Before Jim Fowler joined Nationwide as chief information officer in June 2018, he and the company’s CEO talked at length about the challenges facing the 100-year-old insurance giant. The insurance industry, they both felt, hadn’t yet been disrupted by technology and the pair wanted to be the ones who did it first.
While Nationwide was well into a massive modernization of its core transactional systems, this wasn’t transforming the business. To drive Nationwide into its next phase of growth, Fowler asked himself: “How do we take advantage of these new capabilities to meet our customers’ needs in new ways?”
To do that, he concluded, he needed to better connect IT’s goals with the goals that other business functions cared about. And he needed to collaborate with those other leaders to identify steps and even entire processes that could be automated.
Now, Nationwide has cross-functional teams embedded with the lines of business to make sure IT is digitizing processes in a way that makes work more efficient for employees and results are faster for customers.
You’d have a hard time telling who was from IT, who was from finance, and who was from operations, That whole team is measured on the success of shared business metrics.
A year into this effort, Nationwide has reduced the time it takes to issue a new life insurance policy from a month to, in some cases, minutes.
Fowler attributes these successes to the company’s ability to implement a digital workflow strategy.
CIOs are being tasked by boards, investors, and business leaders to digitize workflows, the interdependent business processes required to reach a result, like onboard a new employee or resolve a customer issue. Workflows are the circulatory system of any enterprise. Digitizing the repetitive parts of these processes can grow the productivity of organizations, improve customer experiences, and empower employees to spend more time doing meaningful work.
Nine out of 10 CIOs expect to digitize at least 60% of their company’s workflows in the next three years, according to a survey conducted by Oxford Economics and commissioned by ServiceNow. Among the benefits these CIOs are already achieving through this transition are speed to market, attracting and retaining customers and employees, and operational efficiency.
The survey, which includes responses from 516 CIOs from around the world, offers a comprehensive look at how companies are approaching workflow digitization, including the business lines they start with, how standardized their approach is, and the peers they lean on most to see results.
The data also reveals the CIO’s greatest challenges. For example, a significant percentage of IT departments don’t effectively understand the value of various functions or are communicating the goals of technology investments clearly.
In complementary interviews that contextualize the survey data, leading CIOs—from a range of companies including Nationwide, Siemens AG, and JPMorgan Chase & Co.—describe how a good workflow strategy can help overcome these and other challenges. As Shamim Mohammad, chief information and technology officer (CITO) of CarMax, the largest used-car retailer in the U.S., says: A comprehensive strategy can equip a CIO with the “tools and tactics and policies” necessary to ensure the digitization journey is successful.
Here are four components of a good digital workflow strategy.
Step 1: Tie digitization goals to business goals
To be successful, a digital workflow strategy must reflect the priorities and goals of the business at large. Yet this is an area where many CIOs struggle: Just 18% of CIOs report that their organization is highly effective at understanding the ways that various business functions provide value, with the same percentage saying they’re highly effective at setting business goals that permeate all areas of the business. Even fewer, 17%, say they’re highly effective at tying their plans to business outcomes.
Nationwide’s Fowler won’t take on a digitization effort without that link being clear. He starts by connecting the company’s strategic priorities to IT efforts. He asks his team: “What are the things that have to be true technically for the business to be able to achieve those business goals by 2021?” The answer becomes his digitization goal.
For example, to improve customer engagement and satisfaction, his team is working on making all of Nationwide’s products and services available through APIs on different channels, such as social networks and the company app. “We can hook into whatever ecosystem our customer wants to use to interact with us,” says Fowler.
On top of that, Fowler’s team regularly rechecks whether the projects are meeting goals and readjusts strategy accordingly. Progress is measured with business-impact metrics, not IT metrics like uptime. For example, when digitizing to improve how long it takes to complete transactions, the team measures insurance-industry KPIs like time to quote, time to bind, and time to process service requests.
The digitization goal “drives the technology strategy, which drives the tactical planning for the next three years of what initiatives we’ll run,” says Fowler.
Step 2: Have a standard process for digitizing workflows
Almost 8 out of 10 CIOs have a standard process for digitizing workflows across functions, but given the scope of processes running an enterprise, many still struggle with figuring out the opportunities ripe for improvement. Just 14% of those surveyed by Oxford Economics say they’re highly effective at creating a catalog of all processes and assessing what can be digitized. Successful CIOs have developed tricks for doing this that help them prioritize which workflows to start with.
For example, at ServiceNow, every business function has three top priorities—things like speeding up the time it takes to close the financials, release new products, and onboard new employees. CIO Chris Bedi looked at each of these corporate priorities to see which had a dependency on technology. His conclusion: more than 70% did.
The digitization goal ‘drives the technology strategy, which drives the tactical planning for the next three years of what initiatives we’ll run.’
This effort surfaced “the big rocks we absolutely have to knock down as an organization,” he says.
Bedi’s organization devised a digital assessment to standardize the process for each business line and then created a digital maturity “heat map” that visualized all the smaller processes where friction could slow down these big priorities. “Now when we ask the question at a very micro level—how digital is our accruals process?—we have an answer,” he says.
The heat map also makes it possible to take a broader view. That way, Bedi says, he can answer questions like: “How digital is our financial close?” Zooming out even further, the heat map lets Bedi and the business process owners look across functions to identify disconnects that need to be addressed.
