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IBM Smarter Process (Göteborg)
Service-centric industries are facing significant challenges due to complexity, with over 50% of management time spent on customer variability and workflow efficiency. The automotive sector, particularly impacted by economic shifts, is navigating emerging markets while encountering increased regulation and a demand for innovative processes to enhance productivity. IBM emphasizes the need for smarter processes through automation, big data, and analytics to adapt to evolving consumer needs and improve operational efficiency.
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IBM Smarter Process (Göteborg)
- 1. IBM Smarter Process 1 RobertGolladay, Smarter Process Leader, Europe [email protected] 26 Nov, Gothenburg
- 2. Managing complexity isa challenge in most industries Time spent managing complexity (customer variability, performance quality and workflow efficiency) in service-centric industries has surpassed 50 percent Complexity threatens to reduce customer engagement 2 Source: Booz and Co., 2011
- 3. Global Automotive IndustryTrends and Challenges 3
- 4. CEOs are confrontedwith massive global shifts in the New Economic Environment Mature markets retain economic power Growth has been stagnant as the market awaits the rate of adoption of connected and electric/hybrid vehicles 5% 15% 79% Move or return to unrestrained market with limited state ownership or regulatory reform 24% 15% 61% Greater government involvement, more regulation and government as a stakeholder in strategic industry Continued globalization 11 23% Truck industry is still determining how aggressively to globalize Not at all/to a limited extent Incredible growth, particularly in China despite depth of recesssion Big government, heavier regulation Small government, light regulation Slow down or reversal of globalization Rapidly developing markets gain economic power To some extent 67% Auto companies have been among the most global of all industries, truck OEMs have been determining how to follow To a large/very large extent Insights from the IBM Global CEO Study Source: Q8 Which of these future scenarios for the next five years do you consider more realistic? Globalization n=1515; Markets n=1502; Government n=1519, Automotive n=75 4
- 5. Complexities Identified byAutomotive CEOs in Today’s New Economic Environment The New Economic Environment “The market in developed countries is saturated. We have to go to emerging markets such as China, Middle-East and Africa” More volatile Deeper/faster cycles, more risk 7% 21% 72% CEO Automotive OEM, Japan. 17% 23% “Today’s economic environment will be tough for a long time. It is going to force everyone to look at their businesses differently.” CEO Truck OEM, U.S. “We would love to simplify, but the reality is that we will have to manage complexity going forward.” 16% 13 23% More uncertain Less predictable 60% More complex Multi-faceted, interconnected 71% Structurally different Sustained change 16% 61% CEO Supplier, U.S. Insights from the IBM Global CEO Study 5 Not at all/to a limited extent To some extent To a large/very large extent Source:Q7 To what extent is the new economic environment different? Volatile n=1514; Uncertain n=1521; Complex n=1522 ; Structurally different n=1523, Automotive n=75
- 6. New forces aredisrupting how companies do business spend by 2014 25% productivity improvement 47% growth in cloud processes €100B government savings CONSEQUENCES $3.6B
- 7. New forces aredisrupting how companies do business $3.6B Mobile requires process reinvention spend by 2014 Forrester forecasts that companies will spend about $900 million on mobile process reinvention services in 2013 and up to $2.7 billion in 2014 25% Socially-enabled processes drive increased productivity productivity improvement According to McKinsey, social technologies, when used within and across enterprises, can raise productivity of high-skill knowledge workers by 20 to 25% 47% Cloud deployments force companies to rethink their processes growth in cloud processes €100B government savings Gartner ranks Business Process as a Service (BPaaS) as the fastest growing cloud segment with 47% annual growth Big data drives insight into processes McKinsey found government administration could save more than €100 billion in operational efficiency improvements alone by using big data
- 8. IBM capabilities forSmarter Process Banking Insurance Healthcare Industry and Functional Industry and Functional Consulting Expertise Consulting Expertise Government Operational Decision Management Telecom Managed Managed Business Processes Business Processes Social Mobile Transport Energy Industry Solutions Industry Solutions and Accelerators and Accelerators Big Data Cloud Business Process Management Retail Case Management Operational Intelligence Operational Intelligence Business Intelligence Predictive Analytics Enterprise Content Management Service Oriented Architecture & Integration 8 Master Data Management
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- 10. The industry mustbe oriented around changing user priorities… Traditionally, automotive enterprises have partnered with related industries and entities to varying degrees. Today’s smart automotive enterprise deepens these partnerships to generate new insights and create capabilities—and connects this collaborative ecosystem directly to the consumer. This results in the ability to deliver new value and experiences that meet consumers’ evolving needs. New mobility models Fewer manual operations Increased safety Greener vehicles Alternative financing Better service Customizable options Responsible manufacturing 10 Connected entertainment
