EngO 2010 Smart English

EngO:
From Business Process Outsourcing
Engineering Finance Division
www.eng.it
To Business Process Utility
November 2010

Offering
AREAS EngO Services
Banking-Credit
• Mortgage
• Rating models updates
• Credit administrative services
• Collateral Management
• Client personal information
From Business Process Outsourcing to Business Process Utility2
Banking-Commercial
• Client personal information
• Opening and closing a bank account
• Bank transfers, direct debit, domiciliation
• Insurance saving
Banking-Finance &
Investiments
• Fin. BO
• SGR - Services
• Custodian

Banking-Credit
Rating Update
Customers economic data recovery in
order to replenish the internal
models
• Data Collection
• Reworking
• Reclassification
• Origination
• Proposal
• Resolution and delivery
• After-delivery and Archive
Mortgage
Administrative management
• Collaterals data recovery
• RE geo-detection
• Fair value determination
Credit administrative services
BO in order to credit activities
Collateral management
Data recovery for Credit Risk
Mitigation
• Centrale Rischi management
• CRIC management
• Credit Scheduling
• Renewals

Banking-Commercials
Banking account management
Opening and maintenance accounts and
others
Population and maintenance client data toolClient data management
Administrative BO for PSD compliance
Insurance BO
Payments managemnt
Underwriting Redemption
Suspension Supplement

Banking-Finance & Investiments
• Securities Register
• Deposits and depositories management
• Asset Management
• Funds placement
• Settlements and Payments
Finance BO
SGR Services
• Share calculation
• Accounting
• Activities against money laundering
• Asset Management
• Positions in share management
• Asset Management (law’s control and
value share)
Custodian
SGR Services
• Activities against money laundering
• Subscribers administration

The financial market today
Momentum of significant discontinuity in the market due to changes in the political-
economic scenario that impacted the whole system, generating crisis and reducing
trust from the clients
The market crisis and the change of mentality imposed by the system offer, however,
big opportunities that can create value
THE MARKET
Need to develop innovative customer loyalty techniques
Need to revise their own rating systems because of inadequate internal ones and not
trustful external agency (ex. Lehman classified as AAA+)
Implement prompt reply skills to all changes imposed by the market (ex. compliance
with new regulations etc.)
Implement efficient sourcing models to reduce costs and gain operational flexibility
FINANCIAL INSTITUTIONS

BPO Market Trend in Financial Services
According to Gartner (Dataquest Insight: BPO Trends in Financial Services, 2008), the market of
BPO Financial Services will grow in the next years with a CAGR of 10.5% from 2007 to 2012,
reaching a total of $55.9 billion in expenses by 2012. This growth is mainly due to reduction costs
strategies implemented by the institutions to deal with the recent financial crisis (IT expenses – if
not for the components that guarantee costs reduction – will decrease, while the off shoring
services will see a fast acceleration). In terms of evolution of BPO services provided, we have
recently seen the establishment of the new model known as the BPU (Business Process Utility).

The evolution of BPO: the BPU (Business Process Utility)
In the area of service delivery, in the following years, we will see an evolution from the Business
Process Outsourcing towards the Business Process Utility that is, as stated by Gartner, a way to
deliver slim, automated services. In the “Four Steps for BPO Success”, Gartner show the trend
these services will have in the next few years:

• Regulatory Compliance
(Basel 2, Bersani, Mifid, etc.)
• Credit Excellence
• Payments (SEPA)
• ……
• Back Office of Second
Offer model
The offer model brought to the market will be made up of three Business lines: Consulting,
BPO, Innovation:
Consulting
• Customer Experience
• Lean Branch
• …….
• Back Office of Second
generation
• Rating models
• Collateral Collection
• …
BPO Innovation
EngO – thanks to its presale structure – will bring its offer to the market with the purpose to
manage and outsource the operational processes of financial intermediaries in an end-2-end
perspective, exploiting expertise on process, regulation compliance, and innovation.

