveness of local data protection and cybercrime laws across each location. Understanding local governance mechanisms and laws will help bolster viability for each location and help organizations map suitability for each function. Further, as their employees will be working from home, organizations will also need to understand the nuances around crime rates across employee neighborhoods, civil unrest, and natural hazards, as these can potentially increase the business cost for crime and violence, and also disrupt operations.

Reaping potential benefits

Adopting a WFH model will not only help organizations drive the next wave of cost optimization (significant savings over leasing real estate infrastructure and utility expenses) but also will help them overcome challenges related to availability of real estate across leading talent hubs in tier-1 locations.

WFH adoption will further help organizations establish additional satellite locations, or tertiary sites, in which talent works remotely, either permanently or part-time, with or without a corporate physical presence in the location. This will not only help reduce travel time, but also help improve employee productivity and reduce overall attrition for organizations. Based on a recent survey we conducted with leading enterprises, more than three-quarters of the respondents said their organization’s overall productivity has increased in the current COVID-19 period. The average improvement in productivity was just over 13 percent, as compared to before the pandemic period.

The WFH business case is a win-win proposition for most organizations as they adapt to the “next normal.” While there are multiple factors that potentially sweeten the business case for WFH adoption, taking a detailed view by each location will be an imperative as organizations progress and evolve on this journey. An iterative and continuous thinking approach will further help organizations overcome some key challenges including employee and organization development, legal, and regulatory concerns. Watch this space for more updates.

For additional details on this topic, reach out to us at [email protected], [email protected] and [email protected].

COVID-19 Will Accelerate Private 5G Adoption | Blog

COVID-19 has disrupted the business landscape, forcing enterprises to find new work models to ensure business continuity. There is, however, a silver lining to the otherwise painful episode: support for accelerating 5G adoption.

Several factors are significantly driving the business case for adoption of a faster and more reliable network: the spike in work-at-home, increased demand for digital delivery of applications and content, and the realization that digital-ready enterprises are better prepared to navigate crises. These challenges put 5G firmly in the forefront of future digital transformation.

However, in the medium term, recessionary pressures, constrained capital, and heavy debt may discourage telcos from widespread deployment of public 5G. As a result, telecom providers are increasingly exploring the prospect of private 5G for enterprises as a means of generating steady revenue. Telecom providers’ interest, coupled with enterprise enthusiasm – now truly appreciating the importance of digital readiness and advocating for Industry 4.0 adoption, of which 5G forms the foundation – make now the right time for private 5G adoption.

Effect of COVID-19

Consumer, or B2C, data consumption is likely to increase as social distancing continues, at least until the release of a viable vaccine. Moreover, as firms pivot to digital models and operate virtually, data consumption will continue to rise, establishing a connectivity-centric ecosystem while compounding the load on 4G systems.

To maintain service quality and ease network congestion, telecom providers have begun to invest in 5G networks. These networks can be classified into two broad buckets: public 5G and private 5G. Public 5G refers to consumer cellular networks deployed across the world for telcos’ B2C customers. Private 5G is a kind of restricted network, often used by enterprises on their premises, to take advantage of 5G’s low latency and high bandwidth for accelerated Industry 4.0 adoption.

Slow progress of public 5G deployments

Most telcos are highly leveraged, given the capital-intensive nature of the business. Some market leaders, such as AT&T, have also taken on additional debt in their pursuit to transform into media conglomerates. Telcos that follow that strategy will most likely prioritize optimization of existing consumer networks to cope with the load and deploy consumer grade 5G only in highly urban pockets where the return on their investment is sizeable.

To increase revenue, we expect a push from telecom operators for B2B private 5G networks.

Rise of private 5G

Private 5G is a means for an enterprise to modernize its internal broadband and wireless communications infrastructure with high speed 5G cellular networks. A cellular network can provide better coverage within an enterprise’s work location, enable better bandwidth, and support low latency requirements. Deploying 5G in controlled work environments like shop floors, power plants, and healthcare facilities can also negate some of the key technology issues of mmWaves such as the effects of noise and attenuation, and difficulty in penetrating dense objects. We expect telcos to aggressively push private 5G use cases as an integral part of Industry 4.0 transformations as they look to improve revenue share from their B2B businesses.

Private 5G adoption by industry

Given its use and benefits, some industries are more likely to leverage private 5G more quickly than others.