- 11. … and changebusiness models and value chains to address evolving market requirements and opportunities. Recent Past Evolving Future Differentiation based on styling and power No direct OEM-consumer relationship Linkage to the automobile owner via the connected vehicle Longer warranties and annual maintenance checks Self monitoring and self-healing vehicles High volume production Flexible manufacturing Captive financing to enable car sales Captive financing enabling new business models Supply Chain Speed 11 Consumer focus on fuel consumption, infotainment, advanced electronics features Cross-industry integration
- 12. Accelerate Change withOptimized Processes and Decisions .... 12 12
- 13. Automotive CEOs AreCharting Their Roadmap to Agility Customers Customers Accelerate change with optimized Business E-Banking processes and decisions Business Process & Customers Branch Decision Management Site ATM International Bank Strengthen relationships Government and integrate with customers, Oversight suppliers and partners Customers ATM Internal Employees Home Mtg LOB Commercial Finance LOB Connectivity 3 Party & Mobility Services rd Services LOB Commercial Customers Branch Site 3rd Party Service s Underwriting Control costs and add flexibility with smart applications Mortgage providers Payment Service Providers Outsourced service providers Legal Services Cloud Infrastructure Across their Dynamic Business Network 13
- 14. Automotive Processes Benefitfrom a Layer of Control and Visibility with BPM Finance and Ops Warranty Claims 1. Automatically Prioritizes and Routes Work 2. Guides users through decisions 3. Standardizes resolution across geographies 4. Leverages existing systems and data 5. Monitors for business events and initiates action 6. Real-time visibility and process control Finance Management Dealer Engineer Line Worker BPM Benefits: 80% Reduction in Manual Interactions Faster Issue Resolution 14
- 15. Adoption is Incremental,Benefits can be Extraordinary Europe Tamed incident management scenario in record time Implemented twenty processes across their supply chain in 24 months System handles 30,000 rules and 500 transaction types for 4,000 institutions 3x faster time-to-market 25% cost reduction to maintain business logic Increases customer & distributor satisfaction Company-wide adoption by business users > 200 simple processes built by business users in production within 18 months > 40,000 tasks assigned to users per month within first 6 months > 180,000 process instances created in first half of 2012, surpassing total for 2011 Average 3000 users per day 15 Cut “engineering” time of designers on car systems by 20% in one year 60+ BPM Developers across 3 continents Multiple processes automated across purchasing, & product development Process discovery, process automation and integration, and decision management are all building blocks across the enterprise
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- 17. Here are severalrecent examples of BPM/BMRS deployments delivering Smarter, more agile processes @ IBM Mid-Market Deal Registration – Deliver PTI improvement by reducing deal registration cycle time with rules-based work-flow automation. Supply Chain Alerts – Over $2M annual savings for timely notifications when supply chain disruptions occur. Cross-brand Pricing Estimator – Reduce pricing proposal implementation from 14 to 1-4 days and deployment to new countries in days versus weeks. Business Outcomes Achieved GTS Cloud Sales Enablement – Integrated work-flow, rules and monitoring to reduce partner “register to welcome kit” cycle-time from days to hours. GMU Geography Location Code Assignment - Enabled GMU reps to update rules (direct) for geography location code assignments, reducing cycle time from several weeks to just a week for more than 50 countries. Maintenance Technical Services – Increased IBM Client satisfaction through proactive notification of exposures in clients’ IT inventory by applying rules derived via analytics Infrastructure Optimization – Reduced cycle time by 75% to complete the analysis required to migrate from Physical servers to Virtual servers Business Agility Enablement Cloud - Application teams rapidly acquire shared instances of BPM and Decision Management software in minutes to implement solutions that achieve business agility. 17
- 18. Business process managementyields significant benefits 4 Weeks 300% ROI KPMG is providing its clients with business benefit in as little as two weeks, helping them remediate bad books of business Captured critical tax&audit knowledge, applying ad-hoc business patterns and creating a new line of business Horizon Blue Cross Blue Shield generated an average of 300% ROI on each internal process improvement project Reduced processing time for claims by 20-30 minutes each 3000 Banco Espirito Santo has 200 simple processes in production with 80,000 process instances in 6 months Average users per day 3000 average users per day running on the processes $30 Million in savings in six months 18 Caterpillar generated $30M automating workflow and decision making in the warranty claim process Visibility, compliance, and adaptability to new international markets
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- 20. Typical Entry Pointsdemanded by clients to achieve Process Innovation Industry Expertise and Solutions Business Discovery Understanding & Compliance Process Automation & Integration Decision Management Business Events & Rules Business Visibility, Monitoring & Measurement Master Data Management Integration Analytics Enterprise Content Management
