Leveraging The Work Force using Information Technology:
A Financial Service Case Study
Tyler Ferguson
Northwest Farm Credit Services
Headquarters
Spokane, WA 99258
509-340-5574
[email protected]
Binshan Lin *
College of Business Administration
Louisiana State University in Shreveport
Shreveport, LA 71115
318-797-5025
[email protected]
Jason C.H. Chen
School of Business Administration
Gonzaga University
Spokane, WA 99258
509-323-3421
[email protected]
*corresponding author
Leveraging The Work Force using Information Technology:
A Financial Service Case Study
Abstract
How can a company maximize its employees’ workload, become more efficient, and
maximize profits without having to drastically increase the number of employees? This is a
problem that many companies face everyday. Companies trying to compete in markets with
intense rivalry and small profit margins must fully utilize every employee by maximizing
efficiency, effectiveness, and work output.
Information Technology (IT) is not only changing the way companies operate internally,
but also altering the relationships between companies and their suppliers, customers, and other
business partners. Thanks to various advances in IT the problem of leveraging the work force has
been mitigated. Implementing a successful solution requires more than simply purchasing new
computers or software. To effectively use an IT strategy a company must undergo a Business
Process Reengineering (BPR) that requires vision and dedication.
Using the right IT and Information Systems strategies will help a company leverage its
workforce.
Fewer employees will be able to manage a greater workload while increasing
company profits. This paper focuses on IT and models and examines how they can be used to
leverage the work force within Northwest Farm Credit Services, a company that provides quality
financial service, thereby enhancing its competitive strategic advantage within the marketplace.
Keywords: Information Technology, Information Systems Strategy, Business Process
Reengineering (BPR), Customer Service Center (CSC), Customer Relationship Management
(CRM/e-CRM).
Leveraging The Work Force using Information Technology:
A Financial Service Case Study
INTRODUCTION
Information Technology (IT) is not only changing the way companies operate internally
but also altering the relationships between companies and their suppliers, customers, and other
business partners (Porter and Millar, 1985). Employing today’s modern IT and appropriate
Information Systems (IS) strategies (e.g., management, technology, and organizational strategies)
can help companies accomplish many goals including the leveraging current work force to
become more productive. Utilizing current assets in an effective or innovative manner is a core
component of how today’s technology can help businesses gain a strategic advantage. “In
today’s competitive world, leaders are faced with a very difficult challenge: How to do more with
less in an environment where the velocity of change is increasing” (Daley et al., 2002).
The problem of how to leverage employees to receive a strategic advantage is what
Northwest Farm Credit Services (NWFCS) faced in the early 1980’s.
On the brink of
bankruptcy, NWFCS realized that it must turn to innovative technology and procedures in order
to compete in this agricultural lending industry. Implementing a new IT and IS strategies
requires total commitment to see the whole process through. NWFCS went through the process
of reengineering. This reengineering process dramatically changes a company that requires
vision and dedication. “Job designs, organizational structures, management systems - anything
associated with the process - must be refashioned in an integrated way” (Hammer, 1990).
In this article, both Porter’s model and Framework for Assessing Organization
Effectiveness were employed for analyzing the business situations. It then focuses on IT and
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other strategies identified by the models and examines how they can be used to leverage the work
force within Northwest Farm Credit Services, a company provides quality financial service
through the Business Process Reengineering (BPR), thereby enhancing its competitive advantage
within the marketplace. The article concludes with a discussion of its solutions for improving or
creating sustainable advantages.
LITERATURE REVIEW
Ever since computers were invented technology has been viewed as a source of business
efficiency.
Companies envisioned that information technology would allow it to conduct
business better. If a company provided a product or service IT would allow it to deliver that
product or service more effectively, quicker and cheaper. This notion has sent many companies
on the quest of using IT to do more with less or leveraging its current workforce to gain
efficiencies. There have been many case studies, research, articles, management theories and
new business fads that have evolved from this notion of using IT to leverage the workforce.
