CLARICA — ITX Award Honourable Mention

Clarica, until recently known as The Mutual Group, was founded in 1870. It provides life and health-care insurance for more than four million individual and group customers. It offers professional financial-planning services and a range of savings and investment products. It also provides corporate loans and mortgages for thousands of Canadians and businesses across Canada.

The insurance business has become increasingly competitive in recent years. This has fuelled an industry-wide drive to become bigger and more customer-responsive. In 1996, Clarica realized that the company had to change how it handled customer service. Traditionally, all requests for customer service (e.g. address changes) went through Clarica agents. The agents then communicated with head-office staff who processed the change. While the agents liked this model because it kept them in touch with their customers, management recognized that as Clarica acquired other companies with different products, services and new customers, providing excellent and timely service was going to be increasingly difficult and expensive. It therefore began to look at different models of service delivery and to explore how IT could help implement them.

The first step was to articulate a retail customer strategy. Clarica wanted to provide its customers with the same level of individualized service and information they had always received but to provide them any time they were needed. The company also wanted its agents to stop being middlemen so they could focus on sales. Nevertheless, it wanted to maintain the strong customer relationships the agents had developed.

The Vision. When IS joined the team to develop a new retail service-delivery model, it was clear that a single customer-service centre was the most cost-efficient way to deliver customer service. A centre would enable customers to contact the company directly by telephone, or through letter, fax, e-mail or the agent. First-tier response would be largely located in Ottawa to take advantage of its large bilingual workforce. Second- and third-tier support would continue to be located in Waterloo, Ont.

The IS Challenge. Locating the centre in Ottawa meant hiring 75 new employees with no experience in the financial industry. The IS challenge was therefore to provide a Customer Service Workbench (CSW) which would enable inexperienced employees to professionally handle more than 5,000 different types of customer-service requests for hundreds of products requiring interfaces with dozens of legacy computer systems.

The development team was given a blank sheet and encouraged to see this as an opportunity to develop new ways of thinking about using IT to solve these business problems. Brian Gill, Clarica’s CIO, remarked that he is proud of the new levels of innovation this team achieved with the CSW. He credits having team members with a strong understanding of both the business and the systems needs involved.

Development. There were a lot of challenges. Technology was a huge issue. After determining that there wasn’t a product on the market that would meet their needs, the team decided on a home-grown solution. With the final business and technology solution still uncertain, by June 1997, the team had developed a prototype “fat client” system (which it made the users promise to throw away) to test a variety of concepts involved. This led to a number of innovations in the final product.

A key innovation was separating the processes from the technology involved. Whereas traditionally, systems have embedded processes into the technology solution, the CSW provides a process-design interface that enables users to control and dynamically change the processes involved as often as they wish. A work manager directs the Customer Service Representative (CSR) about what to do next, integrating the necessary tools and screens to step him or her through processes in a clearly defined and repeatable way. Gill notes that the innovative architecture caused a few ripples in IS because it represented a collision with architectural standards. However, he pointed out to IS staff that IT architecture needs to support business needs and not tether the company to models of the past.

“We had a truly difficult and high-value problem which demanded a coordinated effort focused on the corporate good. There was a huge business return for getting over the technical obstacles involved,” he said.

In addition to managing the process effectively, the architecture also had to provide a functional and robust bridge between the CSR and a number of different legacy systems. The team built more than 47 different tools to enable the CSRs to do this. One of the most interesting was a host navigation tool that enabled the system to effectively browse the company’s legacy systems, jumping automatically from system to system as needed. Another tool enables the CSR to send an e-mail to a process owner to suggest process improvements. Others traverse a number of systems showing the CSR all the business Clarica has with a particular customer and tracking all previous interactions he or she has had with the company.

Another major challenge was to find a way to combine the process flow and the tools with the knowledge needed to do a particular job. The team’s innovative solution was to integrate a knowledge database that explains each step of each type of service requests. Today, as CSRs do their work, information about what to do at each step of the process comes up simultaneously with the tool on their screens. This has enabled the company to easily integrate new staff and make them productive extremely quickly.

A third challenge was to get the users to clearly articulate the business processes involved in every single type of request. Previously, the CSR had been able to do this intuitively; now it had to be done explicitly. The result was the development of a seven-step customer-service operations model that provided an overall framework of how to deal with all customer requests.

The CSW was implemented in Ottawa at the end of 1998 and in Waterloo, Ont., in 1999. Today, it has proven so effective that it is also being rolled out to 500 tier-two and tier-three staff who handle specialized requests and develop new processes and standards. While the CSW was relatively easy to implement with new staff who had never worked any differently, proactive change management was essential for more experienced staff. For example, some agents found it very difficult to change their old ways of working until the tools for working in these ways were taken away from them. It has been hard for people to get used to using a structured process when they have been used to working more flexibly.

Wayne Sigurdson, Vice President of Retail, pointed out that it is extremely important under these circumstances to give people the big picture of what the company is trying to accomplish and to get people excited about it. The company has worked hard at restructuring jobs both in its head office and in its agencies to create new learning and career opportunities for the people involved. For example, agents’ assistants have now become branch manager assistants helping agents with the business and marketing side of their jobs. Some senior CSRs have become process owners while others have become coaches and trainers.

Business Value. One of the things Gill is proudest of about this system is that the benefits that were forecast for it were actually achieved. “Many times impressive cases fail because a system’s technology isn’t workable or there is business-value leakage,” he notes. “We have been able to seamlessly manage a 100-per-cent increase in our customer base and a 50-per-cent increase in sales force. Productivity has improved by 20 per cent; training time has been reduced from six months to one month; and cycle times have dropped by 25 per cent.”

While originally the system was designed only for the call centre in Ottawa, it is now being deployed more broadly in the company among all retail services units. The group and U.S. divisions of the company are planning to install it as well. Interestingly, the company has also received a number of enquiries from competitors about whether the company might package and sell the system externally. Although no decisions have been made about this, there are strong indications that the company could develop this as a new line of business if it wished.

Collaboration. The CSW project was led by two co-project leaders — one from Retail Services and the other from IS. A cross-functional team from many different parts of the organization collaborated in both the physical and the virtual workspace. All members of the team found it enormously satisfying to work on such a successful and innovative project. But the benefits of this collaboration have reached well beyond the team boundaries, remarked Gill. Overall, there is a new pride in the IT organization and what it can accomplish and this has been a real morale booster for the whole IS organization.

Service Excellence. Today, every CSR has the “big picture” of every customer he or she deals with. This enables them to achieve an unprecedented level of customer intimacy and to ask intelligent questions that will save the customer effort (e.g., would the customer like to change the address on her health insurance as well as her life insurance?) The system also tracks all previous interactions the company has had with a customer ensuring that whoever deals with him or her has a complete history of what the status of all items of business are. Because all requests follow the same procedure, customers can now be guaranteed that their requests will be handled in an optimal fashion every time they call in. Behind the scenes, the CSW provides managers with actual data to monitor workloads and to set appropriate staffing levels, helping them to minimize customer waiting times.

The CSW project has revolutionized customer service at Clarica and put the company in the front ranks of the financial services industry for customer service. By combining knowledge, data, processes and technology on a just-in-time basis, this project has also transformed the way IS approaches systems and brought new levels of flexibility and innovation to the business as well as providing significant business value.

Heather A. Smith is a Senior Research Associate at the School of Business, Queen’s University, and coordinator of the ITX Awards University Advisory Council. She is a co-founder of the Queen’s I/T Management Forums, which explore IT and knowledge management issues, and the author of Management Challenges in I/S . She can be reached at [email protected].

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