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1 WHITE PAPER Document Services Océ Business Services Business Performance for Documents Cut Costs, Meet Strategic Goals and Manage Document Processes With Confidence Contents 1 Introduction 2 DPM For Document-Intensive Industries 3 A New Science For Document Processes 4 The Balanced Scorecard 5 Defining Objective Metrics 6 Which KPI s do you use? 8 An Innovative DPM System 9 Conclusion

2 Business Performance For Documents: Cut Costs, Meet Strategic Goals and Manage Document Processes with Confidence 1 Introduction The Dow tells you how stocks are perform - ing this very minute. Your dashboard tells you how your car is performing this very second. An electrocardiogram (EKG) tells you how your heart is performing beat by beat. Yet when it comes to measuring the performance of document management activities (such as mail/shipping and print/ copy center operations), many businesses rely on quarterly results in spreadsheets and PowerPoint presentations. By most standards, monthly is very aggressive. Unfortunately, real-time or near real-time performance management is elusive in business and nearly non-existent outside one s core competencies. Although a manufacturing company, for example, may use a dashboard to monitor the production line in real time, it can rarely monitor the supply chain so closely, much less operations like document processes. But support operations cost money and affect results almost as directly as the core business. Accordingly, this paper will explore the potential of applying business performance management (BPM) principles to advance document performance management (DPM) in a way that enables organizations to reduce costs; better manage documents as vital strategic, financial and information assets; and secure positive returns on investments from outsourcing. 1 An example of this approach spotlighted later in this paper is Océ MAX, a document performance management system that enables companies to more effectively manage their document processes and outsourcing service providers. 1 The document outsourcing market will continue to increase from approximately $36.2 billion in 2007 to $46.8 billion in 2012, predicts market research and consulting firm InfoTrends (June 30, 2008).

3 Business Performance For Documents: Cut Costs, Meet Strategic Goals and Manage Document Processes with Confidence 2 DPM For Document-Intensive Industries Every business has a document process management burden, and for most it s a growing one. Mail, print/copy/fax, records and office administrative services are standard operations. On top of these, most every business is under increasing pressure to respond more quickly and precisely to regulators like the SEC, Commerce Department, EPA, FDA, Labor Department, HHS (for HIPAA) and Energy Department. There is also the growing need to proactively prepare for electronic discovery (per the Federal Rules of Civil Procedure). 2 Meanwhile, many businesses are by their very nature documentintensive, e.g., legal, financial, pharmaceutical, government and higher education. Any organization should at least consider the value of leveraging the latest DPM methodologies, systems, and tools to meet these document management challenges. Many organizations lack detailed and timely facts about how their document management activities are performing or where they are headed. They frequently estimate performance based on anecdotal information; or dated, hand-calculated, ballpark numbers. That s analogous to assessing your heart attack risk based only on your age and weight of three months ago. Ignorance is the silent killer, yet document process management deficiencies too often go unaddressed. Many organizations fail to establish complete policies, procedures and processes for document handling. is another trouble spot: It accumulates exponentially and is improperly stored for discovery purposes, sometimes simply disappearing. Workflows are inconsistent or ad hoc. File rooms are disorganized. IT systems can t support best practices. Metrics are undefined. Management s view of performance is fragmented across locations. Businesses pay fines for poor compliance with reporting regulations and discovery rules. Forward-looking companies are using DPM to control the cost of this growing document burden through benchmarking, measurement, management, and proactive improvement of document processes in near real time. Using a combination of software tools and Six Sigma - based 3 performance methodologies, organizations are better managing their document assets in order to help improve business results, whether it s winning a court case, discovering a new drug, or processing claims faster to increase customer satisfaction. Importantly, DPM also enables organizations to better measure the performance of service companies to which they ve outsourced their document operations. 2 The Federal Rules of Civil Procedure is the statutory system governing litigation in federal court. Amendments that took effect Dec. 1, 2006, made electronically stored information subject to discovery (that is, presentation to the opposing party in a legal action) and increased pressure on organizations to better manage, organize and maintain their electronic data. Failure to comply increases the risk for fines and adverse court decisions. 3 Six Sigma is a popular business performance management methodology that focuses on removing causes of defects in manufacturing and business processes. It employs a set of quality management methods, statistic and experts.