This notion that IT has challenged companies/management to do more with less in an
ever-changing environment is a central theme through the IT strategies (Daley et al., 2002).
Companies must learn to harness the IT power through creating an environment that encourages
continuous improvement. Andriole (2002) has stated an effective IT watch continues forever
with continuous revisions.
A key idea that surfaces frequently with the utilization of IT is the need for aligning IS
strategy with corporate strategy, which results in better efficiency and a higher quality of
information (Suwardy et al., 2003). Companies should align IT and IS strategies with business
strategy by putting its best resources towards supporting the newly identified strategy. One of the
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best resources for aligning IT strategy is to find and retain IT professionals who love what they
are doing. Many successful companies has found and retained these IT professionals (Brockway
and Hurley, 1998).
For many companies, aligning IT strategy with corporate strategy is not as easy as simply
adjusting the company motto. Rather, it is a complete company overhaul, or a total Business
Reengineering Process.
The definition of BPR ranges from a broad rethink to total
company/structure redesign with the focus on business processes (Nwabueze, 2000). The key to
being successful is aligning products and services to meet the customers needs (Tanner et al.,
1998).
The reengineering process includes everything from jobs to processes which are
refashioned in BPR (Hammer, 1990). Nwabueze (2000) explained the BPR to include upper
level management’s challenge of how to run the company if it was their decision. Hammer
(1990) identified the key to successful BPR as executive leadership with real vision.
Both BPR and IT focus on improving and changing all aspects of business to gain greater
efficiencies. Several components and systems are identified as being an integral part of any
company.
These components include Database Managements Systems (DBMS), Customer
Relationship Management (CRM/e-CRM) and Call Centers.
DBMS identifies the strategies of managing a central location for a company’s data
storage. Anjard (1994) identified in his article that economies of scale can be achieved through
effective use of DBMS. A large part of achieving greater workforce leverage is achieving these
economies of scale through shared information and knowledge.
CRM/e-CRM is a
comprehensive business and marketing strategy that focuses all activities and resources around
the customer (Anton and Hoeck, 2002). Companies use CRM/e-CRM to greater enhance their
value to the customer by utilizing information which better serves and identifies the needs of the
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customer. Providing continued customer service excellence is a central goal of CRM/e-CRM.
This idea of providing continued customer service is discussed by Amuso when he states that the
bar for customer service is constantly being raised (Amuso et al., 1998). Companies must
continue to strive for ways to better provide service.
Call centers have emerged as a leading strategic weapon on the customer service
battlefront in the banking/finance industry (Anton, 1997, 2000; Feinberg, 2000). If leveraged
correctly, companies can monopolize call centers to become leaders in customer service. For
most financial companies the call center is the primary source of contact for its customers
(Miciak and Desmarais, 2001).
Feinberg (2002) identified that for most banks, customer
service/contact need not end at the bank doors. Rather follow-up customer access/contact after
the transaction adds value to the service and company. In order to compete in the highly
competitive banking industry companies must provide customers with high quality services
(Mefford, 1993). This competitive environment is exactly where Northwest Farm Credit Service
has been from the 1980’s to the present.
THE COMPANY’S HISTORY
Northwest Farm Credit Services is an agricultural cooperative that provides financing and
related services to agricultural producers, farm-related businesses, fishermen, part-time farmers
and country homeowners. It is part of the 80-year-old Farm Credit Systems (FCS), a $60 billion
nationwide network of lending institutions that are a specialized service organizations owned by
their customers - the largest single provider of credit to American agriculture. “Initially created
by an Executive order of the President in 1933, the agency now derives its powers and authorities
from the Farm Credit Act of 1971” (FCA, 2003). Congress created the System to provide
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American agriculture with a dependable source of credit and closely related services. “The
fundamental purpose of this network of sponsored enterprises created by Congress ... to provide
American Agriculture with a source of sound, dependable, competitive rates of interest” (Farm
Credit Services, 2003).