- 21. Why IBM forSmarter Process? Install base of over 5,000+ active implemented customers and 800+ business partners Leader in Gartner’s Magic Quadrant for Intelligent Business Process Management Suites and leader in the Forrester Waves for BPM Suites and Dynamic Case Management #1 market share in Business Process Management (BPM) and Business Rule Management Systems (BRMS) according to Gartner and IDC Global Business Services and ISSW established the Smarter Process Center of Competency (CoC) to provide deep expertise and create repeatable Smarter Process assets 21
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- 23. Operational decision managementyields significant benefits 130 MasterCard processes each payment transaction within 130 milliseconds per request milliseconds per transaction 43,000 transactions per minute; Responds to fraud threats within hours 8000 Visa Europe handles up to 8000 credit card payment authorizations per second across Europe transactions per second 96% 60 rule changes in 13 months; Over 30,000 business rules Swiss Customs achieves 96.5% straight-through processing to validate electronic customs declarations straight-through processing 200,000 declarations daily; Over 700 business rules 300% WorkSafe Victoria sees 300% improvement in payment times to workers compensation treatment providers improvement 23 85% straight-through processing; Over 2,000 complex rules
- 24. Costs, risks andimplied value of Warranty Management in the Automotive Industry Warranty Costs are an important cost factor for the automotive industry. US statistics show (2011) efforts of > 9 bil. USD on the OEM and 1,6 bil. USD on the supplier side. For these costs companies need to hold high reserves. Claims paid (US Automotive Industry) Reserves held (US Automotive Industry) IBM & customer confidential
- 25. Warranty Claims Processing- Before Less Automated, Less Precise/Flexible Notify www N Assess Eligibility Call Center Reseller 78% Eligible? Y N Eligible? Manual Assessment Y Assess Paymen t Settle Decision logic embedded in procedural progamming logic; database/stored procedures; domain experts Limited straightthrough processing Lack of consistency, granularity and specialization Claims leakage/fraud 25 25
- 26. Situation • High touchclaims process – 1.7M claims per year, $1B payouts – 22% of all claims (in $) are automatically evaluated & settled • Only 8% for claims above $2500, yet representing 40% of total payouts • Inconsistencies – Claims processed & settled by people executing corporate policies and exercising their judgment – Lack of auditability • Inability to change & adapt 26 26 – No clear view of policies in effect at any specific period of time. – Difficult to understand and change business policies, thus limiting the business tactics and strategy – Lacking ability to quickly adjust and adapt to the changing business environment – No trend analysis or easy tie-back to product management, engineering, production
- 27. Approach Incremental refinement ofexisting guidelines • Create new guidelines to automatically settle 100% of claims lower than $800. (38% of the total warranty claims transaction) • Refine existing guidelines for the current automatic processed claims: more consistency & minimized claims payouts to the extent possible (38% of the total warranty claims transaction) Expansion of automated settlement with new guidelines • New guidelines (greater complexity) for higher value claims, which account for 65% of the total claims dollars paid out (24% of the total current warranty claims transaction) • Decision logic to engage an expert when a creative human decision is required 27 27
- 28. Warranty Claims Processing- After Less Automated, Less Precise/Flexible Notify www N Assess Eligibility Call Center 78% Eligible? Y N Limited straightthrough processing Eligible? Manual Assessment Y Assess Paymen t Reseller Settle More Automated, More Precise/Flexible Notify www N Assess Eligibility Call Center Reseller 28 28 0-18% Eligible? Y Decision logic externalized Context-specific consistent and granular throughout Y Assess Paymen t Lack of personalization and specialization Highly automated N Eligible? Manual Assessment Decision logic embedded in the process model or code Settle
- 29. Streamlining Compliance Processes TheseDecisioning Elements Or Decision Intensive Applications are Business Rules rich Examples: If the warranty claim is for 400 horsepower turbo diesel and the mileage is less than 150k miles and failure codes d and e apply Then approve warranty claim If mileage is less than 150k miles and failure code a, b, and c apply Then manually review warranty claim 29 Copyright © 2008 by ILOG, Inc. - All Rights Reserved 29
- 30. Streamlining Compliance Processes TheseDecisioning Elements Or Decision Intensive Applications are Business Rules rich Examples: If the warranty claim is for 400 horsepower turbo diesel and the mileage is less than 150k miles and failure codes d and e apply Then approve warranty claim If mileage is less than 150k miles and failure code a, b, and c apply Then manually review warranty claim 30 Copyright © 2008 by ILOG, Inc. - All Rights Reserved 30
- 31. Adoption can bedone incrementally Think Big. Start small. Grow Fast. Think Big. Start small. Grow Fast. 2 1 3 Transform Across and Beyond the Enterprise Establish a Program Build Project-Based Credibility Project …….. to Program ….... to Transformation 31 31
- 32. Why IBM forSmarter Process? Install base of over 5,000+ active implemented customers and 800+ business partners Leader in Gartner’s Magic Quadrant for Intelligent Business Process Management Suites and leader in the Forrester Waves for BPM Suites and Dynamic Case Management #1 market share in Business Process Management (BPM) and Business Rule Management Systems (BRMS) according to Gartner and IDC Global Business Services and ISSW established the Smarter Process Center of Competency (CoC) to provide deep expertise and create repeatable Smarter Process assets 32
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