Overview
One of the country’s largest insurance companies had an enormous in-bound services operation that processed payments, paper documents and other remittances. Faced with an increasingly competitive market, the insurer sought ways to enhance its in-bound services operation in order to continue to provide the required levels of service without investing a significant amount of additional capital. In support of this effort, the company distributed a request for proposal (RFP) in late 2006 that focused on outsourcing their remittance processing operations. Soon, however, the company’s vision would grow much larger.

Business Need
The insurance company understood that, while still quite large, its document-based processing requirements would likely decline as more and more transactions were generated electronically. This would have a profound impact on its bottom line because, with all of the legacy systems and personnel in place, its unit fixed cost would continue to increase. The company also wanted to avoid the significant investments of financial and human capital required to keep its operation up to date. Finally, it envisioned an opportunity to improve performance timeliness by automating workflows and streamlining processes. As such, the company began considering a much more extensive business process outsourcing (BPO) solution in which all in-bound services would be taken over by an outside, expert provider.

BancTec’s Solution
After a substantial review process, the company selected BancTec as its partner in a unique 10-year, in-bound services BPO relationship that would transition the company’s existing processing operation over to BancTec ownership and control. In addition to remittance processing, the agreement covered other services including mailroom, enterprise image capture, workflow management, and exception reconciliation.

While BancTec was the company’s current provider for its remittance and archive systems, this alone did not secure BancTec’s selection for the massive BPO engagement. Rather, BancTec was selected because it was successful in substantiating an economic value proposition that would result in reduced costs, capital avoidance, and processing flexibility through a complete re-engineering of the company’s entire in-bound services function.

BancTec was able to deliver best-of-breed capabilities at the lowest overall cost, and with the fewest integration problems. Specifically, BancTec deployed its IntelliScan® family of high-speed scanners to serve as the primary hardware component in the newly revised scanning operation. BancTec also upgraded the operation to its latest PayCourier® payment processing solution. Finally, as the service relationship continues to evolve, BancTec will utilize its CenterVision® transactional content management solution to provide the company with advanced capabilities for processing and delivering all inbound content to the appropriate business application or knowledge worker.

“Not only were we able to reach our core objective of a 30% cost savings, but we were able to do so in a way that improved service levels, increased our organizational flexibility, and mitigated the impact on employees and the community.”

BancTec’s business approach was the final differentiator. Specifically, the BPO agreement created a partnership in which the companies would share risk but ultimately achieve their respective goals. BancTec transformed the company’s existing operation into a BancTec Center of Excellence for receipt-to-post operations. This represented a significant investment because the operations couldn’t simply be turned around through new management, but would require much more in the way of advanced technology, training and other resources. Finally, BancTec agreed that its assumption of control would not impact local employment levels. As such, all employees who were interested in moving over to the BancTec team were offered positions, thus there was no loss of jobs in the local community.

The Results
By late 2010, the company was realizing reduced costs of approximately 30% as agreed to in the contract. Specifically, in 2009, business case attainment reached nearly $600,000 in savings, while in 2010 it was almost $3 million. In addition, the company was much better positioned for scalable growth in its in-bound services with no future capital investment required.

Also, the re-engineering of in-bound services and implementation of new technology improved processing cycle times. As a result, payments were posted sooner to the receivables system, and response times to customer inquiries were reduced. Specifically, incoming mail times were shortened by one day, resulting in faster receivables posting, and as a result, improved cash flow. The estimated growth in investment income through faster posting in a single year was approximately $670,000. Over ten years, the estimated net present value of this increase would result in a total benefit of $3.4 million.

Other benefits included:

• Lower business risk and improved business continuity. Because work can now be shifted to BancTec’s network of facilities across the country, document and payment processing will no longer come to a standstill if the local facility experiences a disaster.
• Lower transformation risk through BancTec’s phased-in approach, thus allowing the team time to acclimate to the new operation.
• Enhanced employee and community relations. Employees did not lose jobs, plus they would have additional opportunities for growth and development in the future.
• Future opportunities for document content capture and decentralized payment processing. As a result, the customer will be able to investigate future ways to increase timeliness of processing, as well as to take on added roles that ensure full utilization of the facility resources.

In the Client’s Words
“Not only were we able to reach our core objective of a 30% cost savings, but we were able to do so in a way that improved service levels, increased our organizational flexibility, and mitigated the impact on employees and the community.”

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