Today, through its banks and associations, the FCS provides about one-third of the total
credit used by America's farmers, ranchers and cooperatives. “Farm Credit provides credit and
related services to farmers, ranchers, producers and harvested products, rural homeowners,
certain farm-related businesses, agricultural and aquatic cooperatives, rural utilities, and to
certain domestic entities in connection with international agricultural credit transactions” (Farm
Credit Services, 2003).
Providing excellent customer service is the driving force of all NWFCS activities.
Identifying customers' needs and then meeting or exceeding their expectations in serving those
needs is NWFCS’s primary responsibility. Cooperative principles of customer ownership and
involvement are strategic advantages and NWFCS will look to leverage these for the benefit of
its customers. In order for NWFCS to be considered a Cooperative, all customers who extend
credit must purchase stock in the company. Stock is usually $1,000 per loan and comes with
varying voting rights depending on whether the customer is a full or part-time farmer.
NWFCS territories encompass the states of Alaska, Hawaii, Idaho, Montana, Oregon and
Washington. Direct customer lending is limited to only these states. Farm Credit may lend to
customers who live outside of its boundaries by using agricultural suppliers or the Internet.
Examples of agricultural suppliers would be equipment or chemical dealerships that sell products
to the customer. The dealership would sell that credit to NWFCS who would then purchase the
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loans or may participate in some of the loans that already exist. The cooperative has 42 branches
located in mostly rural areas to better service its customers. NWFCS headquarters is located in
Spokane, Washington.
Farm Credit is managed by a 12 member elected board. All board members are or were
farmers voted in by the members of the Cooperative. Management consists of a CEO and eight
vice presidents over specific areas (Figure 1).
---------------------------------Insert Figure 1 Here
---------------------------------------
THE PROBLEM
In the early 1980’s NWFCS was faced with the worst financial performance in its history
nearing the brink of bankruptcy. Interest rates had sky rocketed and the market was in a sharp
down turn. Many lending institutions had over extended themselves by selling more credit,
mainly mortgages, then what was available in reserve accounts. “This is the situation which
arose in the 1980’s when the ‘boom’ in the economy turned into ‘bust’: house prices fell
dramatically, interest rates rose and many mortgagors found themselves in the position of having
‘negative equity’ in their homes, whilst at the same time large numbers of borrowers were unable
to keep up the payments on their mortgages. As a result, the number of mortgage repossessions
increased. For the first time this century, home-owners in huge numbers felt the ravages of
adverse economic circumstances for which they could not be held responsible” (Clements, 1999).
NWFCS was no exception to this. With interest rates high and poor market conditions
many consumers where filing bankruptcy and lending institutions were foreclosing on properties.
Within NWFCS territory many local banks who serviced the farmers and the Agricultural
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supported communities had extended credit.
The banks where unfamiliar with farming
accounting practices and had lent money on higher Loan to Value (LTV) of an appraised property
than they should have lent. The banks had assumed that because the land was worth so much at
the time of the loan, property could always be sold to recover its losses. The problem was the
real-estate market had plummeted due to the higher interest rates and poor market conditions.
Many small and local banks were faced with disaster because of the volume of bad loans.
NWFCS was asked to absorb and buy a large amount of the mortgage loans that the local banks
had made to the farmers, which it did. This decision almost caused NWFCS to go out of
business.
The company survived this ordeal by right sizing its staff almost in half and bringing in
new management.
The new CEO was brought over from another Farm Credit located in
Louisville, Kentucky. Along with the new CEO came new management and a new lending
attitude thus creating a new company culture. The CEO was no longer willing to lend to all
farmers within NWFCS territory but only the top 40 percent producers who were perceived as
moving up on the scale. This new way of lending brought with it many challenges which this
paper will focus on.
One major challenge Farm Credit faced was how to offer excellent customer service and
products without increasing the number of employees. Another challenge was how to leverage
the employees without deteriorating customer service.