  • Healthcare: COVID-19 has highlighted the stark reality of insufficient healthcare personnel to care for patients. As the use of virtual health consultations rises, telemedicine and telehealth will soon become the norm in the industry. With its significantly higher bandwidth and lower latency, private 5G adoption will accelerate with the rest of the virtual healthcare model.
  • Manufacturing and energy & utilities: Manufacturing firms are facing ongoing pressure on demand and production due to lockdowns. With most factories requiring their workforces to work remotely, some of these firms have had to go months without production. To reduce the number of workers on-site, firms will explore automation and adopt technologies such as digital twins, robot assistance, and IoT. Private 5G will enable and accelerate the adoption of these technologies.
  • Media and entertainment: 5G will unlock the potential of immersive reality; for example, stadiums and theme parks are investing in the technology to improve user experience.
  • BFSI: With the movement toward digital and the proliferation of data, the banking industry will explore 5G network slicing, whereby firms can apply specific security policies to various network slices. Moreover, the combination of edge computing and 5G will enable faster and more secure processing of data. For insurance companies, 5G will play an important role in improving customer experience through telemetry.

Challenges remain

Despite its promise for many industries, challenges remain for the adoption of private 5G.

  • Capital intensive: No matter the customer (B2B or B2C), 5G remains a capital-intensive transformation. However, the COVID-19 crisis will further strengthen the business case for Industry 4.0. The manufacturing and energy & utilities industries, which have often lagged in the adoption of emerging technologies, will be more inclined to spend on digital following the crisis. The partial shift of this investment to enterprise customers in private 5G will appeal to telcos, which are otherwise supporting high debt.
  • Geopolitics: Political uncertainties also loom large as countries re-examine China’s accountability on cyber security and data privacy. These concerns have been exacerbated by ongoing geopolitical tensions. 5G deployment may see slight delays as these issues cause supply chain disruptions and increase pressure on other global players.

How you can drive 5G adoption in your organization

You can follow a five-stage structured path to drive private 5G adoption in your organization.

  1. Business case: First you must understand the benefits and challenges of private 5G. It is also imperative to understand the key alternatives to 5G such as Zigbee, WiFi-6, and SIGFOX. You can work with technology partners to identify key use cases for your industry and select effective cases to pilot.
  2. Feasibility study: In this stage, you assess the technologies that could work with your existing landscape and outline the changes that would be necessary to adopt them. You can then run pilots on selected use cases and understand the key parameters that may need adjusting, such as security and scalability. Following the pilot, you must ascertain the business outcomes achievable and model potential ROI.
  3. Pre-implementation: Once you have a fair understanding of the necessary changes, you can begin changing and upgrading your existing landscape to be compatible. Because private 5G is a hardware-intensive and long-term investment, you should plan to spend considerable time in selecting the right vendors for implementation.
  4. Implementation: At this stage, the OEM and service partners begin the network transformation. Because 5G is a disruptive technology, you must give considerable attention to improving processes and change management to realize its full benefits.
  5. Post-implementation: Following initial adoption, you must continuously monitor the technology landscape and assess how you can adopt new use cases to maximize your ROI.

If you wish to learn more about the 5G landscape and private 5G in particular, please connect with us at [email protected], [email protected], and [email protected].

Network Resource Planners (NRPs) and the Transformation of the Enterprise Resource Planning (ERP) Landscape | Blog

Nearly five decades after the release of the first version of SAP’s enterprise application, SAP R1, the Enterprise Resource Planning (ERP) landscape is nearing an inflection point. Over these 50 years, traditional industry boundaries have blurred, and competitors have started working together. Soon, enterprise applications too will transcend functional, organizational, and industry boundaries to support truly connected ecosystems. In the long term, enterprise resource planners will have to develop capabilities to manage decentralized identities, trust, and transaction processing to serve enterprises effectively.

Blockchain, which has been gaining traction steadily over the years, could be the next big thing in the ERP landscape. As enterprises limber up for cooperative ecosystems, participation is rising in inter-industry blockchain networks. These managed business networks, including We Trade, Marco Polo, and TradeLens, are proving to be viable alternatives to certain ERP functionalities. Enterprise application heavyweights such as Oracle and SAP have also begun to push new managed blockchain platforms and are actively assisting enterprises in setting up blockchain networks. We consider such blockchain-based Network Resource Planners (NRPs) – which are comprehensive inter-industry networks catering to a wide range of use cases – to be the natural progression of ERP solutions.

Understanding NRPs

An NRP is a blockchain-based software system that helps manage data and processes across multiple stakeholders in a business network. In an NRP, the blockchain is the foundational infrastructure, and it acts as a platform for enterprises to deliver a more cohesive experience to customers. Present-day NRPs can perform certain narrow ERP functions, such as inventory tracking, financial settlements, and reconciliations. In these use-cases, NRPs can simplify and accelerate such functions by leveraging blockchain’s technological advantages and the ecosystem’s strengths.

