Now, more than ever, consumers have become highly critical and skeptical of financial services firms. People want assurance and move visibility into the operations, fees and services offered to them. To gain back customer trust and loyalty – while driving greater profitability, growth and agility – you need to focus on how your organization will address three key areas.

Three BIG topics in financial services you need to pay attention to, right now:

The Compliance Challenge
In the world of regulations like Sarbanes-Oxley, Basel II code, MiFID, etc., you need a solid platform in place that supports current regulations – but more importantly, creates an environment in which adaptability is a fundamental component. New, stricter regulations are knocking on the door. To avoid a significant drain on resources, money, and time, it’s critical that you invest in a tool that enables you to achieve compliance on a long-term basis without having to significantly alter your operational systems. Business process management (BPM) can help financial services companies define, automate and standardize processes to be both auditable and consistent. By leveraging the existing underlying systems, and providing a more agile platform that is integrated with them but enables control and automation across systems and departments, you are able to implement changes in a fraction of the time you could with legacy systems. Most regulatory mandates require you to provide a wealth of information and audit trails. With BPM, you can track, monitor, and report on critical processes to not only comply with federal regulations, but better improve current processes to drive enterprise-wide efficiency and profitability.

Better Customer Experience
No new customer wants to spend weeks (and even months) getting their account started. The fact of the matter is, in many financial service companies customers go through a long, rigorous process to open their account – all of which is caused by ineffective, poorly structured new client on-boarding processes. One of our customers, Cornerstone Tax Advisors, had an extensive, paper-based on-boarding process, and as a result the time between the first client interaction and the conclusion of the contract ranged from 11-20 months! However, by using Metastorm BPM, the company was able to control and monitor in-bound workflow with ease, visualize its operational positions, and easily design, model, and change its new client on-boarding processes – radically improving the customer experience, and allowing the company to bring on new clients better and faster.

Smart Consolidation
Over the past few years, we have seen a significant amount of consolidation within the financial services industry. The reason for this is simple – companies want to expand their portfolio, gain more market share, increase their customer base and achieve higher profitability. Unfortunately, almost half of the companies that undergo a merger or acquisition do not achieve the original goals. This is largely due to not having clear objectives – that take into account the organizational structure – to meet the strategic goals of the acquisition. An enterprise architecture tool can help you understand the people, processes, systems and technologies within both companies. Taking it a step further, with an enterprise architecture tool you can analyze, model and simulate the optimal way for these processes to merge together – producing the best business structure possible for your organization.

As the world recovers from the economic crisis it is imperative that you have all the resources to make well-informed business decisions. You need to know what capabilities and assets you have and the best way to manage and utilize them to remain a viable competitor in this ever-changing marketplace. To find out more information about Metastorm’s financial services solutions, visit our financial services solution page.

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• “By 2012, a major pharmaceutical company that downsized without transforming processes and technology will experience a major failure of control.”
• “By 2012, a life science company will pay a $1 billion-plus fine for noncompliance with government contracting/rebating rules.”

What is most striking to me about the 2011 predictions is the disastrous nature of the consequences that Gartner cites – all of which can be tied back to a lack of focus on process.  Over the past year, I have become concerned about the rapid pace at which companies in the industry have been consolidating. How does a company fully understand the value of a potential merger or acquisition – let alone realize its true value when events are happening this quickly? I agree with Gartner on this one. Without significant investment in technology to document, harmonize and optimize processes, a merger or acquisition is bound to fail.

What’s especially frustrating for me in particular is that software, services and industry expertise exist (from companies like Metastorm) to help in these situations, and far too often we find organizations either are not able or willing to listen and invest. Rather than ignoring the problem, what organizations should do, as Gartner clearly states, is “consider business process management tools to create agility and the rapid deployment of reorganized processes” and “evaluate processes together.” Not surprisingly, the analysts recommend strongly examining compliance and governance functions to “ensure scarce resources are focused on ‘material’ risks.”

In today’s era of heightened regulatory scrutiny and fines it is shocking that compliance seems to be both overlooked and understaffed.  In addition to overall process improvement, solving compliance burdens is an area in which Metastorm has a long track record of client success.

Metastorm recommends that Life Sciences companies take a 3 pronged approach to process understanding and improvement:

1. Involve all key stakeholders up front by using cloud-based collaborative modeling and process discovery tools.  Virtually anyone can access the tool and groups can work online together to come to consensus on goals, organizational roles, business rules and process flows. 
2. Establish a central repository to house business models, strategy roadmaps and “as is” and “to be” models of the business so that all stakeholders have visibility and stay on the same page. An enterprise business architecture tool is best equipped to provide this along with critical process analysis capabilities.  
3. Leverage process automation and business process management software to enforce and track behaviors for consistent process execution that meets business guidelines and supports business objectives.  People will actually welcome an environment that takes the guesswork out of adhering to complex compliance regulations and that gives that instant access to the information they need to make better business decisions. It also serves to automate the documentation of and reporting on key processes and metrics.  