4 Business Performance For Documents: Cut Costs, Meet Strategic Goals and Manage Document Processes with Confidence 3 A New Science For Document Processes DPM can be seen as a subset of business performance management. BPM itself is a business and technology approach for setting strategic objectives, identifying the activities to reach them, quantifying performance of those activities, measuring success (or failure) in near real time, and systematically improving deficiencies until the strategic objectives are met. As IBM says, BPM align(s) strategic and operational objectives with business activities in order to fully manage performance through better-informed decision making and action. 4 BPM is most prevalent in industries with performance metrics that are easy to define, quantify and collect, such as manufacturing, where automated devices churn out quantifiable production data. BPM, however, is a new science for such document processes as mail distribution, copy, print, imaging, records management and ediscovery. One reason BPM is new to this area is that companies tend to see document processes as a fixed cost of doing business a monolith of red tape. And unlike a production line, document processes don t overtly and obviously generate data that is plainly measurable against strategic business objectives. Whatever mail comes in just gets processed. Whatever time it takes to manage records archives is the amount of time it takes. The number of printers you own is how many you probably need, and how many copies they pump out is driven by one thing: somebody s need for a copy. That view is evolving as forward-looking companies find ways to translate document processes into hard numbers that inform a balanced scorecard. And to address deficiencies, more organizations are beginning to use systematic quality initiatives like Six Sigma, Lean and 5 S. Forward-looking companies find ways to translate document processes into hard numbers that inform a balanced scorecard. 4 Global spending on business intelligence and performance management applications will reach $57.1B in 2008, according to a report released by AMR Research (May 13, 2008).

5 Business Performance For Documents: Cut Costs, Meet Strategic Goals and Manage Document Processes with Confidence 4 The Balanced Scorecard A Balanced Scorecard is a framework for measuring business performance that transcends short-sighted financial considerations. As its name implies, the Balanced Scorecard envisions organizations balancing today s financial performance with perspectives like the voice of customer, HR, and operations. A company might want to know whether customers are satisfied, employees are continuously learning and improving, and operations reflect best practices. Each of these four perspectives encompasses strategic objectives as well as the set of activities required to reach the objectives. Each activity is discretely quantified, measured and monitored in near real time in terms of volume, accuracy and timeliness. These activities roll back up into the four perspectives of the balanced scorecard financial, HR, operations, voice of the customer enabling any organization to instantly and objectively assess performance from the macro to the micro levels. It s important that the BPM system encompass all document processes across all divisions and geographies, whether activities are insourced, outsourced or a combination of both. Otherwise, the organization is simply building new silos that will eventually need to be integrated with the rest of the enterprise. balanced scorecard pyramid PERFORMANCE VOICE: Customer Finance Operations Human Resources ACTIVITIES METRICS: Volume, Accuracy, Timeliness

6 Business Performance For Documents: Cut Costs, Meet Strategic Goals and Manage Document Processes with Confidence 5 Defining Objective Metrics Since there are many ways to talk about document performance management, let s consider a few terms for clarification. A Service Level Agreement (SLA) is the contract an organization has with a service partner requiring the partner to perform certain functions at a pre-determined proficiency level, e.g., process all incoming mail within 4 hours of its arrival, ensure 99 percent uptime on all print/copy/fax machines, or produce any archived record within 30 minutes of a request. Very often incentives are included in an SLA if the service provider meets or exceeds certain excellence benchmarks. Conversely, there are penalties for underperformance. These provisions equate to a performance guarantee. A metric is typically a percentage or ratio, such as % on-time performance or % accuracy. A measure is a data point, e.g., 1,000 mail pieces. A Key Performance Indicator (KPI) is a metric that an organization monitors through a DPM system to gauge compliance with an SLA and to make progress against a balanced scorecard. KPIs should be specific, measurable and result-oriented. How to Develop a SLA Step Example 1 Define the Service Area Incoming Claims Processing 2 Define the Service Activity All incoming mail received by OBS for the Claims area, will be opened, prepped, scanned and committed to the client workflow for processing 3 Define parameters All documents will to be prepped and scanned within 4 hours of receipt during normal business hours (8:00 a.m. to 5:00 p.m. Monday-Friday. 4 Determine percentage of time the client expects these requirements to be met Target = 99% 5 Define Target OBS will ensure that 99% of documents are processed and committed to client workflow within the required cycle time. 6 Identify measures & define metrics # Documents # Documents processed late % On-time Performance Against Target % On-time = (# Documents - # Documents processed late) / # Documents Performance Against Target = % On-time / Target % 7 Determine the data source Scanning application reports, traveler documents, manual logs 8 Establish a reporting timeframe Hourly, daily, weekly, monthly