NWFCS needed to find a way to
accomplish this through the use of Information Systems while aligning the new structure to the
needs of its customers as described in the following. “On its way to this position, a company
(Farm Credit Services) needs to align the products and services package to fulfill customer
requirements, since customers honor only products and service characteristics which are aligned
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to their current needs” (Tanner et al., 1998).
INDUSTRY ANALYSIS
Northwest Farm Credit Services needed to rethink its current use of technology.
Applying different models will help identify appropriate strategies and where to improve or
create strategic advantages. Porter’s model was employed for NWFCS situation and it was used
as basis for analyzing strategy decisions because it “provides coherence within the strategy field
by critically importing economics, thereby providing a point of reference among strategy
scholars” (Foss, 1996).
Porter’s Five Forces Model
According to Porter, there are five competitive forces in any industry, and the
attractiveness of the industry depends on the strength of each force (Porter, 1985). Under the
perspective of market structure, Porter’s competitive forces model (Porter, 1985; Applegate et al.,
1999) has been broadly adopted as the underpinning for investigating the effect of information
technology on the relationships between suppliers, customers, and other potential threats. Five
forces are: the rivalry among existing competitors, the threat of new entrants, the threat of
substitute products, the bargaining power of buyers, and the bargaining power of suppliers. They
are illustrated next (Figure 2).
---------------------------------Insert Figure 2 Here
---------------------------------Industry competitors and Potential entrants
As discussed already, Farm Credit System (FCS) was established by the Federal
Government, therefore, its industry competitors were minimal. The threat of new entrants from
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another FCS was low due to high entry barriers. Government policy was the major barrier to
entry along with access to capital and funds. However, intense rivalry existed between the local
lending institutions and NWFCS.
Supplier’s bargaining power
The bargaining power of the supplier of funds was relatively low. Since Farm Credit was
established by the Federal Government all funds came from the Federal Reserve. NWFCS
created its own bank, called Ag America, to transfer funds from the Federal reserve to NWFCS.
The bank manages the amount of reserves that are needed for funding. There are only two other
banks used to service the various Farm Credit Associations that NWFCS could receive its funds
from. This limited the amount of power that the supplier had due to high switching costs and
government regulation.
Buyer’s bargaining power
Customer bargaining power was also limited due to market rates and their own financial
situation. Lending rates are set by the Federal Reserve. NWFCS looks at the risk associated
with each customer to determine the rate to charge. A customer’s financial position plays a key
role in the rate that is charged – customers in stronger financial positions naturally received better
rates.
Threat of substitute
Lending to farmers and other Agricultural related services was another way in which
competitors could diversify their portfolio. The threat of substitution was the strongest and most
competitive force for Farm Credit.
Residential real-estate lending companies, commercial
banks, investment companies and insurance companies had all been attracted to the Agricultural
Industry because of the large dollar value that large Agricultural corporations borrow. An
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example is Wilcox Dairy, a dominant dairy player in the Northwest that supplies dairy products
to grocery stores and shopping centers. Wilcox Dairy has a large contract with Costco and needs
to borrow a significant amount of operating funds. All lending institutions try to diversify its risk
by loaning to new and different markets. This lending strategy spreads risk across many markets
and industries.
SOLUTIONS
Effective use of IT can help mitigate the potential threat of substitution and inter-industry
competition that faces NWFCS.
“Porter describes three generic strategies for achieving
proprietary advantage with an industry: cost leadership, differentiation, and focus. Focus - has
two variants: costs and differentiation” (Applegate et al., 1999). NWFCS realized that the
livelihood of business depended on becoming the market leader by applying the strategies
identified by the Porter’s model, and refocusing on core values. Farm Credit needed to create a
competitive advantage over its competitors. This competitive advantage was accomplished
through leveraging its current workforce by aligning IT strategy with corporate strategy. “An
important point in obtaining competitive advantage in the market place was to align IT strategy
and investments with corporate strategy.”