Using the heat map, he’s also able to generate a digitization scorecard for each business line. This not only helps to align IT more closely with the business, it provides a sense of accomplishment and momentum as scores improve.
To help identify priorities and guide decision-making at JPMorgan Chase, Global CIO Lori Beer created a “business-capability taxonomy.” The taxonomy helps isolate the most important processes—for example, real-time payments as opposed to payments more generally. Rather than take on the entire payments process, they were able to identify that real-time payments was the capability that needed to be a strategic priority, which led to the decision to build it on a modern technology infrastructure instead of the company’s legacy one.
“We actually wanted to modernize and take a new approach,” Beer says.
Step 3: Collaborate across the C-Suite and integrate IT into the business
Of course, no matter how strategic a CIO’s initiatives, none of this work can be done without buy-in from the business owners and employees whose processes are being targeted for transformation. Still, collaboration is a struggle for many CIOs.
While 61% of CIOs say they collaborate with their company’s COO to standardize workflows through digitization and 50% of CIOs say they collaborate with their CEOs, far fewer work with other execs. In fact, 21% say they alone are responsible for workflow digitization. Meanwhile, just 15% of CIOs say their organization is highly effective at identifying executive sponsors to support digital transformation.
Likewise, 15% say their organization is highly effective at building out specialized teams across functions to carry out digital transformation. About one-quarter of all respondents say their organization is highly effective at integrating IT in all business functions.
One way that successful CIOs have overcome these challenges is by integrating technology teams responsible for digitizing a workflow directly into the business function. This approach, by its nature, creates a sense of “collaboration and shared goals,” CarMax CITO Mohammad says. This in turn produces results.
For instance, CarMax appraises more than two million cars a year. This was previously a manual process, with appraisers physically checking vehicles in all weather, sometimes in the dark, armed with clipboards and cameras to fill out a paper checklist and document the car’s condition. Then, the appraiser had to leave the vehicle and go into the store to complete the appraisal.
A team of technology staff and field associates worked together to design a digital workflow in which associates use an app on a handheld mobile device to capture the vehicle assessment information, take pictures of the vehicle, and enter the vehicle’s VIN. A system then pre-populates much of the data that would previously have been entered manually inside the store, drawing from CarMax’s extensive car database as well as third-party sources. This gives associates access to the information they need to assess the vehicle in real-time and provide an appraisal without leaving the vehicle.
The new workflow streamlines the process for associates and creates a much better customer experience. The information is more accurate, too.
“This has created quite a lot of efficiency and cost reduction,” Mohammad says.
With more than two million appraisals a year, shaving off a few minutes per appraisal adds up quickly. And since CarMax often buys from and sells to the same customers, improving this process enhances its relationship with them. In addition, building this technology has enabled CarMax to make appraisal offers on customer’s vehicles remotely, so customers can receive an appraisal offer on their current vehicle and complete the car buying and selling process from home.
Siemens, the global industrial conglomerate, has taken the notion of embedding IT teams inside the business lines a step further. The company earlier this year reorganized into units focused on its different target markets, such as smart infrastructure and gas and power.
Previously, the IT department was highly centralized. Now, 60% of IT personnel work directly for one of these units. These technologists are “very, very close to the business,” says Helmuth Ludwig, the company’s CIO.
They work with the now smaller central IT department on cross-company projects, including deploying new platforms. But by working in the business units, they’re better able to focus on helping their colleagues “sell better [and] address their customers better,” Ludwig says.
Step 4: Embrace a test-and-learn mindset
For CarMax’s online financing capability, for instance, the company began with a small subset of customers to see how they would react. Over the course of around six months and many iterations, they enhanced and matured the product before rolling it out to the whole country.
“We had a hypothesis that customers would like it, but we really didn’t know much beyond that,” says Mohammad. “We knew that if we turned it on, we’d learn something.”
At Nationwide, to ensure that new workflows hit the mark, the people who will use the new processes (customers or employees) are engaged throughout. This involves design thinking, journey mapping, and an iterative, minimum-viable-product approach to development.
A digital-enabled future
The results leading CIOs have achieved by following these steps have had an outsized impact on their businesses. Until recently, for example, Nationwide sent customers a paper-based application when they applied for life insurance. The customer would fill it out and then mail it back. Later, the company would schedule a medical test and blood work. The entire process could take a month or more before the customer had a policy in hand.
Today, Nationwide customers fill out an online application. Answers to certain questions might trigger a phone interview with a company representative. But aside from that occasional human interaction, many policy-issuing decisions are automated. They’re based on the customer’s answers combined with data Nationwide already has on the applicant and from third-party sources. Predictive modeling, not a human, now determines things like whether a customer needs a medical test.
Because of these digital workflow changes, Nationwide can complete the entire approval, binding, and underwriting of a life insurance policy within a day for up to 30% of applicants. This has not only reduced cycle time from around a month, it has reduced the cost to process an application by about 75%.
The improvement was so extreme that the first agent who went through the process with a customer thought there must have been a problem with the system. “The agent called our call center because the policy came back so quickly,” Fowler says. “They actually couldn’t believe that it was real.”
CIOs and their business partners are mapping the future through workflow digitization. Those who manage the process effectively will be well positioned to lead their industries in the years ahead.
Original article by Abbie Lundberg – a business technology analyst, author and professional speaker with over 30 years experience writing about the ways in which business leaders transform their organizations.