ECM – nothing can do it better (part 1)

Over the past few months, I’ve looked at the ROI associated with ECM from a number of perspectives in my posts. And for the most part, my goal has been to get IT, RM, and legal folks to be able to pitch ECM in the same terms as other corporate initiatives so that it can compete at the C level with more LOB-focused projects.

In this post I want to change gears a bit, however, and talk about a critical way that ECM differs from most other corporate initiatives, a way that allows ECM to play a distinctive role in corporate strategy today: ECM allows an organization to cut costs while at the same time improving core capabilities – something FTE cuts or reductions in service alone cannot accomplish.

To do so, let’s take an example from an industry in the throes of the pressure not only to cut costs but also to radically transform itself in the face of massive regulatory, marketplace, and cultural changes: health payers.

In the lead up to 2014, health payers are going to come under increasing pressure to operate within tighter administrative budgets while providing an expanding array of services to insureds, providers, and employers.

Large, for-profit payers are probably in the best position to respond because they’ve been under these kinds of pressures for some time now, and many of them are making good progress down the road of streamlining their administrative operations.

However, smaller, regional, or non-profit health care payers will struggle to keep up in this race to transformation because until now, they’ve been insulated in one way or another from the larger marketplace that for-profit payers have inhabited: they may be the biggest player in their state, they may provide a boutique, personalized experience customers have been willing to pay for in the past, they may have a niche market they insure, and so on. Whatever the reason might be for any given organization, the fact is they’ve been able to thrive without world-class operations until now…but things are changing right out from under them.

In response, these payers are considering all manner of changes to how they do business in order to cut costs, but most of them come down to reducing head count or scaling back services – neither of which will help them transform to provide better service to their customers. Given my experience with these smaller or non-profit payers over the last 18 months, I think ECM provides these organizations a powerful tool to help them meet the challenges they face leading up to 2014.

Let’s take a look at a few examples of areas that payers might consider cutting costs and then turn to how ECM could do the same while also improving (or at least maintaining) current service levels.

• Sales proposals – increase use of templates or “canned” material for RFP responses, allows reduction of sales proposal staff and lower average cost per proposal
• Marketing and communication – reduce number of mailings (e.g., send bills weekly or monthly instead of daily, combine mailing types into single envelope), allows reduction in marketing and communication staff and lower print and mailing costs
• Customer service – incent CSRs to reduce call time, allows reduction in number of call center staff and lower average cost per call

The problem with using these methods to reduce administrative costs is that there are other costs the organization will incur if they decide to pursue them:

• Sales proposals – lower quality proposals, more difficult to meet RFP/sales deadlines, lower conversion rate, more difficult contract negotiations, more time-consuming implementations
• Marketing and communication – lower customer satisfaction, higher call volume, increased appeals and DOI complaints
• Customer service – lower quality calls (as CSRs rush to reach call resolution), increased call volume (as customers have to call multiple times to solve a single issue), increased appeals and DOI complaints

What ECM brings to the table is a way to lower the administrative costs associated with these activities while maintaining or improving how the organization undertakes them. When approached correctly, it  allows the organization to view these activities as part of larger value chains rather than part of isolated functional areas. By doing so, ECM can improve the overall operations related to these value chains rather than improving one area by degrading another and eroding gains through the overall weakening of the enterprise.

In the next post, we’ll take a look at some of the specific ways ECM can do better than FTE reductions and service cuts in these three areas by addressing larger segments of the value chain rather than isolated portions of it.