This resulted in an “increase in efficiency,
responsiveness, flexibility and quality of information” (Suwardy et al., 2003). Aligning NWFCS
corporate strategy with these IT strategies would help to create greater economies of scale,
different market access and differentiation of products and services while focusing on its core
business.
Steps to success
Framework for Assessing Organization Effectiveness (Applegate et. al., 1999) was
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applied to the NWFCS situation for deriving its solution (Figure 3). The first step was to define
direction and building infrastructure. Farm Credit did this by concentrating on its core: providing
excellent customer service. Farm Credit realized “like other industries, banking and financial
services companies have reached the conclusion that the relationship with the customers should
not (metaphorically and literally) end at the bank door. Customer access after the transaction
adds value to the transaction” (Feinberg et al., 2002).
NWFCS now had defined the direction of it core competencies. The next step was to
develop a strategy to implement this defined direction. “The ... key to IT success is to align
systems with business strategy. This means having the best systems be those that support the
most strategically important business process and functions” (Brockway and Hurley, 1998). The
CEO and board elected to apply this strategy by creating a Customer Service Center/call center
(CSC) and investing heavily in IT. In June of 1985 Farm Credit created the Customer Service
Center/call center.
---------------------------------Insert Figure 3 Here
---------------------------------------
The CSC/call center was created to serve the needs of the branches and its customers.
Within the infrastructure of the CSC/call center was the Customer Contact Center.
The
Customer Contact Center played a critical role in implementing the various information systems
to better serve its customers. Various IT solutions were created to provide the customer service
needs.
Now all external and internal questions, problems and requests would be funneled
through the CSC. NWFCS purchased software and hardware that allowed it to control the
internal network, Internet, and phones.
Farm Credit decided to create its own internal network so that loans could be approved at
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the headquarters instead of branch offices. In order to accomplish this many pieces of hardware
were purchased such as large mainframes, desktop and laptop computers and a phone system that
could be tracked by the network. NWFCS developed its own internal financial system used for
tracking customers’ financial statements and loans. This system was linked directly to the
headquarters’ network. Now the branches would send the majority of its loans to the CSC at
headquarters in order to focus on better customer service.
The board of directors and top management realized that in order to achieve the results
previously identified corporate structure had to be adjusted to match the newly defined corporate strategy
scope. “The scope for process redesign can range from restructuring the entire organization, to the most
local rethink of how you do your work” (Nwabueze, 2000). With this in mind Farm Credit decided to go
through a total Business Process Reengineering Process (BPR). “BPR is the redesign and improvement
of business processes both in depth (roles and responsibilities, measurements and incentives,
organizational structure, information technology, shared values and skills as shown in Figure 3) and
breadth activities to be included which can lead to long-term profits. Yet again, the focus of the
definition is on renewal of business processes” (Nwabueze, 2000).
“BPR starts by looking to the future and working backwards ignoring the constraints of
existing methods; in effect upper level managers are challenged to question at every opportunity
‘if we were a new company, how would we run this place?” (Nwabueze, 2000). The proper
management of knowledge and experience can create a company-wide learning environment that
creates a strategic advantage for a business organization as it responds to today’s business
demands in a much more dynamic setting (chen et al., 2004).
Farm Credit used its past
experiences and practices as a learning tool to modify its corporate structure in order to improve
or create its value.
This new change went from management down to the employees and was spearheaded by
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the CEO and the board of directors. NWFCS under went a total BPR that changed internal
structure, job descriptions and management systems. The reengineering process was successful
due to “executive leadership with real vision” (Hammer, 1990). NWFCS changed its motto to
align itself with the new outlook that the BPR process provided. The motto was changed to “We
understand Agricultural like no other lender in the business” (NWFCS, FLCA, 2000).
