I have just wrapped up design work on a web service to cancel and refund F&I product contracts. Whether a refund is owed to the customer, from an early termination, or to the lender as recovered funds, it is in the provider’s interest to support an efficient automated process. On the lender side, it is also a compliance issue.
This job was rewarding for me because it completes the lifecycle I began automating, ten years ago, with electronic rating. MenuVantage was a leader in rating and originating product contracts, and many providers adopted our model specification.
I then did related work at GMAC Insurance, which was to include claims processing. Sadly, the crash of 2008 ended that project. GMAC also had the bright idea to check for an earlier contract, and apply the refund to the results of the rating call.
The industry has been developing web service support piecemeal. First, there was a need for rating and contracting, supported by companies like MenuVantage. Now, there is financial and regulatory pressure to automate terminations, supported by companies like Express Recoveries.
In hindsight, a savvy provider would have looked at the core processes and developed web service support for the whole lifecycle. It would look something like this:
- Dealer and vehicle information ⇒ Return customized rate structure
- Deal information with chosen rate ⇒ Originate contract
- Form request ⇒ Return contract as PDF
- Form with digital signature ⇒ Store in secure archive
- Blank form request ⇒ Return blank form
- Void request ⇒ Void contract, if eligible
- Remittance query ⇒ Return remittance log
- Remittance notify ⇒ Post pending payment
- In-force query ⇒ Return contract data
- Claim diagnosis ⇒ Verify coverage
- Claim estimate ⇒ Approve/deny claim
- Claim entry ⇒ Issue payment
- Vehicle data from contract ⇒ Return cancellation quote
- Contract data plus authorization ⇒ Cancel contract, issue refund
You could do one big API to manage the product from cradle to grave, and build provider portals and such on top of it. This would have the usual benefits of decoupling the back-end from the presentation layer, and it would facilitate integration with dealer and lender software.
I am doing a Business Process Reengineering (BPR) project for LoJack Corporation. It is to their credit that a mature organization like LoJack is willing to examine its business processes. This is part of a broader effort to increase F&I penetration, and it promises to be a lot of fun. Readers of this blog know how much I enjoy BPR, and Dr. Hammer.
After much deliberation, we chose Business Process Modeling Notation (BPMN) for the project. My main concern was having diagrams that would be easily understood by everyone on the team. Not everyone who is an expert in F&I is also an expert in BPR. I also wanted notation that would keep track of data flows, and was well supported by textbooks and software tools.
If we had only IT people on the project, I might have recommended UML or ODBA, but both of these are too technical. Also, UML doesn’t do a great job of combining process and data flows. I think the absolute best notation on this point is Event Process Chain (EPC) but it, too, requires special training. There is a great paper out of Harburg Tech, by the way, comparing UML and EPC. The windup is that UML is better for software and EPC is better for process.
As to support, BPMN is an Object Management Group (OMG) standard. Visio 2010 not only supports BPMN, but it includes a syntax checker. This will be important for people new to the tool and the notation. I also found a number of good recent textbooks, including The Micro Guide to Process Modeling. This is a concise “how to” that will serve us well, and it includes some good style tips. Happy modeling!
I have just returned from the annual F&I conference. It was a treat to see all my old friends in the industry. I participated in a panel discussion on web services, an area where I have some experience. Click here for my white paper.
The discussion was well attended, even at five o’clock with the open bar beckoning. Not bad for a technical topic. The panel was cordial, even though we are mostly competitors. There was some debate over my assertion that web services can reduce IT costs.
From the audience questions, I detected genuine interest – and I believe we gave some useful answers. Thanks to Brian, Brent and Kumar. Let’s meet again next year!