Applying Six Sigma Principles to Project Management

Copyright 2006. Alvarez & Marsal Business Consulting Services, LLC. All Rights Reserved.

Applying Six Sigma Principles to NetBank’s Project Management Methodology

Case Study

2What We Will Look at Today

• Electronic Bill Pay (EBP) Market Drivers

• Applying Six Sigma to NetBank’s Project Management Structure

• Failure Mode & Effects Analysis (FMEA)

• Wrapping Our Discussion Up


Electronic Bill Pay (EBP) Market Drivers

4Blame the Internet!

• The Internet has created “customer disintermediation”

• The Internet has empowered customers with information, choice and a medium to share experiences (both positive & negative)

• “High Market Transparency” is the result of this customer disintermediation

• Social networks and communities are being created that cross geographical, political, religious and racial boundaries

5What Is So Unique About Today’s Banking Customer?

• Early adopters were considered tech savvy, time-starved, and craved convenience

• There are still significant opportunities for mainstream banking customers• Banks must ease growing security concerns and protection of sensitive

financial data• Better marketing of EBP that is relevant and drive value for the customer• Offer an easy to use interface that is reliable• Offer incentives that benefit the customer

• Banking customers are starting to commoditize their side of the relationship with banks & financial institutions

• The name of the game is “customer authenticity”

6Why Is Customer Adoption Growing So Fast?

Demographics

• 74% of Americans Use the Internet

• Age: 60% of 28-39 yr olds with Internet tried online banking; 38% of 18-27 yr olds; 25% over 60

• Gender: Half of men with Internet use online banking vs. 40% of women

• Edu vs. Income: Online banking more common households with $75K in annual income; college educated

Services

• 44% of Internet users, or about 63 million Americans bank online• On a typical day, 13 million Americans perform banking activities online• Online banking growth relates to spread of high-speed broadband connections & Internet experience• 42% of U.S. households have broadbandOnline Commerce• Growth in e-Commerce has driven new online payment “front-ends”

Source: “Payment Stats & Trends: What Do They Mean to Me?” Jim McKee, SVP, Federal Reserve Payments OfficeDelivered January 9th, 2007 at the Atlanta Electronic Commerce Forum

8Why Is Customer Adoption Growing So Fast?

The 2007 Consumer Bill Payment Trends Survey: Volume of Electronic Payments

• Bill Pay Reach – 39%; Check Bill Payments Decline to 34%• Record 74% of U.S. Online Households Pay at least 1 bill online• Paperless bills appears to be catching on with mainstream customers

Macroeconomic Drivers for Customer Adoption

• Rising postal rates are encouraging consumers to switch to lower cost alternatives

• Environmental concerns are also a key driver for EBP adoption


Applying Six Sigma Principles to Project Management Methodology

11Challenges & Opportunities

The Challenges

• Six Sigma Champion….GONE• Intellectual Capital…….ADIOS

• Six Sigma principles not previously applied to project management structure

• Required “intellectual horsepower” – tough to change the institutionalized thinking!

The Opportunities

• Voice of the Customer was previously never taken into consideration

• Proactively allowed us to identify potential failures prior to go-live

• Enhancing our EBP offering allowed us to be at parity with our competitors


Failure Mode & Effects Analysis (FMEA)

13Failure Mode & Effects Analysis (FMEA)

• A method that first examines potential failures in products or processes

• FMEA is evaluated by three criteria and associated risk indices:– Severity– Likelihood of Occurrence or Probability– Inability of controls to detect it

• The overall risk of each failure is called a Risk Priority Number (RPN)

• NetBank’s FMEA for the Bill Payment Implementation/Upgrade

14Results

• Only 9% of customer calls received were related to the implementation– Customer concern was mostly around the change in processing

models (Good Funds to Risk)

• Identified only 1 critical issue that impacted customers– MS Money, QuickBooks & Quicken Integration Issues

• The first project that we implemented where there were no major catastrophes– FMEA was a definitely a MAJOR enabler; other change management

practices also helped (i.e. constant communication, onsite training of customer service agents, vendor onsite for implementation & post implementation)

15Wrapping Our Discussion Up

• Implementing Six Sigma tools during the project management life-cycle can eliminate unnecessary reworks or failures

• Whatever project that your financial services is considering, it’s good to know the customer and competitive landscape and apply that learning to the project management lifecycle

16Let’s Keep In Touch

Art HallAlvarez & Marsal Business Consulting3399 Peachtree Road, Suite 1900Atlanta, Georgia [email protected]: 404-260-4152Mobile: 404-759-9158

mailto:[email protected]


Applying Six Sigma Principles to Project Management Methodology

NetBank Case Study

Applying Six Sigma Principles to Project Management

Business

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