After creating the Customer Service Center/call center all service and loans calls were
now channeled through the CSC. Farm Credit realized that “call centers play a critical role in
today’s business world, and for may organizations they are the primary source of contact for the
customers” (Miciak and Desmarais, 2001). “Moreover, in the banking and financial services area
access over the phone and the internet is emerging as the access of choice for both customers and
institutions. In this way banking/financial service companies are very similar to other industries
in that customer call centers (1-800 number centers for customer contact) have emerged as a
leading weapon on this customer satisfaction battlefront” (Anton et al., 1997, 2000; Feinberg et
al., 2000). Branch employees were very skeptical of the new process because they did not feel
that employees at headquarters would give their customers enough attention. To ease concerns
NWFCS created a Customer Service Contact Center within CSC to administer the new IT
technologies and handle all incoming inquiries from branch customers. The contact center had
two employees and the whole CSC unit consisted of eight employees. By reengineering its
current structure and implementing various IT strategies, NWFCS was able to leverage its current
workforce to effectively handle the newly assigned duties and responsibilities.
Technologies that will carry out the solution
Internal Networks
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The reengineering process gave NWFCS a chance to create its own internal network by
using IT as its backbone. The company did this through hiring several IT professionals to create
and build internal network and software system. “IT professionals love to build, manage and live
systems. Successful companies find and retain IT professionals who also love the business they
work in – no mean fat” (Brockway and Hurley, 1998). The name of the company’s internal
network system is Integrated Loan Origination System (ILO). This network system allowed the
whole company to connect and share information involving the customers. Now all branches and
headquarters had access to customer information regardless of the customer’s initial point of
contact. The new network created information synergies by allowing information to flow freely
from one employee to another. Loan packets no longer had to be sent by mail or fax which saved
time and money.
Online Banking
Farm Credit also took this opportunity to create an Online Banking System. Previously,
if a customer wanted information about a loan payoff or to transfer money, a call would have to
be placed to the local branch to request this transaction. The Online Banking System allowed
customers to view accounts, transfer money or apply for new loans all at their convenience. Not
only did the online banking help NWFCS focus on its core value - providing excellent customer
service - but it also helped differentiate itself from other lenders. This differential in services
added switching costs and product value to the customers that competitors would find difficult to
replicate.
Customer Relationship Management
Customer Relationship Management (CRM/e-CRM) software was used to help manage
new and existing customer relationships with Farm Credit Services. Farm Credit realized as
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Anton (2002) describes “Customer Relation Management (CRM) is a comprehensive business
and marketing strategy that integrates technology, process, and all business activities around the
customer.” The software acted as a bridge between the headquarters, the branches, and its
customers to satisfy the customer service demands.
This Information System was named Remedy CS1, which stands for Customer Service is
number one. The program allowed the CSC to identify the customers’ account and profile when
a phone call came in or the customer sent in a request through the Internet. Now instead of
calling the local branch all calls are funneled through the CSC.
A service representative
promptly assists the customer because Remedy CS1 pulls up all the customers’ relevant
information.
If problems exist, Remedy CS1 would allow CSC to create a ticket that would open up
an investigation to solve the problem. Each ticket is a small case or problem that needs to be
solved. The goal was to have the problem solved as fast as possible by the appropriate division.
Tickets were electronically pushed to the right person or department and solved. An example of
this was if a branch was having problems with its phones, a ticket would be sent to the employees
in charge of the phone systems.
All tickets were tracked in reports to help insure quick responses and to identify why the
ticket was sent. Remedy CS1 allowed management to track the number of tickets and to decide
if there were bigger problems that needed to be solved in order to create better customer service.
The software also helped the company to monitor all the calls, recording which customers were
calling and the reasons for customer calls. Reports were monitored so management could see
what questions received the most attention, such as an account balance or new product inquiries.
This allowed management to identify problems that needed correction. It also allowed new
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strategies to be formed and implemented which helped give NWFCS certain strategic advantages
over the competition.
