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Outsourcing Can Rescue Document Management

Daniel Joelson July 2007

In 2006, Auto Club Group (ACG) found that its document composition capabilities were highly inflexible and, faced with a legacy environment, it could not manipulate its print stream-at least without contracting additional workers.

The Dearborn, Mich.-based company was unable to deal with spikes in mailings, which occurred when it had to send bulk materials to a large credit union, for example. And yet, employees and equipment often sat idle during lighter mailing periods.

Looking at the sea of hardware and software the company had accumulated over the years, Auto Club Group (ACG) realized document management "wasn't necessarily a best practices profile for us," says John O'Connor, director of strategic sourcing and fulfillment services for the carrier. Its documents were somewhat antiquated and they were not intuitive, says O'Connor.

So, like a growing number of insurance companies, ACG decided to outsource much of its document management work to vendors dedicated to the task. Document management processes can include everything from housing, maintaining and supporting the servers that run the document management technology to front-end business processes, such as scanning and indexing documents.

As with ACG, cost reduction has been a critical driver behind carriers' move to outsourcing. Document management costs are enormous in an industry that is drowning in information and is still largely paper-based despite making electronic advances.

ACG has already saved more than $1 million and expects to save millions more in reduced paper and postage costs alone by turning to Sourcecorp Statement Solutions, a document and imaging outsourcer based in Dallas, Texas, and Exstream Software Inc., an enterprise software solutions provider based in Lexington, Ky.

Approximately 70% of the costs of an insurer's typical production system in operations are postage related, according to O'Connor. Much of ACG's postage savings have come from "real quick, down-and-dirty efficiency gains by being able to tweak a legacy extract and do some of the easy formatting capabilities that we could do with Exstream," says Matthew Waldau, a consultant for ACG.

Exstream also reduced ACG's paper weight and helped focus the company's message. "We had a very shotgun approach to our messaging, where we just put everything into every piece," says Waldau. "And now [that we are] leveraging targeted messaging, we know there is a huge inventory save opportunity." No longer does ACG send out reams of mailings with superfluous papers that nobody reads.

OTHER OUTSOURCING DRIVERS

Technology executives are focusing on improving how they manage documents. Almost half (48%) of the 26 CIOs at U.S. insurance firms who responded to a recent survey have document imaging projects under way, and the same number had a document content/management project in progress, according to an August 2006 report, "Document Management for Insurers: Overview and Solution Spectrum," by the Boston-based research and advisory firm Celent LLC. (See the chart on page 30.)

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