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					A BUSINESS CASE
FOR DOCUMENT
  AND IMAGE
  PROCESSING
A BUSINESS CASE FOR
DOCUMENT AND IMAGE PROCESSING


A Frost & Sullivan White Paper Sponsored by EMC
Analyst and Author: Jarad Carleton, IT Consulting Analyst




The financial services industry consists of multiple market verticals, each with its own procedures
for handling paper-based documents. Although each company typically has decades of experience
dealing with manual, paper-based processes, research has shown that business process
management automation can drastically reduce operational expenses related to paper processing
while simultaneously increasing response times. Automating business processes in the financial
services industry is important not only for the benefit of customer retention, reduced costs, and
wider profit margins, but also as a way to assert control over chaotic manual processes and lessen
the risk of compliance violations and litigation.

This white paper describes several manual processing challenges that are common for mortgage
application and insurance claims processing as they pertain to litigation risk, slow response times,
data inaccessibility, and operational bottlenecks. A business case is made for the necessity of an
imaging and business process management automation system with centralized storage. Finally,
the integration of EMC Documentum and EMC Centera™ is examined as a solution capable of
meeting corporate governance and compliance needs regardless of geopolitical boundaries.




Frost & Sullivan Whitepaper
Sponsored by: EMC and EMC Documentum
                                                                                                2
                                                                                                       INTRODUCTION




The financial services industry is changing its traditionally manual and paper-based
document processes and replacing them with electronic/digital documents and automated
business processes. These changes can be seen in all aspects of financial services, from
online banking to electronic bill payment, the way mortgage applications and insurance
claims are processed, and more.                                                                      Corporate Governance vs.
                                                                                                     Corporate Compliance
The shift can be attributed in part to corporate governance improvement efforts that focus           Terms such as governance
on improving operational efficiencies and productivity that decrease costs while increasing          and compliance are used
customer responsiveness. Other critical factors pushing organizations to new technologies            with such frequency that
                                                                                                     people often get confused
are increased government oversight and continued growth of investigations for compliance
                                                                                                     about their meaning.
and litigation claims. Regulations such as the Gramm-Leach-Bliley Act (GLB),                         Various definitions have
Sarbanes-Oxley (SOX), and Securities and Exchange Commission (SEC) regulations have put              been used, but the common
greater emphasis on compliance efforts in financial services organizations that have led to          denominator is that
                                                                                                     corporate governance
larger information technology expenditures. In 2005 alone, IT expenditures are projected             involves lowering
to total approximately $78.63 billion with software and hardware expenses reaching $33.02            operational costs, increasing
billion. As a result, IT departments must consider implementing electronic/digital imaging,          worker productivity, and
                                                                                                     improving financial
processing, and storage technology that meets business needs and helps to control current
                                                                                                     performance.
and future IT infrastructure costs.
                                                                                                     Corporate compliance refers
Financial Services: Total IT Expenditures (U.S.) 2003-2010                                           to a company obeying
                                                                                                     established laws and
                                                                                                     regulations in the nation or
                                                                                                     state where it conducts
                                                                                                     business.




                                                                          Source: Frost & Sullivan

                                                                   Frost & Sullivan Whitepaper
                                                       Sponsored by: EMC and EMC Documentum
                                                                                                                        3
Those companies dealing with security for mortgage application and claims processing in
particular need the ability to harness the contents of paper documents without having to
physically process, store, and dispose of them. The solution lies in reducing the number of
manual processes by using the most current document and image processing technology
available. This paper will identify the business challenges faced by paper-based, manual
document processing and the market's solution to alleviate those challenges.




BUSINESS CHALLENGES WITH PAPER-BASED, MANUAL DOCUMENT
PROCESSING
                                                                                                    BUSINESS
                                                                                                 CHALLENGES
Regardless of the size of a financial services firm, any company that processes a large
amount of documents faces common business challenges. The most frequently encountered
challenges include:
        • Compliance and litigation risk
        • Slow response time and customer dissatisfaction
        • Data inaccessibility and storage costs
        • Manual processes and operational bottlenecks
These challenges can negatively affect a business if they are not addressed. Thus, leveraging
technologies that minimize manual paper processes is of paramount importance for the
benefit of corporate governance initiatives, compliance efforts, and improving customer
perceptions.

