Organizations find that the adoption of EDM impacts them in expected and unexpected ways, at the operational, tactical and strategic levels, as well as with their customers. The net result of these different impacts is that organizations achieve greater profitability and effectiveness.
As EDM focuses primarily on operational decisions, you might expect the business impact to affect the operational level in terms of cost reduction, and in many cases, you would be right. Interestingly, our analysis shows that companies who implement EDM systems also realize benefits in revenue gain and resource scalability. Strategic benefits also accrue in terms of improved alignment and more precise risk management. Organizations trying to be more customer-centric find that EDM can significantly improve the customer experience. Finally, adopting EDM helps organizations enhance the way they make operational decisions, which ultimately translates into a significant competitive advantage.
Operating Cost Reduction
Operational cost reductions can come from a wide variety of sources as automation has the potential to eliminate or reduce a wide range of costs.
The first element of cost reduction is perhaps the most obvious - time. The amount of staff time required to process transactions in which the decisions are automated is dramatically reduced for organizations that have implemented EDM. Automating decisions can virtually eliminate the staffing cost from many types of transactions.
However, few decisions can be fully automated, so there will always be some referrals for manual decisions. An EDM approach, however, can deliver very high percentages of automation, often reaching 95 or 99 percent for highly repetitive decisions like auto underwriting. Even when the remaining manual, highly complex decisions represent the majority of the workload, typical organizations can still enjoy a timesaving of up to 30 percent.
With many business processes, the volume of transactions is such that automation is required. Direct to consumer marketing, for instance, or contacting shareholders for large publicly traded companies are two great examples. If the decision about what to send to everyone involved is not made well, then time and money will be wasted. Perhaps more importantly, if the right decision is not made, junk mail could be created - and nobody likes that.
Another area for cost reduction is in the area of fraud. Automating fraud-related decisions, such as accepting or rejecting a credit card, is an opportunity to reduce the amount of fraud incurred and the associated expense that comes with it. The decision that determines whether a particular transaction is fraudulent, or at least potentially so, can allow the vast majority of allowed transactions to be processed quickly while still allowing organizations to identify and review those that are risky. One bank using EDM to detect fraud estimated that they weathered an economic crisis with 50 percent of the losses they would have seen otherwise.
Revenue Generation
One gain organizations often see after automating decisions is revenue gain at the point of sale. Customers are not typically ruthless comparison shoppers - they like instant gratification. Pushing decisions to the point of contact and reducing the decision time so that there is no wait (or an acceptable one) can mean closing the business at once. For instance, an online bank gained an additional 1.5 percent in revenue from increased acceptance rates.
Consider the example of insurance underwriting. Unlike manual decision-making, automated decisioning happens fast enough that customers do not need to wait or return later, risking that they will find a better offer elsewhere. An insurer using EDM to automate the underwriting of decisions will find that more prospects will accept a policy at a given price when the price was offered in real time over the phone or via the Web than if it was offered later by email.
In addition, many opportunities to boost revenue through cross-sell and up-sell offers are missed because there is nobody there to make them. Taking advantage of every interaction with a customer or prospect, regardless of channel or device, can grow revenue in new ways. One bank using EDM to up-sell insurance products through its ATMs saw a 14 percent increase in up-sells in the first 90 days.
Complex decisions are increasingly common in self-service. Customers no longer want to have to request the pricing based on their contract; they want to see it as they build their order. This is not enough anymore. Now organizations need to automate these decisions so that customers can serve themselves, even when the decisions are complex. What's more, customers want to be able to serve themselves in this way 24x7 - they expect decisions to be made when they ask, not when it is convenient. Companies must automate the decisions behind customer service requests and problems so that customers can help themselves when they want to. One mortgage company, for instance, used EDM to create a twenty-minute, self-service home loan approval application, while an insurance company cut its online application's abandonment rate from 90 percent to just 40 percent.
Resource Scalability and Focus
Organizations are always looking for ways to grow their business without adding staff. Automating decisions with EDM can be a primary enabler of this kind of scalability. For instance, an insurance company adopting an EDM approach to underwriting was able to grow its business by 35 percent without increasing the number of underwriters thanks to the automation of its key underwriting and renewal decisions. Without EDM, more transactions will mean more staff at a more or less proportional rate. As business grows, so will costs. EDM can break this linkage and create a more scalable business.