7 Business Performance For Documents: Cut Costs, Meet Strategic Goals and Manage Document Processes with Confidence 6 Which KPIs do you use? Although the terminology is easy enough, several challenges arise with KPIs. One is deconstructing a KPI into the right set of metrics, or truly relevant SLAs, to clearly chart progress toward strategic objectives. A second challenge is finding indicators that can be rolled up into a DPM dashboard that enables a senior manager to view, at a glance, current overall performance against strategic objectives. The wrong KPIs can steer an organization off course. Whichever KPIs you choose, you can t etch them in stone. KPIs must be dynamic. Ten years ago, a bank, for example, might have set as a key performance indicator the percentage of paper statements mailed on time. Technology has made that KPI obsolete. A better metric for today might be the percentage of accurate electronic statements posted. It also makes sense to rank KPIs in terms of importance. The same bank during an economic crisis might place a special focus on three or four critical KPIs in addition to the metrics it monitors during stable business conditions. In general, you should have only as many KPIs as you need for a clear and effective view of your performance that leads to actionable results. By nature, a few KPIs tell the story of the rest. Just as a person driving a car can read only so many gauges speed, RPMs, engine temperature and fuel level a business can only monitor so many performance indicators before they are no longer key but superfluous. Cost per mail piece, for example, has implications for financial performance and volume management, so additional KPIs on these counts may be redundant. Once you understand the building blocks of DPM, the trick becomes putting them to good use. Here is a slice of life illustrating how an insurance company examined its processes, developed KPIs and a balanced scorecard, and improved performance: A DPM case study Organization: A life insurance company receives 40,000 claims per month on individual life, group life and annuities. It scans the claims into images, making them easy to process. Quick claims processing is a critical differentiator for the highly competitive, word-of-mouth-driven insurance industry. Processing claims in hours instead of weeks makes a big impact on customer satisfaction, market share, and profit. Problem: Despite suspected overstaffing, the insurance company was reporting substandard turnaround for receiving mail and scanning it into the database. Poor grades were based on anecdotal feedback from employees who had no involvement in the scanning. No metrics were in place to judge scanning timeliness or accuracy against service level agreements. Solution: The insurance company outsourced the scanning process to Océ Business Services, which deployed a best practices team. Led by a Six Sigma master black belt, the team applied BPM principles to the problem and documented all processes, implemented performance tracking and reporting, helped the client define an objective scorecard and associated metrics, analyzed true cycle time performance, recommended changes, and kept the client apprised of progress.

8 Business Performance For Documents: Cut Costs, Meet Strategic Goals and Manage Document Processes with Confidence 7 A Key Finding: Objective measurement of KPIs indicated that work was in fact occurring within deadline, but that there were more efficiencies to be gained. Productivity could increase without redesigning workflow. Rather, the organization could better align staff with mail volume and eliminate interruptions. Results: Better staffing saved the insurance company more than $150,000 annually in labor expenses. Staffing was reduced from 28 to 21 full-time equivalents. Cycle times were reduced from 4 hours to two hours. The client is now able to manage by an objective and balanced scorecard and has decided to outsource all of its document processes. DPM helps organizations take business benefits like these and standardize them across all sites and lines of business. Executives can manage aggregate document performance through an intelligence-packed dashboard 24 x 7 x 365. They can drill down to the device, staffer or mail package level, and drill horizontally back and forth through time. Printer/ scanner/copier fleets, mail systems, and couriers barcode scanners provide data for DPM software to consume, enabling companies to monitor and continuously improve their document process performance. If performance in a particular site shows up as blue or excellent on the dashboard, the company can replicate this best practice across all sites and functions. If, on the other hand, one site or process is struggling in the red zone, the company can pinpoint the problem and launch a quality initiative anything from a short staff meeting or revision to a form to a full-fledged Six Sigma project until the process meets standards. DPM can conclusively answer: Do you have a holistic view of your operations across all locations? How does your daily operation support strategic corporate initiatives? Are you getting what you re paying for? How do your site/locations rank against one another? How does your operation rank against the competition? Can you justify investment decisions?