Compliance and Litigation Risk
Compliance and litigation risk-minimization is of the utmost importance for financial
services organizations needing to comply with regulations ranging from HIPAA (Health
Insurance Portability and Accountability Act) to GLB, and SOX. However, full adherence to
regulations is clearly at risk in financial services companies with a heavy reliance on
paper-dependent and manual processes.

With each manual or procedural error the potential to violate regulations increases, as
does the possibility of litigation, government fines, and government remedial action. Taking
a "business-as-usual" approach is not only contrary to good business practices, but also
goes against compliance and corporate governance improvement efforts.

Slow Response Time and Customer Dissatisfaction
Frost & Sullivan has observed that manual, paper-based processes such as insurance claims
or mortgage applications can cost up to 22 times more than computer-assisted, electronic
document processing. Furthermore, eliminating manual processes can reduce a mortgage
credit approval process from 4 hours to 10 minutes.


                                                                   Frost & Sullivan Whitepaper
                                                       Sponsored by: EMC and EMC Documentum
                                                                                                       4
Unfortunately, paper-based manual processes are common for business areas such as mortgage
application and insurance claims processing. In both situations, the high volume and variety of
documents is enormous and is further complicated by the fact that many different people and
functions need access to the same information.

For organizations that rely on manual paper processes, it can take days or even weeks to respond
to customer inquiries and requests. Customers perceive the company as unresponsive or
negligent, when in fact it's just difficult and time-consuming to access the right information. The
fact is that relying on manual processes frequently results in procedural bottlenecks that
negatively impact the customer experience, customer loyalty, and repeat business. These
bottlenecks not only adversely impact the customer experience, but also directly contribute to
lower productivity and higher operational expense.

Data Inaccessibility and Storage Costs
Another challenge of paper-based processes associated with critical business areas is the
inability to promptly access documents that are stored offsite or in disparate storage rooms
within the organization. Even in organizations that no longer store physical copies of documents,
it is not unusual for imaging and storage processes to place documents in multiple repositories,
making information retrieval difficult and time-consuming. If information is migrated offline to
optical or tape storage, documents can be unavailable for days at a time, creating a problem as
bad as paper-based document storage. Further, when information resides on multiple databases,
content repositories, and storage infrastructures, or in numerous onsite and offsite storage
facilities, the organization will encounter operational problems including:
           • Slow response times
           • Cost overruns
           • Productivity loss
           • Inability to comply with regulations

Manual Processes and Operational Bottlenecks
One of the facts of doing business in a paper-based system is that manual processes inevitably
create operational bottlenecks that negatively impact company profits. The bottlenecks
themselves are caused by a variety of reasons including:
        • Inability of management to accurately balance workloads
        • Lost paperwork and/or illegible facsimiles
        • Misdirected paperwork
        • Inaccurate paperwork that forces a process to start over
        • Employee vacation, illness, or resignation
Regardless of whether the company has one large bottleneck or several small ones, processing
time for a mortgage application or an insurance claim can increase from minutes to hours or
from days to weeks. The result is increased costs and an inability to respond quickly in the
market, beat competitors, or meet customer expectations. In today's business environment,
accepting manual processes and their inevitable bottlenecks will enable competitors to take
more market share and marginalize any company unwilling to automate business process
management (BPM).

                                                                       Frost & Sullivan Whitepaper
                                                           Sponsored by: EMC and EMC Documentum
                                                                                                      5
                                                                                                  BUSINESS
                                                                                                     NEED



THE BUSINESS NEED FOR A DOCUMENT AND IMAGE PROCESSING
SOLUTION

In comparison to previous generations of image processing systems, today's technology
enables not only standard document imaging of paper documents, but also allows the
customer to enter data on an electronic form and submit it online or print it out and fax
it into the document and image processing system. This permits a wide variety of
information to be captured more efficiently, and enables financial services companies to
improve critical business processes such as loan origination, document processing,
underwriting, claims, and case management with automated business process management
(BPM). Today's leading document and imaging process solutions allow you to:
        • Decrease the amount of paper to be printed, copied, handled, marked up, and
          saved
        • Increase the efficiency and accuracy of index information (data about the data)
        • Significantly reduce the incidence of lost paperwork
        • Support compliance improvement efforts by more centrally managing capture,
          access, and storage of both data and documents
        • Provide faster processing time by automating business processes

