This summer, the four winners of CIO Canada’s 2000 ITX Awards were announced at a presentation ceremony in Toronto. Produced in association with The Conference Board of Canada, the awards recognize IT initiatives that demonstrate best practices and enable the enterprise to move in new directions, changing its scope, nature
This two-part article takes an inside look at the innovation, the hard work and the people that contributed to the success of the winning entries. Last month we looked at the efforts of overall winner Teranet, and BMO Nesbitt Burns, winner of the Colla-boration category. This month we look at winning applications from Clarica and Royal Bank Financial Group.
What is the best way to approach e-business strategy and development? This is a challenge facing many companies today. All too often, e-business strategies are presented in the media as being conceived, developed and implemented in a straightforward fashion. This perception leaves many CIOs wondering why it isn’t this easy for them.
In reality, developing an effective e-business strategy is frequently more of a trial and error process that includes a great deal of consultation and uncertainty. Clarica, the winner of the 2001 ITX Award for Outstanding E-business Strategy, knows this first hand. Their Web-enabled Agent strategy involved as much learning and evolving as it did strategizing and planning.
“We wouldn’t have got very far at all if we had just sat in a room talking,” stated Diana Deverall-Ross, Vice President of e-Business and Marketing, and Co-chair of Clarica’s e-Business Development Council. “We had to take bold steps and learn from them. Our e-strategy development was very much a pioneering process.”
Clarica had made a timid, early foray into e-business with the development of its website in 1997, just to try the platform out for a few services, but didn’t roll it out across the entire organization. “Basically, we adopted a ‘wait and see’ strategy,” explained CIO Brian Gill, the other Co-chair of the e-Business Development Council. “It was only once the environment proved itself that we decided to push ahead with e-business. Then we had to play catch-up and hustle to move ahead of the pack.”
Going Against the Flow
Although Clarica has a history of developing leading-edge applications, it also has a reputation for contrarian thinking. For example, most other insurance companies have long since abandoned using dedicated agents who sell only their products, in favour of brokers. Clarica has retained them and believes that they are a strategic advantage for the firm.
Thus, in 1999 when company president, Bob Astley, declared that building an e-business capability was a strategic imperative and “absolutely critical to Clarica’s future success”, Deverall-Ross and Gill had a difficult decision to make. “This was at a time when the dot-coms were very successful and other insurance companies were spinning off e-business companies and completely revamping their business models,” recalled Deverall-Ross. It would have been easy to give in to the hype at the time and adopt a similar strategy, essentially developing a different sales channel that would undercut the role of the agent. Instead, they decided to integrate the firm’s e-business strategy with its existing business model, extending it and using it to complement Clarica’s strengths – its brand, its customer base and its sales force. Deverall-Ross and Gill then had to defend this strategic direction to the company’s Board of Directors.
With this hurdle accomplished and the top brass firmly behind the approach, the next step was to figure out how the strategy could be accomplished. The e-Business Development Council established one fundamental principle: the entire web project had to be designed from beginning to end with the customer’s experience in mind.
“In retrospect, this was a key decision,” stated Gill “because both business and IT people had to keep the customer’s perspective front and centre in everything they did.” This made it easier for both groups to identify and clear away old ways of doing things which wouldn’t work for the customer, such as changing back-end business processes. This decision also meant that the web project would be integrated across all products and lines of business to make it easier for the customer to navigate. As a result, it nipped any possible ownership issues between lines of business firmly in the bud.
To reinforce this principle, the e-Business development team moved usability analysis to very early in the development process and continued to test it throughout. “In most companies, usability assessment is just tacked on at the end of the delivery process,” said Gill. “We tested everything out with our customers all the way along and made significant changes to our thinking as a result.” Various design techniques were employed to assess usability: wireframe designs at first, followed by mock-ups, and then working versions of the website. Gill noted that the high degree of business and IT commitment to getting the design right made it easier to do things differently.
A second key decision was to try out this customer-centric approach with a single product – personal health insurance – through which the company could learn more about how to actually implement their e-business strategy. “This was a product which we had never before sold directly,” explained Deverall-Ross. The project’s objective was primarily to establish the user interface and to line up back-office operations to support a completely paperless process. “We wanted to completely redefine how Personal Health Insurance would be delivered at Clarica,” she stated. The process was therefore revamped to accept electronic signatures and payment and to even enable simplified online underwriting for straightforward cases so that customers could request and receive insurance right away.