Business Partnership objectives
Improve the operational performance of business processes through:
Time to Market
reduction Operative Costs
reduction
Process execution control
Increase quality and
generate new value

EngO’s model: Business Partnership
Engo model provides a gradual and flexible approach to Business Partnership.
Each of the executive arrangements described below may be implemented stand-alone or
together with others in the customer's needs.
Transform
H
COSTS/ADDEDVALUE
Transform
• Transformation of one or
more parts of the value
chain
• Certainty of the result in
terms of business
performance
EngO
COMPLEXITYL H
L
COSTS/ADDEDVALUE
Service Delivery
• “as is” execution
Re-Engineer
• Efficiency induced by changes in
process and organization
• Using technology to support the
efficiency of processes
performance
Reengineer
Service
Delivery

EngO mission
EngO was born by the desire of Engineering Group of challenging the right mix of
capacity for "listening to the customer" with operational powers and set of
methodologies, asset and experiences.
In the context of the model of services provision, in the coming years we will see the
development of Business Process Outsourcing into the Business Process Utility that
is in fact, as defined by Gartner, a way of providing services leaner, automated.
is in fact, as defined by Gartner, a way of providing services leaner, automated.
The “Human Intensive” activities are physiologically migrating to IT transactions:
unstructured information (typical of the paper contents) become in Engo structured
information in a position to be directly drawn up by information systems. Engo
accompanies its partners in this path with the credibility of being part of one of the
main actors ICT.

Improve efficiency of Back Office structures
The application of the EngO offer, identified by projects to increase efficiency of the financial
intermediaries Back Office operational structures, is based on the following stages: process
assessment and gap analysis, activity reengineering (Consulting), definition and implementation of
new operational model (Innovation), outsourcing to EngO structures (BPO).
Service quality
improvement
SLA Improvement
Service Monitoring (BAM)
Process mapping vs. best practiceProcess mapping vs. best practice
BSC Application and Back Office activityBSC Application and Back Office activity
Assessment
processes &
Gap Analysis
Activity
Reengineering BPO
Implementation
new operational model
Commitment
EngO
Costs analysis
Reduction of redundant, low value activitiesReduction of redundant, low value activities
Productivity increase
Cost control in real time
Business Process Transformation
Service cost reduction
t0 time
BPU

The EngO approach
Methodology
Approach
Project Plan
EngO aims to become the Bank industrial partner for the realization of a Business
Process Outsourcing project of the Bank Back Office activities, that can be identified
into four macro phases:
Approach
Project Plan
Know-how
Acquisition
Transition
Plan

This phase is applicable to each process analyzed, and the key activity is
the definition of the process KPI for their subsequent evaluation.
Quality management
Flow Rollout and
Start
KPI represents the small group of
indicators that have been identified
as critical variables to reflect the
value of the process management
strategies adopted, and that can be
categorized as follows:
Methodology: Processes and relevant KPI definition
Definition and
evaluation of
reference
benchmark
Flow Chart Drafting
Definition of
reference metrics
Flow Rollout and
process book
sharing
Definition of
Monitoring Model
Acceptance Test
Planning
categorized as follows:
•Service Level Agreement
•Performance Time and % Based
•Human Resource Management
•Volume
•Customer Satisfaction
KPI also represent an evaluation of
the success strictly connected to the
improvement targeted with the
initiative.

Flow Chart
Drafting
Methodology: Processes and relevant KPI definition
• The activity
wants to draft a
back office
project flow
chart according
to a logic
temporal
succession of
structural
• The activity
aims to define
the reference
metrics for
each entity
indicated in the
flow chart.
• Metrics will be
extracted from
• The activity’s
objective is to
measure
processing
timing for each
entity identify
in the flow
chart.
• Reference
• This activity
intend to define
the monitoring
model of the
process shown
in the flow
chart.
• The model
could be
• The purpose of
this activity is
to validate
deliverables in
the previous
phases, and
verify the
equity of
models created
• The activity
aims to define
the Process
Book and its
continuous
update in time.
Phase: Acceptance
Test
Definition and
Evaluation of
reference
Benchmark
Definition of
Monitoring
Model
Flow roll-out, and
process book
update
Definition of
reference
metrics
activities.
extracted from
the catalogue
of metrics
defined within
the EngO®
Method, and
will be
implemented at
the maximum
level of detail
expected in the
flow.
• Reference
benchmark
will be
collected and
implemented at
the maximum
level of detail
expected in the
flow.
could be
defined at
single entity or
entire flow
level, and its
realization
implies many
different
activities.
according to
EngO quality
guidelines.

Definitions :
The Process is decomposable in subsequent phases. The Phase is an macroactivity
succession. Every process (working) will have to be represented with the level of
decomposition till the Macro activity or, if necessary, with the level of detail on the single
Activity
Macroactivities
This second activity has as objective the design of the flow chart of a
office process of back a temporal logical sequence of structured activity.
Activities
The macroactivity can be subdivided in
Flow Chart Drafting
Macroactivities
• The Phase is decomposable in
Macro having activities specific
input/an output. Every Macro activity
is characterized the being carried
out from operatingly homogenous
subjects.
• Eg. Asset Management
The macroactivity can be subdivided in
activities, that they constitute the minimal
level of analysis of the process. The
activities are determined decomposing the
macroactivities second a sequential
parallel logic
Examples:
Formal control ( / open note WF)
Verify “bene firma” ( / open note WF)
Angrafic control ( / open notes WF)
Inclusion in proceedings
…

Process Repository and Work List
Process Repository
Work list
The Organizational Repository is characterized from a structure
based on the catalogue of the business processes (taxonomy), that
it constitutes the infrastructure on which the characterizing mappings
are placed the operativity of the nets, of the offices center them and
of the outsourcer in an univocal context, homogenous and
integrated.
Work list (the operating guides) for the operators, bring back the description of
every single activity member the operating procedures in which the Service is
articulated. Inside of every operating guide the following elements are indicated at
least:
• the single elementary steps that compose every activity and the relative
modalities of execution;
• the reference to the line controls that must be carried out by the operators;
• the activities to undertake to forehead of anomalies;
• the activities for which an explicit authorization from the Customer is
previewed.

Control system
• Leaving from the risk analysis, connected to the activity of the Finance, EngO an
inner control system has elaborated on the activities of the Service that can be
reviewed for the specific requirements of the Customers, the system is such that:
– it assures an effective management of the operativity and of the connected risks, defining
political and appropriate procedures of control;
– it establishes effective communication channels to the aim to assure that all the staff is
Control system
– it establishes effective communication channels to the aim to assure that all the staff is
to acquaintance of the policies and the relative procedures to own tasks and
responsibility;
– it defines the informative flows faces to assure to the full Customer acquaintance and
governance of the operating procedures object of the Service.
• The control system previews the institution of operational controls on line that
will come executed from the operators of the supplier in order to control the
correctness than operated.
• Such controls will be in appropriate controls card’s

Flowchart example

This activity has as objective the definition of reference metrics for
every entity defined in the flow chart.
The metrics will be extracted from the metric’s catalogue defined
inside of the EngO® Method and will be applied to the maximum level
of detail previewed in the flow.
Volume
• Percentage practical subdivided for channel
• Percentage practical subdivided for typology
• Medium number of practical that an operator manages
medium Number for the time being managed practical all'
year from an operating medium Number of practical for
Service Level Agreement
• Aging practices in Backlog anomalies
• Medium number of practical managed to the day in lying from
48 hours
• Quality: Percentage practical managed in wrong way shifting
percentage on the Previewed Volumes
Reference Metrics
Reference Metrics Definition
Performance Time and % Based
• Medium time Practical Management
• Medium time Wait Which had to I.S.
• Percentage One Step Resolution
• Percentage of Practical Suspended to external cause
• Percentage Practical Reject to the competence sender
because not Percentage
• Practical Transferred to other Back Office
• Percentage Practical that demands a call to the
customer Medium time called duration customer
(outbound)
• Average ready Time on effectiveness Time in seconds
Medium time Availability to the Effective Job vs
Contractual Time
• Occupation Operating Percentage
year from an operating medium Number of practical for
Customer for Year
Customer Satisfaction
• Percentage Customers whom Percentage supplies a positive
feedback in last the 90 days
• Customers whom a negative feedback supplies in last the 90
days
Human Resource Management
• Annual turnover
• Operating cost of new Assumption
• Necessary time for the formation of a new Operator
percentage on the Previewed Volumes
Performance IT
• IS accessibility

This activity has as objective the measurement of the timing of working
for every entity defined in the flow chart. The reference benchmarks
will be found and applied to the maximum level of detail previewed in
the flow.
Measurements
Having decomposed every process in the macroactivities/activity composes that it concurs a
measurement of detail of the single entities that takes part to the realization of the same process. It will
have to be given evidence of the dependencies from the used systems
Manual Survey
• The timing of processing for each
Automatic Detection
• Should be identified Processes, Phases, the
Measurement and definition of the reference benchmarks
• The timing of processing for each
Macroactivities / Activities represented in
the model are detected manually by
stopwatch in assistance to operators.
• Should be identified Processes, Phases, the
Macroactivities or traceable activities
automatically and the possible interventions
to be implemented to simplify the
measurement of the same.
Benchmarks
The reference benchmarks will be those now found for each process.
In the absence of a reference model should be created one base of measurements on significant volumes :
- Last month
- Last quarter
- Last half-year
- Last year

This activity has as objective the definition of the model of monitoring of
the process represented from the flow chart.
The model could be defined at the level of single entity or at the level of
flow in its complex and its realization it previews multiple activities.
Targets
To provide the guidelines for monitoring the workflows of each practice run in the Back Office by:
Analisys and definition of:
• Instruments
Monitoring Model Definition
Identification of a set of recommendations and requests through the creation of
functional specifications for:
• Customer IT
• Internal IT
Identification of monitoring methods and types :
• Manual
• Automatic
• Mixed
• Instruments
• Methods
• Support procedures

This activity aims to validate the deliverables of the previous steps and
verify the consistency of models made in accordance with the Engo
guidelines.
In this phase it should validate:
• the flowchart
Acceptance Test
• the reference metrics and their applications
• the measurement model
• the monitoring model
In the event that these deliverables are not acceding to the quality guidelines,
recommendations for the revision and completion of the models should be discussed
and provided.

This activity aims at defining the Process Book and its continuously
update in time.
The Book consists of three types of documents:
Process List
It’s the file (Excel format) that contains the stock of working according to the triplets structure:
• Type
– Family
• Subfamily
Summary
Flow Rollout and process book update
– Reference to the Flow Chart document
– Reference to the Card Process document: Metrics and Associated Measurements
Flow Chart
It’s the file (Visio format) that represents the flow chart of the process (subfamily) concerned with a detail level of or
Macroactivities or Activities depending on the complexity of processing.
Card Process document: Metrics and Associated Measurements
It is the rows (formed excel) that it takes a census metric of reference for the working (family) and the carried out
tsurveys (times of working, incidence %, etc…). The metric ones could be applied on various levels: the
process; the phase; the macroactivity; the activity
Detail Document for each Subfamily

Project Plan - Phases
DIC 09 30/04/2010
End actual
Service
July 2010
New Operating
Model START
Transition Consolidation
Service Improvement
Service Model fully
implemented
Initial Assessment
Sept 09
Start
(Sign LOI)
Due Diligence e
Contracting
As Is SLA
collection
To Be SLA
definition
Services
responsibility
SLA
management
EngO
Operating & Service Model
deployment
Operating & Service
Model consolidation
To Be SLA
tuning
To Be SLA start
measurement /
responsibility
Internal Back Office

Activity Description
g Collection of Bank requests for the activity that will have to be delivered by the service center
g Definition of user requirements to connect the delivery center with the volumes it will have to manage
g Analysis and definition of transition phase from the paper driven to the paperless working model
g Collection of Bank/EngO IT specifications for the monitoring activities of mailing and reporting services
g Definition and sharing of contractual SLA (metrics to measure performance, collection instruments, recurrence,
reference temporal span, actual level of performance, target level of performance,…)
g Definition, sharing, planning, and start up activities of Knowledge Transfer
Project : Services and IT Infrastructure – Start –UP Form
Deliverables
g Contractual addendum
paper filing procedure
g Document with detailed
technical requirements
g Personnel involved List
Objective
g Census of the applicative/infrastructural/policy context, and of relevant indicators within the project
g Identification of user requirements for the set – up of infrastructure needed by the Supplier to deliver the service (user profile,
applications, connectivity, …)
g Guarantee the correct implementation or user requirements towards IT, that can activate the operation
— Gantt of project — Responsabile
• Logistic Infrastructure project
Census of areas, office realization, work places
Management transition phase couriers services from bank to
service center
Filing of registered and processed documents
• IT infrastructure project
Census of applications
Collection of Bank requirements
Implementation requirements and test
• Mailing service project
Analysis processes/sub-processes, procedure and service
level
Personnel selection and Knowledge Transfer activities
Management of transition from paper driven to paperless
model
— Gantt of project —
OctFeb Mar May June JulyApr Sept Nov DecAug
EngO
EngO
EngO
Release of detailed technical requirements document
Personnel List
Production of contractual addendum
Start up Service (1/06/2010)

Example of Governance
Director
Project Management
Knowledge Management
Process & Solutions
Engineearing
a.i. C.Guerrini
Process & Quality
Management
Issue/Risk Mgmt
Request Change
Contract & Budget
Transition Staff
Transition Project
manager
People Manager
Business Transition
Project
Technical Transition
Project
Business Capabilities
Management
Improvement Project
HR & Facilities
Service Performance
Management
Service
Management Steering Committee
Operation Manager
Recruitment and HR
IT
Finance
Facilities and Services
EngO
BackEnd
Structure
Operating
Structure
Operation Manager
Banking Operations
Structure
Banking Operations
Structure
Operating Committee
Structure 1
Structure n

Know-how acquisition
The model to be followed during the Knowledge Transfer/Training process will be defined
by EngO during the preparation of the project plan. The EngO method involve a constant
information exchange with Bank personnel to reduce operator “Time to proficiency” .
Bank
Document
Identification
Details
Processes
• Knowledge Base
Contents
Identification
Procedures
Company
Product
Approccio
Metodologico
Piano
Progettuale
Acquisizione
Know-how
Piano di
Transizione
IT Infrastructure
(Knowledge Base)
EngO
Processes
Request of updates/amendments to
knowledge base
• AnalysisProcess Flow
• AnalysisOperative
Procedures

Knowledge Transfer – Training Plan
The training plan that EngO intends to implement to reach the operator expertise
level needed to manage the working, contemplates 3 main phases:
Ph 1
• Theoretical training
• Formal verifications
• Theoretical training
• Formal verifications
• Bank support
• Operative verifications
• Bank support
• Operative verifications
Ph 2 • Operative verifications• Operative verifications
Ph 3
• Activities start-up
• Quality control
• Activities start-up
• Quality control
At the end of each phase there are the quality controls that must be overcome by all
operators. During the service delivering are provided continuous training sessions
(both platforms through portals e-learning and classroom

Back Office
Distribution:
• Files
• SLA
Automated BO
operatorsManagement:
• Files
• SLA
Bank Management
Systems
Branch/Client
The new generation operative engine activating BPU
Engine for:
Info & Control:
• Reporting
• Alerting
Operative
production
Communication
• Mail
• Text messages
• Fax
Distribution of files to operators
Classification of files based on workability
Optimal management operators skills
Monitoring in real time of Back Office
status in terms of:
- compliance with SLA
- instantaneous loading of BO
- Actual or potential Backlog
- “Dangerous” events:
- Entrance flows anomaly
- Delay in crossing time
- Automation of repetitive files and processes
Flexibility and Efficiency
Engine for:
• Analysis
• Distribution
• Monitor & Alerting
• Alerting
• Monitoring real-time

Phase 3
Transition Plan from BPO to BPU
The approach is very flexible and scalable, and can also be modeled
according to the agreement between the Bank and EngO.
Baseline
effectiveness
Baseline
effectiveness
Effectiveness
Increase
Effectiveness
Increase
Control of Business process
Increment in production flow control
Slim production processes
Increase of speed in feeding Back Office production
Baseline
effectiveness
Effectiveness
Increase
Control of Business process
Increment in production flow control
Slim production processes
Increase of speed in feeding Back Office production
Partial CHARGE
over some
activities
Phase 1
Phase 2
Month 1 Month 2 Month 3 Month 4
Baseline
Service Cost
Baseline
Service Cost
Service Cost
Reduction
Service Cost
Reduction
Adoption
Paperless
Strategy
Adoption
Paperless
Strategy
Transition of Back
Office towards EngO
Transition of Back
Office towards EngO
Back Office of new
generation
Back Office of new
generation
Workforce
Optimization
(Outsourcing)
Workforce
Optimization
(Outsourcing)
BPUBPU
Reduced paper processes
Reduces production time for each requirement
Increase operator productivity
Baseline
Service Cost
Service Cost
Reduction
Adoption
Paperless
Strategy
Transition of Back
Office towards EngO
Back Office of new
generation
Workforce
Optimization
(Outsourcing)
BPU
Reduced paper processes
Reduces production time for each requirement
Increase operator productivity

The Delivery Model
www.eng.it
The Delivery Model

Governance/Monitoring structure
EngODeliveryStructure
Delivery Model
The Delivery Model embraced by EngO will be a “lean” model, made of the following:
1. A Governance structure (to monitor and control processing)
2. An Operational Brain structure (to fraction different process phases, and for dispatching activities
towards external factories)
3. A net made up of partners and third parties (for execution of process micro activities)
Operational Brain
Internal Structures
Onshore Near shore Offshore
Site 1 Site 2
..Site 4Site 3
EngODeliveryStructure
Operational Brain
Third Parties
Each activity will be analyzed, mapped, and divided into micro activities which execution will be
outsourced towards onshore, near shore and off shore third parties.

Fine Tuning
Back-Office
Level I
(operation)
Back-Office
Level II
(supervision)
Administration
(ratification)
The operative back-office performances are guaranteed by a multi level control
(operation) (supervision)
The fine-tuning among the different levels allows to minimize the number of manual
intervention in favor of control automatism.
The final result is very high quality.

EngO:
Engineering Finance Division
Thank you
www.eng.it
To Business Process Utility
Novembre 2010

EngO 2010 Smart English

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