Today's best document and image processing solutions automate and streamline business
processes with integrated BPM features capable of eliminating bottlenecks and decreasing
operational costs. Features such as efficient automated routing of information to
appropriate people, automated re-routing of information in cases of illness, vacation, or
resignation, and workload balancing that alerts management of developing process
bottlenecks ensure accelerated processing speeds and lower overall costs. When combined
with the ability to always provide the right access to the right information, true business
evolution is possible.

Certainly the process improvements gained by electronic routing are appealing, but perhaps
most important of all are the process monitoring improvements associated with the system.
This type of system increases the level of control an organization has over loan application
or insurance claims documents mandated by regulators.

EMC Documentum: Bridging the Paper and Digital Divide
It is clear that paper-intensive businesses such as mortgage banking and insurance can ben-
efit from a modern document and image processing system that bridges the gap between
paper and electronic documents. Because it is impossible to eliminate all paper documents,
unlike traditional legacy systems, EMC Documentum enables the mortgage and insurance
industry to work equally with scanned documents, electronic files, digital assets, records,
and images. EMC Documentum has bridged the paper and digital worlds by offering robust
capture capabilities for paper documents, electronic files, large print reports, and electron-
ic forms; sophisticated processing capabilities; and robust records management and archival.




                                                                    Frost & Sullivan Whitepaper
                                                        Sponsored by: EMC and EMC Documentum
                                                                                                     6
Using a typical mortgage loan application process as an example, a loan applicant might fill
out an electronic form on the computer. As the data is entered into the eForm, a
computer readable 2D PDF417 bar code is generated at the top of the form data entered
by the loan applicant. After checking for accuracy, the form is printed by the applicant,
signed, and faxed directly into the EMC Documentum document and image processing
system. When the fax is received, the 2D bar code enters all of the data into the system
with 100 percent accuracy and creates a virtual case file for the applicant. The file contains
a signed image of the loan application and all the supporting documents that were either
sent in electronically or scanned in from paper. Manual data entry is minimized, reducing the
potential for errors that can slow down a loan approval process.

Once all the documents, forms, and applications are captured in this digital folder, the
information can be appropriately routed for review and approval. All authorized employees
now have access to the relevant information in the folder, eliminating the need for multiple
paper copies of the same documents. Because processes are automated, processing of the
information is much quicker, much more secure, and much less error prone. When a
customer transaction is complete, information is stored and archived for easy retrieval in
customer service and call center environments. Content archived in the system can also be
repurposed for use in a self-service portal where the customer can securely access his or
her information at any time.

Included with the EMC Documentum document and image processing solution is Business
Process Manager (BPM), which provides workflow capabilities to automate business
processes. EMC Documentum covers a wide range of business processes from highly
structured to highly collaborative. This includes content creation, versioning, approval
processes, and expiration of documents. Furthermore, data needed as part of a business
process can be captured through formlets configurable to the needs of any organization.
EMC Documentum BPM can be used to automate processes where content is fixed, but
required for a business process. And in the event of exceptions to structured processes,
EMC Documentum BPM tools can be highly collaborative in nature as well.

EMC Documentum BPM is powerful and highly scaleable, allowing workflow designs to be
easily created by business users through an intuitive graphical user interface (GUI). Once
workflows are established in the system, EMC Documentum BPM shepherds processes
along with the appropriate documents through simple and/or complex processes to the
appropriate people, helping to ensure fast, reliable, sustainable processes across the
organizations. In addition, EMC Documentum is able to manage, control, and publish XML
at a very native level. Thus, as XML standards for different industries (such as MISMO for
the mortgage industry, and ACORD for the insurance industry) are embraced, the EMC
Documentum platform will provide a solution that allows businesses to take advantage of
the efficiency, structure, and re-purposing potential of XML.