Business processes not only drive company operations, but they also are a key element of compliance. Back to Gartner’s 2011 Predicts report – the other prediction I find almost equally compelling (given the hard dollars associated with it) is that, “By 2012, a life science company will pay a $1 billion-plus fine for noncompliance with government contracting/rebating rules.”  I can’t tell you how often clients ask me for Return on Investment (ROI) models to justify process analysis and business process management software – while almost every day news headlines cite yet another pharmaceutical company paying a massive fine.  There is the ROI right there – often hundreds of millions of dollars.  

The numbers are no longer trivial in terms of fines, and the negative publicity can be even more damaging in a market that is becoming increasingly competitive.

The other side of this is pretty simple as well – fines are a source of income for the government. I don’t think that requires further explanation, but suffice it to say the industry is going to pay one way or another. I addressed the government contracting and rebating rules component of this prediction, in a blog post last year.

I don’t know any other area of Life Sciences where such complex, yet bottom-line-impacting processes, activities and controls are so far behind the curve. I understand this is a highly complicated process and area of regulation. My response (similar to Gartner’s recommendation) is simple – the impact is huge (to the tune of an $11B a year loss for the industry) so– this is where you should be investing heavily in controls, processes, and technology to ensure you are compliant and also agile enough to adapt to on-going changes. I also recommend taking it a step further, which some of our most mature clients have done, and layer process controls and automation through Metastorm BPM on top of the core infrastructure of revenue management. We have multiple clients who have taken this approach and literally saved millions of dollars on an annual basis – providing more than adequate ROI justification and case study proof points to get your organization moving.

I think it’s clear that things are going to get much worse for some Life Sciences companies, with potentially disastrous consequences.  While those that do take the time now to develop process visibility, understanding, optimization and control will be poised to not only survive this industry storm, but emerge as the market leaders. The best approach to survival in 2011 and to prepare for the future is for Life Science companies to invest in a strong, flexible software suite that allows them to fully understand their organizational capabilities, while providing features allowing them to track and manage change.  The question is – are you ready to step up and make this investment now or are you going to wait and risk the fallout?

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Before it even passed as legislation, Allergan proactively took steps to meet the mandates listed in the Physician Payments Sunshine Act and ensure that technology was in place to support overall corporate compliance and risk management efforts.  In doing so, Allergan implemented BEACON – a formal compliance and reporting program subjected to regular reviews, built on Metastorm BPM.  Rather than just focusing on reporting, Allergan chose a Business Process Management (BPM) solution to ensure it had better insight and control over its underlying business processes, as well as the ability to proactively analyze and making ongoing improvements.

In an article published by CIO Magazine last week, How Botox Battles Compliance Wrinkles, Allergan CIO Sue-Jean Lin discusses how Allergan was able to meet its new compliance burdens using Metastorm BPM.

For more information about Metastorm’s Aggregate Spend Solution, I encourage you to sign up to watch a free demo and explore our Life Sciences solution page.

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Well, one can hope anyways.

Nonetheless, this year’s “winners” certainly faced some serious competition.

My favorite moment on Fortune’s list is number 18- Anthony Armatys being paid a six-figure salary for five years for a job that he didn’t even have (somewhat similar to the character Milton in the movie Office Space).

But seriously—this kind of stuff happens in real life! Although both of the salary mishaps are grotesque examples, costly oversights on a smaller scale happen every day. Added up, these can cause some serious problems—squandered resources, lack of visibility and inefficiency are wasteful at best and disastrous at worse (think about the banking crisis—if banks had a little more visibility it could have played out much differently).

So what can we learn from history to avoid repeating it? If you don’t have visibility and control over your simplest processes (payroll for example) then you could be in for some serious problems.

This is yet another reason why CIOs have made business process management (BPM) a top priority for 2010—BPM enables businesses to optimize their processes for increased agility while providing visibility into who is doing what and how resources are being managed—fostering accountability and control.

Who knows? With the functionality provided by BPM you could have one of the smartest moments in business in 2010—a much more admirable achievement.

Learn how one Metastorm customer used Metastorm BPM® to increase visibility, accountability and control across the organization while achieving greater enterprise agility and efficiency.

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The article titled, “How to Use Business Process Management and Enterprise Architecture Tools to Thrive in a Recession,” first outlines four ways BPM software can allow for cost savings. BPM software can:

• Increase efficiency
• Maximize current resources
• Lower risk
• Gain greater visibility into dead weight

While an EA software tool can help organizations evaluate and make critical infrastructure decisions that can dramatically reduce fixed-cost expenditures and ensure that any reductions are the right reductions to make. EA software can:

• Identify duplicate or underutilized overhead
• Optimize your value chain
• Quickly and effectively assimilate mergers and acquisitions

Investing in these types of tools will ensure that you are well-positioned when the economy rebounds.

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