9 Business Performance For Documents: Cut Costs, Meet Strategic Goals and Manage Document Processes with Confidence 8 An Innovative DPM System As an award-winning document process management service provider 5, Océ Business Services has advanced the concept that documents are vital information assets requiring active management throughout their lifecycle. The lifecycle of a document begins at its creation; evolves through distribution, storage and access; and ends with archiving or precisely timed destruction. Océ Business Services manages the linked processes that make up this complete cycle of events whether documents are in electronic form, paper form or both. With the help of Six Sigma methods and proven DPM technology, Océ Business Services helps reduce costs, minimize risk, improve performance and maximize value in the management of mail, copy/fax/print, records, and more. This approach makes it easy for Océ Business Services clients to outsource their document processes with confidence and gain deep insight into the performance of their contracted services. Océ Business Services clients use the Océ MAX performance management system to systematically measure, manage, benchmark and drive continuous improvement in all of these outsourced document processes. Clients can count on steady gains in operational efficiency, employee productivity and cost-effectiveness. As part of the Océ MAX implementation, each client is engaged in conversations about the critical document processes that drive their business, surfacing Key Performance Indicators that are monitored, measured and improved. Service Level Agreements are developed, and process maps are created to provide an objective view of the current operation. Finally, the critical data is captured and imported into the Océ MAX Standard or Océ MAX Advanced web-based systems for performance monitoring and improvement. These tools are designed especially to manage document processes in near real time (unlike paper reports or static Web pages reporting monthly at best). As with any quantitative application, the value of the business insight depends upon the quality of the data going in. Océ Business Services combines expertise in Six Sigma methodologies with deep knowledge of document processes in order to pinpoint data that is valid, reliable and statistically meaningful. Throughout an engagement, Océ Business Services adheres to the transparency philosophy promoted by author Glen Urban: Customer advocacy means faithfully representing the customers interests. It means giving them open, honest, and complete information because empowered customers will discover the truth through today s free information flow. It means talking with them, not at them. 6 In this spirit of transparency, Océ MAX replaces assumptions and opinions about service provider performance with hard, unassailable data. And it lets organizations easily modify metrics or objectives as business conditions change. The Océ MAX methodology is based on the careful research academic and experiential of dozens of quality management professionals with decades of real-world experience managing business performance, improving document processes, creating effective SLAs, and identifying an organization s most important KPIs Black Book of Outsourcing, annual user survey. Océ Business Services was named No.1 document process outsourcing (DPO) vendor for the second straight year and was named to the prestigious 50 Best Managed Global Outsourcing Vendors list. 6 Don t Just Relate Advocate! Glen Urban, Wharton School Publishing, 2005.

10 Business Performance For Documents: Cut Costs, Meet Strategic Goals and Manage Document Processes with Confidence 9 Conclusion Although business performance management is always valuable, challenging economic times demand that organizations do everything in their power to cut costs and improve business results. So ensuring that all operations, including document processes, are objectively managed with near real-time reporting can be a matter of survival. If survival is indeed at stake, then it relies on the imperatives we have explored in this paper: deeply analyze business processes; extract quantifiable metrics; define key performance indicators; consider customer, HR and operations concerns; hold service partners accountable with SLAs; monitor performance in near real time; populate a balanced scorecard; and aggressively tackle deficiencies. Like a manufacturer collecting data from the production line, an organization that takes these steps will be able to obtain critical details of its document management activities in near real-time. Recent advances such as Océ MAX can help organizations monitor how document processes, once dismissed as a fixed cost, are making a positive impact on market share, profit and business performance. Whether survival or shareholder value is at stake, organizations can make surprising advances in meeting strategic business goals by driving continuous improvement in their document processes. Gone are the days of making decisions about these processes without a deep view into them. Using innovating DPM systems, tools, and methodologies, businesses can feel confident that they are measurably improving operational efficiency, reducing costs, and proactively preparing to meet the inevitable challenges that lay ahead. Although business performance management is always valuable, challenging economic times demand that organizations do everything in their power to cut costs and improve business results.

11 Océ Business Services is a leading international provider of document process outsourcing services and technology to enterprises, law firms and the public sector. Océ solutions span the document lifecycle from creation through disposal, encompassing mail, print, copy and fleet management, imaging, records management, and ediscovery for complex litigation and regulatory compliance matters. By managing and improving document processes, Océ helps organizations reduce costs, increase efficiency and mitigate risk. Our proprietary service delivery methodology applies Six Sigma to achieve a higher level of performance. 460 West 34th Street, New York, NY Océ. All rights reserved. All referenced product names and other marks are trademarks of their respective owners.

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