Because the online product was the same product as Clarica’s agents were already selling, it didn’t change what agents were doing. It was only after the product was launched that the team discovered that online products not only needed to be marketed in new ways but also through their traditional sales channels.
“Our agents kept asking ‘How can we play?'” said Deverall-Ross. The team then realized that it needed to get its agents onside to promote and cross-sell the online product. In this way, the team learned two crucial lessons: what was needed to make web-based products successful and how to better involve their agents in selling them.
Lessons Well Learned
Their next new web-based product took these lessons to heart. When Clarica began to sell index funds online it also recognized whether or not customers had been referred to the website by an agent. Fortunately, the company already allowed two agents to share commissions if they had both done some work in getting a sale. It was therefore a short step to have agents split com-missions with the website (acting as an agent) if they referred a customer to the web to purchase a product. This turned out to be a true “win-win” for both the agents and the company. Agents found that it was very convenient to discuss new products and refer busy clients to the web to finalize a sale, thus saving both a meeting to complete paperwork. Agents also liked having the new products to sell and saving the time of doing the actual sales processing. They could then use the time for marketing and helping clients with more complex financial needs.
As ways of integrating the existing Clarica business model with the web became clearer, the team then redesigned the overall Clarica website to support these new linkages. “We learned that potential customers use the web to do research and become knowledgeable,
but when they are ready to buy, they still want advice from an agent,” explained Deverall-Ross. Therefore, the website now provides referrals to agents based on geographic location and agents have each been given a home page they can customize for their own particular needs. As a result, agents now believe that working together with the web, both they and the company will be more successful.
It was around this time that the big picture of the firm’s e-business strategy began to emerge. Clarica now provided e-sales and its website offered e-info and advice. Another project had been working on developing basic customer services online (e.g., banking and address changes, customer access to their accounts and policy information with one ID and password). In thinking about their next online move, the e-Business Development team realized that together in-formation and advice, sales and service offered support to and complemented
almost the entire sales cycle. The only thing missing was e-marketing.
LifeServ filled that gap (see figure 1). It attracted prospective customers by helping them plan for key life events (e.g., weddings, birth of a child), which is when most people have the greatest need for Clarica’s products and services. Customers could register online and receive a CD to facilitate their planning of these events. LifeServ integrates Clarica’s products and services in its materials and refers customers to agents when appropriate.
Fitting all these e-pieces together created a “web-enabled agent”, which provides substantial support to Clarica’s sales force while also offering online accessibility to customers. As a result, far from being put off by the company’s e-business initiatives, agents are clamouring for more and actively making suggestions about what to do next.
With over $1 trillion in assets under its management, RBC Financial Group’s (RBC FG) Global Services Institutional and Investor Services (IIS) has the dominant share of the custody market in Canada and is hardly a minor player in worldwide securities markets. Yet, in the increasingly international world of financial services, IIS is facing some stiff competition from even larger firms and the ongoing threat of rationalisation in the industry. This all amounts to considerable pressure on IIS to acquire new customers and retain existing ones.
IIS provides a broad range of services to institutional investors, such as pension plans, insurance companies, crown cor-porations, governments and fund managers. In addition to providing core custody services such as trusteeship, safekeeping and settling securities, IIS offers a number of value-added products and services to customers that enable them to do business and track investment information in a manner designed for their particular needs. This “high touch” management differentiates IIS from its major competitors and is therefore central to its growth strategy.
In 1999, IIS recognized that its clients were looking for easier access to their portfolio information. While IIS had already provided some of its customers with online access through a client-server application, there were a number of limitations with this approach. A “fat client” solution meant that programs had to be physically installed and maintained at each client site. Upgrades were therefore very expensive and time-consuming to implement for both IIS and its clients, particularly those located around the world. As a result, only a limited number of clients were using this system. Many others were still relying on paper reports. “We knew that if we wanted to grow, we had to provide improved information access, but we needed to do it in a more cost-effective way,” stated Tom Wolf, Senior Vice President e-Business Group, RBC FG. With more and more of their clients able to access the Internet, an e-commerce solution was the obvious answer.
Serving Sophisticated Clients
While Internet access to information was logical, a number of strategic decisions had to be made as to how it would be implemented. Global custody is a very information-intensive business with very sophisticated clients, explained David Barkley, Director Strategic Business Technologies for IIS. Any new solution had to provide the personalization that IIS customers had come to expect. In addition, it was essential that a web-based solution assist customers with their workflows and reduce their cost and effort as well as the bank’s. Finally, IIS wanted a solution that would increase client touch points; one that would readily integrate a number of different business work processes and make it easier to work with IIS than its competitors. From the bank’s point of view, a new application also had to provide ease of support and facilitate straight-through processing, i.e., eliminate the need for human intervention, to comply with new securities regulations. This would require considerable re-engineering of IIS’s back-end processes.
