Growing Firm Seeks Paperless Efficiencies

Dramatic growth can be too much of a good thing when the scale of an organization threatens to swamp operational efficiencies.

During the past 10 years, Ohio National Financial Services (ONFS, Cincinnati) has enjoyed a nine percent compound growth rate or better in life insurance sales, according to Al Bowen, senior vice president, information systems. Variable and fixed annuities grew 81 percent in 2001 alone. The firm recently established a New York company in partnership with Security Mutual Life (Binghamton, NY), and also expanded operations into Puerto Rico and Chile.

Though good news, these successes create a challenge of "how to support all that growth while keeping a focus on being a low-cost producer," Bowen says.

Time To Reengineer

Given existing business processes, ONFS anticipated having to add staff at a phenomenal rate, raising fears of not being able to maintain existing levels of operational efficiency. With that in mind, Bowen recounts, "We decide in1999 we were going to reengineer the enterprise top-to-bottom using imaging and workflow technology, to at least pursue the dream of being a paperless company."

ONFS turned to CSC (Austin, TX), for help in developing a solution using Kansas City-based DST Systems' AWD (Automated Work Distributor) product. "We did a pilot with the product in a new start-up business, and the success of that pilot, along with the strength of the relationship with CSC, caused us to go forward," Bowen says.

Calling the AWD tool a "solid-as-a-rock," product, Bowen says implementation required minimal systems work. Rather, he adds, the challenge to ONFS was to carefully modify business processes in a way that would work optimally with the technology, and then to "translate business workflow into the language of an imaging and workflow system."

ONFS began implementing the solution for its life and annuity operations in January 2000, supporting both new business and post-sales service, according to Bowen. The implementation, completed by June 2001, involved the extension of "tentacles that go all over the place just to support those two businesses," in terms of imaging enablement, he says, "plus into accounting, contracting and licensing, in addition to the creation of an extensive document management center."

CSC served as the lead engineering team throughout the first year, mentoring the ONFS team before handing over the baton, Bowen says. ONFS also made modifications in its storage capacity to support the solution. "We have a mainframe-based approach to storage using EMC Corp.'s Hopkinton, MA systems managed storage capability that allows us to get into a more industrial-strength storage environment," Bowen notes.

ONFS faced some difficulties, he acknowledges, given the complexity of the business environment itself, and the fact that it faced a 60 percent increase in the life business during implementation. The business was adversely affected by problems in matching up certain documents to cases, according to Bowen. "If we had to do it all over again, I think we would have established a contingent capability to ensure that we didn't suffer any time and service standard degradation," he says.

Tallying up all costs—including consulting, equipment, software andtraining—Bowen estimates the solution cost about $7 million. But, based on staffing alone, ONFS calculates an "internal rate of return on that effort at 21 percent payback, at 4.2 years," he says. "When we started this project we had about 500 relevant staffers. We're well up in the 600s now, but doing 100 percent more business." Additionally, the unit cost of issuing a paid annuity policy dropped by nearly 55 percent.

Planning for the Future

ONFS currently is working on extending the workflow and imaging solution to its contracting and licensing operations, as well as to its joint operation with Security Mutual, Bowen reports. "We'll finish up these three things this year," he says. In 2003 ONFS plans to take the solution to its pension administration business.

Bowen likens the efficiency gains to those resulting from the industrialization of agriculture. "This enables some unbelievable improvements in productivity," he says. "Every day we figure out ways to leverage this technology to do something different."

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Case Study Closeup

COMPANY: Ohio National Financial Services, Cincinnati, $9.3 billion in assets.

LINES OF BUSINESS: Life and annuity, pension.

VENDOR/TECHNOLOGY: DST Corp. (Kansas City) AWD; CSC (Austin, TX); EMC (Hopkinton, MA) storage.

THE CHALLENGE: Automate workflow processes to support growth.

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio