Term Paper: Business Requirement Analysis

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Business Requirements Analysis for Long Beach Mortgage

The intent of this paper is to provide both the Business Requirements Analysis and use cases regarding the Broker Front Office Tool (BFOT) for Long Beach Mortgage. The BFOT system which will provide FlashQuotes that include loan modeling and pricing data in real-time from the Loan Origination System (LOS). A second requirement of this project is the real-time integration between FlashQuotes and the LOS so loan quotes can be uploaded electronically and tracked as they are funded. Inherent in these two requirements is the need for tailoring quotes to the specific requirements of customers and their unique financing and loan needs on one hand, and the need to deliver a quoting system easy enough to learn, use, and quickly traverse to capture loan prospect's needs on the other. As integration of FlashQuote with pricing and model data is a major requirement for delivering accurate quotes, there is also the cross-system integration requirement of having FlashQuote be directly integrated into the Loan Origination System (LOS) so that potential financing prospects can be quickly turned into customers. Columbus (2002) in research of quoting systems' integration with back-office systems has found that the greater the level of integration, the higher the Return on Investment (ROI) within an IT initiative with three or more systems delivering sustainable returns vs. The alternative of using manually based approaches. Askegar and Columbus (2002) define the integration of front office applications that encompass the functionality delivered in BFOT with back-office systems as one of the highest ROI activities a company can undertake.

FlashQuote Business Requirements Analysis

Creating an automated quoting system is one of the most effective online selling strategies any company can pursue, and this is especially true in financial services, Long Beach Mortgage's core business. The business development team has found in their initial research that existing approaches to completing quotes, generating pricing, and then tracking specific opportunities are for the most part manual. Like many financial services and manufacturing teams, they are also finding that every sales representative has a slightly different approach to creating quotes, pricing, and tracking them. The result is that often tracking the overall sales pipeline, or value of potential prospects in total across the entire company, is difficult to achieve.

Within the broader area of Customer Relationship Management (CRM) which quoting is part of, this is called the business requirement of a 360-degree view of the customer.

CRM is defined by Jill Dyche' (2002) as the infrastructure that enables the delineation of and increase in customer value, and the correct means by which to motivate valuable customers to remain loyal and purchase again. The quoting system delivers the most critical link in any selling strategy within the broader context of CRM in that it sets expectations not only of pricing and loan model, but also of Long Beach Mortgage's performance. Quotes set and manage expectations by default, and that's why the critical first business requirement of 360-degree view of the prospect and customer is the foremost business requirement in the development of this system.

A second major business development driving the development of the FlashQuote system is the shift occurring in how business strategies define the direction of investments in information technology. In the context of the FlashQuote system, the unmet needs of capturing specifics of what prospects want accurately, responding back to clients in real-time through integration to the LOS, and tracking quote status all are business strategies that need to be supported through the development of the FlashQuote system. Business managers, not IT, are driving the development of the FlashQuote application within the context of the BFOT. The rise of Software-as-a-Service (SaaS) is directly attributable to the dynamic of how business managers are choosing how to deliver applications and to which selling and service teams. SaaS is defined as the delivery of applications over the Internet, accessible through a web browser. For Long Beach Mortgages' sales management, the delivery of the BFOT and FlashQuote on a SaaS platform is critical so that the application can be used by any sales representative at any time, all they need is an Internet connection. The market factors driving the adoption of SaaS over the traditional licensed approach to delivering enterprise-wide CRM applications is that the IT Departments of many organizations are increasingly being called on to reduce costs more often than make selling strategies work. For the typical IT department today their direction is to reduce costs first and when possible, help with business strategies. SaaS as a delivery model however circumvents the cost-reduction agendas of many IT organizations and gives line-of-business managers including Sales, Marketing, Operations, and Service Vice Presidents, Directors and other senior managers from these ranks the power to bring applications in through web browsers. At the center of the dynamic growth of CRM through on-demand and SaaS is the shift in the balance of power in software spending in organizations. Today the line-of-business managers, especially Sales VPs, want to be able to develop and refine their selling and customer retention strategies quickly without having to rely on IT. As SaaS is by nature the delivery of applications over the Internet and accessible through any web browser, Sales VPs are finding they can pilot and even deploy enterprise-wide quoting systems with minimal involvement from IT for custom programming.

A third major business requirement that the LOM business development team focuses on when defining the BFOT and specifically the FlashQuote system is the pervasive need for analytics.

The need to track what's going on in the loan sales pipeline is only the beginning, with metrics of performance needed for tracking the performance of quoting as a strategy as well. In other words, the business development managers are already asking themselves what the pay-off is of having an automated quoting system, and as BFOT and FlashQuote ad delivered, the focus on measuring their contributions will increase. Specifically in the financial services industry, quoting systems are used for measuring the impact on company-specific, sales, quote and loan, customer service, and bad debt expense reduction measures of performance as are shown in Figure 1, Measuring FlashQuote Performance.

Figure 1: Measuring FlashQuote Performance

Areas of Measurement

Baseline: What to Measure

Example of Benefits

Company-specific

Loan costs and expenses

Use as a baseline for defining ROI

Number of loans per year

Determine quoing's impact on loans

Current loan costs

Loan Savings

Customer Data

Lifetime cost per customer; avg. deal size by customer

Sales

Loan cycle time

Loan cycle times reduction of 65% or more recorded

Cost of Sales

Days Sales Outstanding reduction from 60 to 29 days on average

Cross-sell and up-sell revenue

Increase of 33% on aggregate

Average sales price per loan

Increase from 9% to 26%

Quote and Loan

Average costs to complete a loan

95% reduction in cost per order

Special Pricing Requests

Over 100% ROI on automating Special Pricing Requests

Bad or incomplete loans

Incomplete order reductions of 20%

Customer Service

Number of customer complaints

98% reduction in cost of simple requests

Revenue lost to churn

60% when cross-selling is used with quote-to-order

Number of calls on order status

Median level of 500 per week to 70

Bad Debt Expense Reduction

Reduction in bad debt expense

10% reduction at a minimum

Labor cost reductions

Decrease order re-work from 15% to 2%

In summary, the three most critical business requirements driving the development of the BFOT overall and specifically the FlashQuote system are better and more complete visibility of prospects and customers. The second is a strong focus on quoting as a business strategy first and its deployment being aligned with how sales representatives work. The third major business driver is on measuring the performance not only of quoting activity but of the quoting system itself.

Multi-System Integration Business Requirements Analysis

The second requirement of the BFOT is its real-time integration with the LOS for both pricing, loan rates, and uploading completed loan applications for fulfillment or continued tracking. As the financial services sector is highly competitive, the need for responding quickly to prospects that request loan quotes can very often mean the difference between winning a new client or not. The business requirements of accuracy, completeness, and speed that are driving LOM to create real time-integration links are well supported through research completed through information technology research. According to AMR Research (2003) companies are achieving Return on Investment (ROI) with configuration when these strategies are made core to all customer fulfillment initiatives starting with order capture and order management. Further, according to AMR Research (2003) best practices are elusive in configuration, with only 6% of companies being able to accurately quote Available to Promise (ATP) or loan closing date. This translates into a significant competitive advantage for LOM in that few if any competitors in this arena are capable of accomplishing. AMR Research (2003) lists the fact that fixing quoting process first delivers the highest ROI, since it offers the greatest immediate impact on complex products sales and service revenue today.

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