Once these decisions were made and the new project, View-Finder, announced, the development team got a taste of the pent-up customer demand for this delivery channel. “The floodgates literally opened,” recalled Pat Bunting, ViewFinder’s e-business technology project manager. “The hardest thing we had to do was control expectations about how fast we could develop and implement it.” When moving to a new platform, such as the web, there is a significant amount of work to do behind the scenes that isn’t visible but is highly necessary. The project’s delivery schedule had to be constructed so that chunks of the technical platform could be delivered with chunks of business value. While the project took only eight months to fully implement, the team had its hands full dealing with users who wanted the system yesterday.
From a design point of view, the application had to offer extensive customization to IIS customers yet also assist the organization in keeping unit processing costs low. “This is an incredibly hard balance to strike and to do successfully,” explained Wolf. The team decided that the best way to do this would be to build a tool kit that would allow customers to try different things and create their own individual versions of ViewFinder. The tool kit enables IIS or its clients to customize reports and the look and feel of the system at both an individual user level and at a corporate level without costly technology changes. Therefore, ViewFinder can easily be set up to accommodate different types of users with different information needs in a single organization. Data can also be downloaded directly into customer processes in a format a company prefers. While IIS still provides custom reporting services, the vastly increased functionality of ViewFinder means that customers are now empowered to address most of their own reporting needs and in real time.
While to most people web-based applications mean developing what the customer sees, the IIS team also used the web to facilitate development, customer set up and customer support.
To speed up development, IIS partnered with Bottomline Technologies, a web development firm based in New Hampshire. Members of the project team were based in both the UK and Toronto. The team created an extranet version of the system that team members could use and review online.
Addressing Support Issues
One of the features that Bunting insisted on taking the time to develop was an internal web-based module for IIS use only to support customer set up. This facilitates the migration of client data to the new system, client set up, and other system management tasks. “This aspect of ViewFinder has been absolutely essential to our ability to support a growing number of clients,” Bunting stated. “All too often web-developers focus only on the end-user features of the product and forget about the time it takes to handle the administrative aspects. This module has been key to our ability to shrink new customer set-up time.” The administration system also collects metrics about system usage and who is using what features and how. This enables IIS to target its training and guide product development initiatives.
The administration system also enables IIS support personnel to sign-on to a customer’s personal version of ViewFinder and to walk them through support and training issues. “Now our customer service staff can see exactly what clients sees when they call in,” explained Barkely. “This makes customer service much easier and less frustrating,”
Customer roll-out has proven to be the biggest challenge of all. “Keeping up with client demand for ViewFinder access has been difficult,” admitted Wolf. Requests to get on the system have far exceeded the original conversion plans. IIS is careful to ensure that desire to meet demand not override a quality experience for its clients. Therefore, even with the internal web system, it takes several weeks to migrate a customer to ViewFinder since it involves understanding customer requirements, designing a tailored solution, identifying changes to work flows, working with the customer to determine the best set of tools to use, setting up appropriate security models, migrating the data and supporting the transition.
However, both IIS and its customers are finding that ViewFinder is worth the wait. “Before ViewFinder, we worked with individual clients on a one-to-one basis,” explained Barkley. “Today, we can manage the overall customer experience as well. This larger view provides improved services to customers and enables us to add real value.” Interestingly, before ViewFinder, most customer questions about online access involved technical questions (e.g., how do I back-up? My download has failed.). Now, client questions are focused more on asset information itself and they can use ViewFinder to get additional business value.
Seven months after its November 2000 roll-out, almost 50% of the assets IIS administers are being managed through ViewFinder. Clients love the functionality and ease of access and IIS managers credit it with a number of major new business customer and client retention wins. ViewFinder also enables IIS to compete more effectively worldwide against other custodians since it facilitates quicker time-to-market for new functionality, extends the organization’s reach and dramatically improves the distribution of services to customers. While supporting the business’ customer intimacy strategy, ViewFinder has reduced manual processing and the cost of delivering services. As a result, the judges of the 2001 ITX Awards named ViewFinder as the category winner for the application with Best Business Value.
Heather A. Smith is a freelance writer, as well as a Senior Research Associate with Queen’s University School of Busi-ness and co-director of Queen’s Management Forums. She can be reached at [email protected].