                                                                    Frost & Sullivan Whitepaper
                                                        Sponsored by: EMC and EMC Documentum
                                                                                                  7
How Document and Image Processing with EMC Documentum Works




                                                                     Source: EMC Corporation

EMC Centera™ Content Addressed Storage (CAS) System
While EMC Documentum meets the business needs of the mortgage banking and insurance
industries for document and image processing, the system requires a storage infrastructure
capable of meeting data storage needs in a regulatory environment. Stringent regulations
governing the mortgage banking and insurance industries require companies to control
electronic content by preventing data theft, enabling version controls, and providing
assurance that data has not been altered after it has been archived.

EMC Centera™ with its Content Addressed Storage System (CAS) provides an advanced
storage technology capable of delivering tamper-proof audit trails as well as single instance
storage capabilities. Single instance storage enables an organization to decrease the
amount of additional storage infrastructure needed each year. Redundant file storage is
problematic in hierarchical storage infrastructures, but is not an insurmountable problem
when using a Centera™ array. CAS technology makes single instance storage possible by
addressing stored data based on a Content Address (CA) rather than depending on the
information's physical or logical placement in the storage array. The addressing and
encryption functions are similar to a public key infrastructure (PKI), which can be thought
of as digital fingerprints.

The unique Content Address of each piece of data ensures security, authenticity, and non-
repudiation, all of which are critical from a regulatory perspective in both the insurance and
mortgage banking industries. Since government mandates insist on a WORM (write once,

                                                                 Frost & Sullivan Whitepaper
                                                     Sponsored by: EMC and EMC Documentum
                                                                                                 8
read many)-based storage infrastructure for insurance and mortgage banking, Centera™
was designed to enforce application-based retention periods within its micro code.
Centera™ only permits authorized Records Managers to lengthen retention periods, but
prohibits shortening them. To address the needs of mortgage banking and insurance compa-
nies, EMC has simplified the integration of document and image processing by EMC
Documentum with Centera™ storage infrastructure. The combined solution enables high
levels of document and image control that are made possible via a Centera™ API (applica-
tion program interface) that integrates EMC Documentum with one or more Centera™
arrays.

How EMC Centera™ and Content Addressed Storage Works




                                                                     Source: EMC Corporation

For business continuance purposes as well as for compliance needs, Centera™ stores
content and safeguards it using content parity protection within the same array. Thus, in the
event of a storage node failure, Centera™ is capable of healing itself by detecting the fault
and generating new copies of the content objects onto a healthy node. As this process takes
place, the failing storage node is isolated from the rest of the system and can be hot
swapped at any time without disruption. Hot swapping without application disruption is
possible since applications lack the knowledge of a physical or logical placement of fixed
content within Centera™.

Finally, although data retention is important, the information lifecycle management (ILM)
process isn't complete without a way to automatically implement data end-of-life policies
immediately after retention periods expire. Centera™ offers IT departments this

                                                                 Frost & Sullivan Whitepaper
                                                     Sponsored by: EMC and EMC Documentum
                                                                                                9
capability and utilizes U.S. Department of Defense 5015 standards for data deletion.
Automating this process to coincide with corporate policy and regulatory requirements
frees up IT personnel and easily applies a standard data destruction policy that helps
eliminate potential legal liabilities.

A BUSINESS NEED FOR DOCUMENT AND IMAGE PROCESSING WITH
CENTRALIZED STORAGE

As discussed previously, manual, paper-based processing leads to numerous inefficiencies
that increase cost, litigation risk, and customer churn, while making it more difficult to
maintain relationships with strategic business partners. In the diagram below, the
complexity of a comprehensive automobile insurance claim in a manual, paper-based system
is shown to illustrate the need to automate business processes for one financial services
industry vertical.

Manual Paper Flow for a Comprehensive Auto Insurance Claim is Complex and
Inefficient




                                                                    Source: Frost & Sullivan

Modern systems such as EMC Documentum and Centera™ streamline the process for the
customer, the repair facility, and the insurance company while reducing costs through the
elimination of manual, paper-based processes. A similar situation using a document and
imaging system with centralized online storage such as that offered by EMC can be seen in
the diagram below.




