21 July 2020
Automation works when people talk to people about people-things; and machines talk to machines about machine-things.
But how do you know whether a person or a machine should do something? Using examples from insurance industry, this article takes you through a common pattern that will help you decide what tasks should be done by machine and what tasks should be done by people.
If you look across the business processes in your organisation, you'll see that some processes involve your team members applying their experience and expertise to devise new ways of solving business problems or taking advantage of business opportunities. You see this in action when a member of your sales team builds a strong relationship with one of your customers or member of your finance team works with one of your suppliers to remove treasury risk. Your team may rely on data in your systems to help them with these tasks but they are using that data in unique ways. These types of processes will never be automated. We call this an individualistic process
There are other processes though where your team members are taking data from your systems and sending it somewhere or receiving information from somewhere and putting it into your systems. These processes usually start in one system (such as your supplier's billing system) and end up in another system (such as your accounts payable system). We call this a systemic process.
Systemic processes are ripe for automation and characterised by data that starts in one system and ends up in another. This is the most common pattern indicating an automation opportunity.
Let's look at some examples.
Underwriting agencies find it challenging to match payments to open invoices because the payments in their bank accounts are aggregated across many policies.
In a typical workflow, when a broker makes a payment to an underwriter, the broker's finance system generates a remittance and emails it to the underwriter. At the underwriter, a finance team member reads the email, views the attached PDF or Excel remittance and then manually marks as paid each of the invoices listed on the remittance.
This is an example of the Systemic workflow pattern - the information starts in the broker's finance system and it ends up in the underwriter's finance or underwriting system.
Everything is OK on the broker side - they are automatically generating remittances from their finance system. But things are not so good on the underwriter side because a person is receiving the remittance and then entering it into a system. This is an opportunity to automate.
The diagram below shows, on the left, the broker's system generating a remittance and, on the right, sending it to the underwriter where it is manually entered into the underwriter's finance system (circled in red).
Instead of manually matching remittance lines to payments an underwriter is better off letting a machine receive the remittance from the broker and automatically match it to open items in their underwriting system for review by the Finance team as shown in the diagram below.
Of course, the next question is "How do we do that?" Answering that question is exactly why we started Managed Functions. Let us handle that and manage the ongoing process. Your finance team no longer needs to do that work.
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Another example is a request for a premium quote from an underwriter. The policy information starts off in a broker's system. The broker sends that information to several underwriters who enter it into their rating engine and then respond with the premium they would charge for the policy.
This looks very similar to the remittance processing example above. Brokers typically generate requests for quotes from their broking system - so from their perspective everything works great. The problems arise when the underwriters need to put the quote request into their premium rating engine so they can generate a quote.
Just like remittances, this process is ripe or automation by automatically entering requests for quotes directly into the rating engine. Doing so removes a tedious task from your underwriting team and frees them up to spend time considering the risk rather than spending time keying quote information into their rating engine.
The final example is not insurance-specific but it also follows the same pattern as remittances and quotes.
Invoice processing is one of the first processes a company will automate when it embarks on an automation project. Invoices are typically system generated by the supplier but are then manually entered into the buyer's accounts payable system. Diagrammatically this looks identical to the other two processes we've looked at.
And once automated, the end result looks the same as the others.
When you look across the processes in your company, you'll likely find lots of examples that follow this pattern. If you just want it solved, drop us a note and we'll take care of it. We've done enough of these that we don't even charge an implementation fee for automating and managing processes for our customers.