Putting Information Together

The cases above focused on the significant cost savings consolidation enables. What about the opportunities we ve mentioned? Why and how are our opportunities multiplied? Our information resources enable us to see our business more accurately, make better, faster decisions and look into the future.

Information makes no assumptions ”it helps find unique associations.

Complete, consistent and freely available information that has a single version of the truth enables a company to see the business as it can be and leverage that new insight to create value. Here are just a few select examples of how companies have been profitably putting their information together.

Nationwide Insurance

Until recently, anything but the simplest questions at Nationwide Insurance required IT programmers to help retrieve the necessary information. It could take months to obtain data needed for analysis, and reporting systems were only updated quarterly, which created a substantial lag between when things happened and when senior management knew about it.

It was in this environment that the president of Nationwide asked for a monthly view of early term losses (claims filed very quickly by new customers). An initiative was just getting under way to centralize and standardize information with monthly updates, and the president's request provided the first test of the project s worth.

What did the early term loss analysis show? The likelihood of claims on newer policies had increased dramatically in recent years , demonstrating a distinct deterioration in new business underwriting practices. Aggressive actions were taken to address this.

Better tracking of early term experience is only one of the many benefits of putting all the information together. Another major benefit is improvements in the pricing process. Pricing is one of the most complicated tasks in the insurance process. The centralization project has reduced the time required to perform rate reviews. Access to the same information sources as other divisions in the company eliminates questions about whose version of the truth is correct. Instead analysts can focus on more efficient and responsive sensitivity analysis. In addition to the business solutions, the centralization project has allowed the retirement of an expensive system used exclusively for pricing analyses.

Early term tracking and pricing are just two of the areas that have benefited. Across the functional areas of the company hundreds of people can access information directly now, getting answers to complex what if scenarios in seconds or minutes, which means better, faster decisions.

Consolidating its information resources gives Nationwide Insurance the speed and accuracy essential to compete in its industry. Fortunately, consolidation is profitable for every industry.

Whirlpool

Whirlpool, a major home appliance company, has reduced its annual warranty costs by 10 percent by putting all of its information together to better track customer complaints and identify the source of common problems with unprecedented speed and accuracy. In one instance consumers began complaining about a buzzing in a particular oven model. Whirlpool was able to aggregate the common complaints, trace them to a faulty transformer and switch suppliers with ease and efficiency.

Without centralized information the ability to respond to customers might have been delayed many months while various divisions struggled to coordinate their data and develop a consistent response. Customers were frustrated. Now, with centralization, not only are costs down, customer satisfaction is up. Just as important, overall complaints are down because faster responses mean fewer serial complaints and good information means Whirlpool can anticipate problems and deal with them proactively before complaints occur.

The issue in this next industry is not complaints but risk management in the financial markets.

The China Securities Depositary & Clearing Corporation Limited Shanghai Branch

The China Securities Depositary & Clearing Corporation Limited Shanghai Branch provides information to 84 securities companies and helps all its members to improve their risk management capabilities. To do this it is essential for the Exchange to have complete, up-to-date and accurate information on all the daily trading activity and have access to historical trading data for analysis.

Having a single version of the truth is the business of a stock exchange. Moving from high finance to holidays, here s a short study from the travel industry.

TUI Netherlands

One of the greater challenges facing TUI Netherlands, the largest tour company in the Netherlands, is to distinguish its offerings from other tour packagers. Customers are rarely loyal to a particular tour company. They just want to go on holiday. TUI, for example, has discovered through market research that travel customers do not respond significantly to tour operator loyalty programs. As a result, most tour packagers are product centric. Yet it is the behavior of the customers that is the most critical information for TUI to effectively and efficiently package products customers will want.

There is a second level of complexity. TUI s customers are travel agents , but the true consumers of TUI s products are the travelers. So TUI is taking a two-pronged approach to the problem. The company is working to get to know its travel agents better, focusing on the issues of importance to travel agents ”speed, ease of booking and response to complaints. And it is working to get to know the end customers better. Identifying what is important to travelers ”room location, size or view, flight preferences, calendar preferences, perk preferences, complaint hot buttons and style of travel. TUI plans to move to a more dynamic packaging and pricing model that is totally responsive to the consumers desires. With better information, TUI will be able to tailor its packages more precisely, provide more information and booking capability over the Web, and reduce the load on the call centers.

TUI faces the expected resistance to a project of this scale. There are always those who just want to conduct the daily business and not waste time. But there is no such hesitancy at the board level. The company knows that the business of the future is connected to its customers, responsive to their needs and always dynamic.

These companies provide great examples of the power and profitability of consolidation and demonstrate the effectiveness of consolidation across industries. Every company in every industry can benefit from eliminating fragmentation.