Cards Incentive
System
A brief outlook
What are Cards Incentives?
Generally thought of as: -
Frequent flier points
Gift certificates
Cash back or redemption as an incentive to
use the card.
Rewards are generally tied to purchasing
an item or service on the card.
What are incentives for Corporates?
For corporate clients they extend way beyond this definition.
Some Terms:
NACV – Net Annual Charge Volume
CHD – Client Held Days
AVERAGE_SPEND
CIF – Cards in Force
Gross Incentive
Signing Bonus
Write Offs
Incentives are paid based on various combinations of conditions as
agreed upon in contract sign up.
Example:
A client X shall be paid USD 100,000 as annual incentive if the charge
volume (NACV) for the client is more than USD 10,000,000
A client shall be paid an incentive of
1% of the total amount spent if the CHD is less than 10
5% of the total amount spent if the CHD is less than 5
Importance of incentives
A standard practice in relationships with corporate clients
and business partners is to provide financial incentives.
The incentive offering is often times the deciding factor
between competing Corporate Card Companies.
The ability to compete for card customers is becoming
increasingly dependent on the company’s ability to
provide tailored contracts and specialized support.
Clients consistently rank incentive payments high on their
list of key satisfaction drivers to decide on the card
company to be selected.
The Strategy
To build and use a single global system for card
incentive settlements across all corporate card
markets.
This new system will be an enterprise system
Well integrated with the other systems.
With good security and controls.
Provide an integrated accrual and billing process.
Meet AMEX standards and the statutory requirements
of the Sarbanes-Oxley Act (SOX).
Why CIS?
The support and processing of incentive payments is a function that
historically has been performed manually without much
standardization.
The current process does not comply with Amex standards with
respect to data integrity and control.
In addition, as the business card environment moves towards more
creative pricing models, develops new products and services and
drives customer self-service, the current incentive calculation
process will become increasingly obsolete.
It is therefore critical that the existing process be completely
replaced.
Key drivers
Systematic Calculations –
Currently all calculations are performed manually.
As with any manual effort there is always a risk of inaccuracies.
As new pricing strategies are offered to the market, an enhanced or
new system would be better able to perform this function in terms of
both accuracy and supporting documentation.
Customer expansion –
The current process for calculating Card Incentives is done manually
in Excel spreadsheets.
As the number of contracts with Card Incentive programs increase so
will the burden of manually calculating the incentives.
Direct Access to Information –
Various functions within American Express Corporate Services need
access to card incentive calculation and payment data for enhanced
service provision and pricing decisions.
Methodology
Client
(IBM)
Division1 Division 2 Division 3
(USA) (EMEA) (JAPA)
Location1 Location2
(Houston) (New York)
CID1 CID2
Marketing Office Services Office
BCA1 BCA2
(HR Dept) (Finance Dept)
Process
Profiling of clients, divisions, contracts.
Creating Terms and conditions.
Importing data.
Scheduled Calculation and transmission of
data to the Payables department.
Generation of reports.
Calculate and book accruals every month.
What are the volumes?
Total incentives paid by American Express
for the year 2006-07 is about US$ 600
Million.
Application Architecture
Siebel System GCP My Prospects
Card Incentive System (CIS)
Each of the data feeds are summarized and pre-processed
User Client Match profile to client and calculate settlement balance
Interface Profile
(Web
Create reports, process authorizations and files to update
-Enabled
A/P & G/L
Application
)
Reporting Check Payments Journal Entries
Global Client (Millennium A/P) (Walker G/L)
Profitability
Application Structure
WEB TIER APP TIER DATABASE TIER
IIS 5.0 IIS 5.0 Microsoft SQL Server 2000
.NET1.1, ASP.NET .NET 1.1 Windows 2003
WIN 2000 WIN 2000
HTML, XML Actuate 8.0 report server
SSO Web Agent
Internet ACTIVE
Explorer Export/ Import
IDC Module
.NET WebService
IDC
HTTPS
IDC
Web Server IIS
IPC 5.0 Internal Internal
Firewall
IDC
Firewall Firewall
Database Server
SSO for .NET WebService
Amexweb Logon
IDC
Application Server
AMEX LIN
Security is controlled by
STANDBY the appserver after the user
has been authenticated
Security is role based.
Web Server
CFS User based on groups
Analysis will have access to certain
Login Functions and screens
Actuate 8.0 reporting server
Logical Flow Diagram
CIS
Databas
GCP Files in Ascii format Import Walker
From CIS To GCP e
Files in Ascii format Export Files in Ascii
From CIS To GCP format to Walker
Thank You!!