Let’s take a look at the benefits of an NRP in detail.

An NRP helps stakeholders by:

  1. Building a foundation of trust: The underlying blockchain network creates a single source of truth for all network participants and avoids the need for data duplication across the transacting stakeholders. Blockchain also helps optimize and automate processes that would otherwise be bogged down by the limitations of ERP. With all stakeholders being on a single network, the need for specialized interfaces among the stakeholders’ enterprise applications is eliminated
  2. Acting as the backbone of the ecosystem-thinking movement: The presence of multiple competing stakeholders often undermines the creation of a cooperative ecosystem. An NRP mitigates this challenge by leveraging blockchain to distribute trust among stakeholders. Governance structures can be codified into the technology, putting to ease many enterprise business concerns. This could make NRPs the backbone of the impending ecosystem-thinking movement, assisted by the ongoing convergence of Internet of Things (IoT), blockchain, and Artificial Intelligence (AI)
  3. Unifying stakeholder experiences: Traditional enterprise applications create bottlenecks and eventually impact stakeholder experience. A cooperative network helps standardize processes that establish a baseline experience that is consistent across the network

Business challenges and how to navigate them

Although NRPs are fast gaining traction and offer multiple benefits, an ecosystem model still poses several challenges, such as:

  • Establishing cohesion among competitors in a collaborative environment to ensure consensus and fairness
  • Ensuring appropriate governance, monetization, and optimization of Return on Investment (RoI)
  • Addressing any network lock-in risk, which may deter participants from fully committing to the network; managing this concern through standardization rules will be key to creating viable networks
  • Managing the change ushered in by blockchain adoption, which may be incompatible with existing processes and limited understanding of technology

To successfully address these challenges and leverage NRP, enterprises should undertake a structured adoption journey, comprising four phases:

  1. Selecting the foundational approach and identifying key stakeholders: A network can be built through either a technology- or business-first mindset. The right approach depends on the primary contributing industry, proposed network use case, and prevalent market conditions. In either case, it is also important to simultaneously identify the target stakeholders for the network
  2. Building the minimum viable ecosystem: The next phase involves demonstrating the viability of such a network through a pilot. The pilot also helps identify possible problems early on and creates the foundational data to build a business case for a full-fledged network
  3. Defining the governance structure and incentive model: Defining and codifying the intended governance structure and incentive model help lend credibility to the network. Establishing such rules helps build trust among potential participants and attract new ones
  4. Activating the network effect: Encouraging stakeholders from other industries will help build an ecosystem of primary, secondary, and value-add participants that further enhances the network effect

In conclusion, NRPs seem well-positioned to replace certain ERP functions, and such blockchain-based networks, alongside IoT and AI, can become the foundation of future innovations.

If you wish to learn more about the blockchain landscape, network resource planners, and how enterprises can adopt them, read our recently released report. We’d also love to hear your views on blockchain and NRPs. Please share your perspectives and any questions with us at [email protected] and [email protected].

Is Work-From-Home Productivity A Mirage? | Blog

During the COVID-19 crisis, companies moved nearly all their white-collar workers around the world to work from home. It was an eye-opening experience. Almost universally, executives were surprised that working from home is far more effective than they anticipated. In fact, in many instances, it appears that people are more productive working from home than they were when working in their offices. But some of this supposed improvement in productivity is a mirage.

Read more in my blog on Forbes

Develop Metrics That Drive Increased Productivity | Blog

There is a huge problem with trying to increase productivity in functions, processes and in business teams. Measurements of productivity look at the efficiency of a task. The assumption: if companies focus on making activities more efficient, they will increase productivity. History has not been kind to that belief. So, what enables the ability for teams to break out of their current way of doing business and reassemble the constituent pieces for more effective, more productive results?

Why Retirement Plan Defined Contribution Recordkeepers Need to Modernize Their Plan Administration Systems | Blog

The retirement savings gap in the US – meaning the difference between the amount of money people should have and actually do have to retire on – stands at around US$40 trillion currently. To put this number into perspective, it is roughly 187 percent of the US GDP and 124 percent of US retirement asset holdings. Dwindling revenues for retirement plan administrators due to fee compression, high costs for servicing retirement plan participants, and the COVID-19 crisis are exacerbating the gap. And participant experience has degraded over the years, leading to inadequate savings for retirement and making the shortfall grow continuously.

Recordkeeping businesses in the Defined Contribution (DC) space are particularly struggling in the current environment. They’re facing multiple challenges, including: an influx of regulatory requirements involving fiduciary responsibilities; sustained low interest rates; pandemic-induced uncertainty; legacy technology systems; increasing costs; and the lack of agility to respond to customer demands and compliance requirements.