                                                               Frost & Sullivan Whitepaper
                                                   Sponsored by: EMC and EMC Documentum
                                                                                               10
Comprehensive Auto Claim with Automated BPM




                                                                     Source: Frost & Sullivan

With an integrated system such as that provided with EMC Documentum and Centera™,
when a claim is entered into the system, a virtual case file is created that includes all
pertinent coverage information for the claimant and an audit trail is initiated. A claims
adjuster calls the claimant and conducts a phone interview, which is followed by an
electronic notification of an in-network body shop chosen by the claimant. The claimant
then brings the vehicle in for inspection, pictures are taken, an estimate is generated, and
all of the information is transmitted back into the document and imaging system from the
repair facility.
If the insurance adjuster working on the claim is unavailable, the virtual case file
complete with all documentation is routed via BPM software to another team member
for analysis and approval. This is a major difference from a manual, paper-based system
where the customer cannot rely on other claims adjusters to process the claim because
they cannot easily access the paperwork. An active file could be locked in the desk of the
adjuster assigned to the case or the paperwork could be scattered throughout the office.
However, when a virtual case file in a document and imaging system with BPM software
is automatically shepherded through established processes with the required
documentation, repair approval is quickly granted and isn't stalled by one unavailable
person. When authorization is granted, the system automatically generates a letter to the
claimant stating that the repair has been approved and provides the necessary
documentation to send to the Department of Motor Vehicles if needed.

Upon completion of the repairs, an itemized paper invoice is provided to the claimant
and an electronic version is sent to the insurance company document and imaging
system for payment. When payment is approved, an electronic funds transfer (EFT) is sent

                                                                  Frost & Sullivan Whitepaper
                                                      Sponsored by: EMC and EMC Documentum
                                                                                                11
to the bank account of the repair facility and an automatically generated letter is creat-
ed and sent to the claimant stating that the case is closed. Upon closure of the claim, the
BPM system directs the virtual case file and its electronic documents to records manage-
ment software that applies retention rules to the data. The BPM software then moves the
closed virtual case file to low-cost, online storage where it resides for the duration of
the retention period until it is retired and subsequently moved to offline storage or
destroyed.

Lastly, throughout the lifespan of the virtual case file, there exists a nonrepudiable audit
trail that began upon creation of the file, providing detailed information regarding who
accessed the information and what was done. This is important because it is possible that
a regulatory body or legal discovery team will need to analyze an audit trail either while
the claim is active or after it has been closed. Using a system such as that offered by EMC
with EMC Documentum and Centera™ helps to ensure regulatory compliance and
minimize liability risk.




CONCLUSION

For industries that rely on manual, paper processes, efforts must be made to leverage
technology that will enable the company to not only effectively compete in the U.S.
market, but also to ensure regulatory compliance while decreasing operational costs. It is      CONCLUSION
clear that the single best way to achieve cost reduction and regulatory compliance is to
rid the organization of as many manual processes as possible.

A modern document and imaging system with integrated and robust BPM capabilities is
the first step to lowering costs and eliminating problems commonly associated with
manual processes. The second step is to implement a centralized online storage
infrastructure that can provide instant access to archived data subject to regulatory
scrutiny. EMC enables the financial services industry to step away from reliance on paper
documents, or electronic documents stored offline through its EMC Documentum
document and imaging solution and Centera™ content addressed storage infrastructure.
This combination of technologies provides a complete set of capabilities for streamlining
and automating processes as well as providing a highly compliant and cost-effective
infrastructure. Other industries such as aerospace and defense, healthcare, legal,
petrochemical, and transportation that are faced with large volumes of paper documents
can also benefit from these technologies.

In light of the continuing pressure to focus on compliance, corporate governance
initiatives related to cost reduction and productivity enhancement are occasionally
sacrificed. With EMC technology however, compliance and corporate governance
enhancements are possible to achieve in tandem, making the EMC Documentum and
Centera™ solution important to consider for cost-conscious businesses.

                                                                  Frost & Sullivan Whitepaper
                                                      Sponsored by: EMC and EMC Documentum
                                                                                                     12
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