Operational resilience has always to some degree been an important factor in many industries but it's easy to forget just how much of an impact it can have on the health and efficiency of a company. Not keeping it as a key consideration puts your company at risk of becoming uncompetitive in a rapidly changing business landscape.
Every industry is susceptible to busy periods, and this requires increasing levels of planning, even more so in the midst of an economic recovery. It’s more important now than ever before that companies are prepared to act defensively and maximise business growth.
Having a plan in place to boost operational resiliency is the best way to make sure that your company is ready to step in and deal with increased demand, either by expected fluctuations in the year, or sudden market changes. This can be achieved with a mixture of modelling and forecasting, to scale up and down operations in accordance with business needs using capacity planning and measurement. The use of historic management information can allow you, to a degree, react and modify processes and to align with strategic goals to achieve resilient operations.
It’s not the only market where this is applicable, but the mortgage lending industry gives us a good recent example of where operational resilience was necessary. Earlier this year, the UK Mortgage Market Review (MMR) came out in full force. New mortgage affordability testing was added to the process of granting applicants a mortgage, and unsurprisingly, the stricter filters increased the processes that an application needed to go through. At the same time the UK Government is applying pressure to the mortgage industry to grant more applications. For many lenders, there was an increased pressure on the back office and the growth of incoming applications meant that it was becoming even more time consuming to process applications putting house purchase transactions at risk.
According to the UK Council of Mortgage Lenders, mortgage lending hit the highest levels since the financial crisis this August. There are a number of factors for this, including arguably the fears of an impending interest rate rise. While this could be seen as a great boost for the housing market, what is often not thought about are the scenes taking place in the back office. For the lenders who hadn't considered operational resilience, this commenced the task of overhauling and streamlining functions to extract the best efficiency - especially important as there was a firm belief in the industry that many lenders were competing for the same applicants.
The time it takes to hear back about a mortgage application is typically a few days to a few weeks if you ask the average consumer, however, from conversations with some of the mortgage lenders we work with, we've learned that with the right back office planning in place, this can actually take a matter of hours. What shook up the lenders (or at least operations managers!) was the fact that the new affordability testing risked lengthening an already drawn out process. Those who had a plan to deal with an influx of applications during a busy time stood to gain a lot more than those lenders who hadn't, though the streamlining of processes and the quicker turnaround time.
The Mortgage Market Review and the mortgage lending industry is just one example, but the fluctuations in processes and the increased importance of operational resilience is felt within any industry. This could be permanent changes, like in the case of the example above, or this can be temporary like in the case of retail where changes are felt at certain times of the year. Adapting to changing patterns has become less of a 'what if' and more of a 'when' and we've noticed more and more that those who plan in advance and are able to act quickly have the most to gain from maximising their chances of success.
Our customers naturally enough come to us for back office workforce optimisation to maximise the efficiency of their business operations through forecasting and capacity planning tools. Naturally they want build an edge on the competition, to be able to evidence compliance and of course improve customer service levels.
It is the single real-time view of incoming work and on-line capacity of the back office operations, irrespective of where these teams are located, that really makes the difference to the resilience of their operations. Managers are able to view the pipeline of incoming work, irrespective of channel, and allocate that work automatically or manually to the best back office agents or teams depending on their skills, backlog, capability and availability.
The combination of planned and real-time information allows businesses to pre-empt and react quickly to changing market conditions.
The UK Mortgage Market Review prompted some proactive lenders to reassess their back office functions and evaluate how to organise operations and staff efficiently for the best outcome, bringing the importance of operational resiliency to the fore for the mortgage lending industry. The lesson we can take from this case, for each and every industry is that ignoring operational resilience may not ruin your business, but it isn't giving your business the chance it could so easily have.
I'd be hard-pressed to find an industry where changing regulations, channels, competition and customer service levels don’t challenge the operational resilience of any business in order to create, or maintain a successful and competitive company.
By Tim Taylor, CMO, eg solutions