Our recently-published report, Making a Business Case for Modernizing Core Systems for the US Retirement Industry: Value Beyond Cost Savings from a Cloud-enabled Recordkeeping System, identified that the root cause behind profitability and customer experience issues for recordkeepers is the high incidence of home-grown, legacy, and mainframe-based recordkeeping systems. Eight of the top 10 US DC recordkeepers, which hold 73 percent of the total DC assets and serve 66 percent of plan participants, are on custom-built recordkeeping systems that are predominantly mainframe-based. The high cost of running and maintaining these systems has bulked up recordkeepers’ total cost of ownership and squeezed their operating margins. Additionally, these systems have not been able to respond quickly to constantly evolving and complex compliance mandates such as ERISA, Section 404(C), Secure Act, and the Department of Labor’s (DOL) fiduciary rule. These challenges are causing a host of fines, lawsuits, and sanctions from the Internal Revenue Service and DOL. Further, there is an acute talent crunch in servicing these systems for recordkeepers.

What should recordkeepers do to combat these challenges?

They need to design cogent strategies to modernize their plan administration systems. A cloud-first core platform is at the heart of this modernization. From a cost savings standpoint, taking a cloud-first core platform approach can effectively halve the technology and operations cost base. On an annual basis, this change results in a cost yield of roughly 20 percent.

The benefits of modernization extend far beyond cost savings as it entails use of a combination of technology levers to improve the plan participant experience. Modernization:

  • Enables migration to the cloud, which enables adoption of analytics tools for plan providers to better identify each participant’s financial wellness needs, optimize plan management, and redesign plans to deliver competitive retirement options. And analytics can help maximize the return on investment through predictive trend analysis of investment options
  • Helps recordkeepers integrate automation solutions to improve retirement applications processing speed, enhance efficiency in managing participant transactions, and reduce manual interventions in plan administration tasks
  • Allows recordkeepers to employ agile solutions for better and quicker compliance with regulations, to quickly meet participants’ needs, and improve the agility of recordkeeping applications
  • Lets recordkeepers offer self-service tools to manage contributions and investment allocations, AI-based robo-advisory solutions to address plan participant questions quickly and drive personalized plan recommendations, and a digital UI/UX to simplify the participant enrollment process while improving customer experience
  • Enables recordkeepers to expand services scope in the investment advisory and asset management space, which can unlock new revenue sources and lets them subsidize their recordkeeping costs through provision of these ancillary services.

The benefits of modernization of recordkeeping systems to a microservices-based, data-driven, cloud-first core platform cannot be overemphasized. Driving down costs and improving the participant experience will play a critical role in helping recordkeepers survive the pandemic and thrive in the next normal. Using the pandemic as a catalyst to modernize plan administration systems will not only make recordkeeping businesses resilient for the future, but also help support the nation’s retirement readiness and narrow the retirement savings gap.

To learn more about the dire need for transformation in the retirement industry, please see our new report titled “Making a Business Case for Modernizing Core Systems for the US Retirement Industry: Value Beyond Cost Savings from a Cloud-enabled Recordkeeping System.” And to drill down even further, please reach out to the report authors, [email protected], [email protected], and s[email protected].

The Contactless Economy – Reimagining Process Through Technology | Blog

Digital Reality podcast episode #10 examines how savvy companies leveraged technology to redesign their processes to continue to serve clients, streamline operations, and even thrive during the crisis. We examine lessons from three diverse B2C sectors – restaurants, apparel stores, and liquor stores – that ensured some semblance of “normal” during these uncertain times.

Browse all episodes

Jimit Arora (JA): Welcome to the tenth episode of Digital Reality, Everest Group’s monthly podcast that moves beyond theory and beyond technology to discuss the realities of doing business in a digital-first world. I’m Jimit Arora and…

Cecilia Edwards (CE): I’m Cecilia Edwards. Each month we bring you a discussion that digs into the details of what it means, fundamentally, to execute a digital transformation that creates real business results.

This month, we are talking about how technology impacts an organization’s ability not only to continue to operate, but to streamline operations and thrive during times of crisis. As the pandemic wreaked havoc on the economy, many businesses shuttered or lost a tremendous amount of value amidst the shelter-at-home orders. However, today we want to look at two examples of companies that leveraged technology to meet the shifting demands of the “new normal” we find ourselves in.

Jimit, do you want to kick us off?

JA: Let’s start with B2C examples because most of us can relate to whether or not we can still eat from our favorite restaurants or purchase the goods we desire. I’ll briefly touch on restaurants. The shift restaurants have made during this time period was clearly a technology plan supported by some operational shifts. In a previous podcast, we talked about how Domino’s transformed itself over a 10-year period into an e-commerce company that sells pizza. Every restaurant that wanted to survive the pandemic has had to do the same. They have had to beef up their online capabilities to make it easier for customers to order. And they had to create changes in their operating processes to support curbside pick-up without the convenience of the drive-through windows that are used by fast food stores. While they are still cooking food, their survival depends on a technology play.

Now let’s talk a bit about brick and mortar apparel stores. This pandemic caused nearly all of them, as non-essential businesses, to shut down. Their only option to not be completely decimated by the crisis was to turn to e-commerce. However, it became clear quickly that merely having an e-commerce website, which by now, most retailers have, was not sufficient. Order fulfillment and inventory management became an issue. Most businesses handle their e-commerce sales from centralized warehouses. With no new shipments and lots of inventory at retail locations, Lululemon’s technology choices allowed them to thrive.

Having invested in RFID technology to track every piece of clothing in every store or warehouse worldwide, it was able to effectively use its retail locations, and staff, as fulfillment centers to support their online business.

This strategy worked for Lululemon; its stock is up 37% so far this year. The company has pulled back on its plans to build experiential bricks and mortar stores and will invested in digital, omnichannel, and e-commerce tools. While not able to completely offset the loss of in-store sales, the company is planning for double-digit growth in online revenue over the next three years.

Question to you Cecilia: What do you see as some of the lessons companies can take away from both the restaurant and Lululemon stories as companies contemplate their technology strategies?

CE: B2C success in a social distanced world requires more than an e-commerce site – there are implications for the entire operation’s ability to support the digital strategy. There needs to be a plan for how people will be deployed differently to support the e-commerce strategy. These new practices are likely, in some form or another, to become part of our future business norms.

Let’s shift our focus now to a B2B example and talk about how Johnson & Johnson has been doing. As one of the world’s largest healthcare companies, supplying consumers and businesses with medical devices, pharmaceuticals, and consumer packaged goods, J&J was obviously deemed an essential business during the shutdown. But that doesn’t mean its business wasn’t impacted.

In addition to the same work-from-home challenges most businesses had to adjust to, J&J has been supporting front-line workers with medical devices and products, continuing to supply consumer hygiene and health products, and is one of the companies working on a coronavirus vaccine.  It’s a bit of an understatement to say J&J has a complex business, with over 200 business units in different parts of the essential business spectrum.

Its IT capabilities have played a critical role in keeping J&J going. Data and analytics has been a big focus. The company has needed to ensure that the data required to scale up its supply chain was available to both internal and external partners and that real-time insights were uncovered to provide patients with the right care at the right time. For example, J&J consistently overcame operational challenges by using data analytics to assess alternative logistics and supply chain routes.

J&J has updated its mission statement to reflect the importance of IT. It now reads, “We shape the future of healthcare by unlocking the power of people, technology, and insights.” This mission has translated into investments in digital robotic surgeries, cloud computing, AI, and blockchain. J&J has obviously also had to take security into consideration. Its digital infrastructure allows its cybersecurity to scan the entire system every 15 minutes. And lastly, the company has a clear focus on business outcomes – it can routinely provide performance against key business metrics to the entire firm, not just IT.

While it’s unclear whether it is causal, J&J has announced that human trials of its coronavirus vaccine will begin in July versus its previously planned September timeline.

Question to you Jimit: As other companies are unsure about investing in technology during times of crisis, like now, what are some of the people considerations they should take into account?

JA: Three things:

  • Aligning everyone against a clear set of business objectives and investing against those
  • Ensuring transparency and collaboration across business silos and external business partners
  • Fully leveraging data – having the right data, updating it, making it broadly available

Digital Reality Checkpoints

CE: While technology is not the silver bullet to address all of the challenges companies currently face – and will continue to face – as we navigate through and eventually come out of this COVID-19 crisis, it has been shown to be a key enabler in the success of both B2C and B2B businesses. As usual, there are some lessons, or Digital Reality Checkpoints, that can be broadly applied:

  • Invest beyond the technology basics, but at a level to support your business objectives
  • Plan for how people will be deployed differently after the technology investments are in place
  • Ensure you have the data and analytics capabilities required to power your digital investments and make sound business decisions

Please check us out at www.everestgrp.com, or follow us on LinkedIn at jimitarora and ceciliaedwards. If you’d like to share your company’s story or have a digital topic you would like us to explore, reach out to us at [email protected].

Browse all Digital Reality episodes

Have a question?

Please let us know how we can help you.

Contact us

Email us

How can we engage?

Please let us know how we can help you on your journey.