One of these strategic advantages was utilizing the capabilities that Remedy CS1 allowed
Farm Credit Services to outsource to other associations and lending institutions. CSC was used
to service other company’s customers the same way it serviced its own. NWFCS outsourced its
CSC services to other Farms Credit Associations. Now the CSC would take on a whole new role
of serving another company’s customer. Remedy CS1 would allow the Service Representative to
act on behalf of the other association. NWFCS was selling its own outsourcing technologies
which generated fee income that the company needed and also leveraged its current workforce to
be more productive.
Data Base Management
Data Base Management System (DBMS) software was used to manage and transfer data
from the other Associations to NWFCS. Sequel program was the software used to manage the
transfer of information. This program allowed the database to be updated every business day by
transferring information in a straight (ASCII) text file. This database integration was critical for
the CSC to fulfill its responsibilities to the other associations. This information was uploaded
into the Remedy CS1 database. DBMS allowed NWFCS to fully leverage its IT and employee
capacity by reducing and eliminating duplication of efforts. “With a database management
system, data can be stored in one location and accessed by many different systems and
departments; there is no unplanned redundancy.
Economies of scale can be achieved by
installing a database management system at a central site where it can be supported by a group of
highly trained personal” (Anjard, 1994). NWFCS received these economies of scale by storing
all data at the headquarters, providing access to employees and management through Remedy
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CS1, ILO and other software programs. This meant that those who needed the information to
make a decision always had access to the information as a direct result of the DBMS.
Automatic Call Distribution
Automatic Call Distribution (ACD) was another key component to NWFCS’
reengineering process and is illustrated in Figure 4. Farm Credit needed a package phone system
that could handle and track all of the calls that would be coming in from its own customers and
other associations. BCMS View, a Lucent product, is a complete phone operating system which
includes programmable phones and the software to monitor and track the phone calls coming in.
BCMS can program the phones so that management can decide three very important things: who
gets what calls, when they get the call, and what kind of call it is.
---------------------------------Insert Figure 4 Here
---------------------------------When a call comes in, BCMS helps to transfer that call to the appropriate department.
Each department will be separated into what is called a split. A split will have authorized
employees who are trained to handle a call in that area. If a phone call comes in from the branch
with a legal question, the call is automatically transferred to the legal split. The phone calls in
that split can be distributed to the employees by either the first available or by a set order. The
set order would be designated by management as to who should be taking the majority of the
calls in that split. For example, if every one in legal is busy, BCMS View will check the next
split to see if anyone is available. If an employee in that split is available, the phone call will be
transferred to them. BCMS will check all the splits for availability and if no one is available at
that time the phone call will automatically transfer down to the contact center to a service
representative. Thus all calls are handled in an effective and efficient manner. The goal is not to
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allow any call to go unanswered.
Management can also use BCMS View as a great reporting tool. It will track what
happens to all calls, assess the phone availability of each employee, and determine what areas are
receiving the most phone calls. Management can use this data in developing strategic decisions.
Other Information Systems
Along with the other implemented IT and IS strategies, Farm Credit decided to move
towards going automated.
Management could see the value of integrating modern
communication tools such as e-mail and instant messaging. Microsoft Outlook was used for all
e-mail services and MSN Instant Messaging was used for real time communication. Now
NWFCS employees and customers could communicate in a variety of different ways. E-mails
could be tracked and responded to and branches could communicate with headquarters in real
time chats using instant messaging.
Both of these steps were results of the Business
Reengineering Process.
COSTS AND OTHER ISSUES
Costs associated with implementing the IT and IS solutions
There were also costs associated with the BPR and the implemented IT solutions and IS
strategies. These costs included employee turnover, large financial investments, opportunity
costs and an initial deterioration in the level of customer service. Employee turnover was a
major cost to the company with many employees leaving because they were unwilling or unable
to learn and adjust to the company’s new motto, structure, processes and computer applications.
Farm Credit’s largest expense was in implementing the various IT solutions.
These costs
included the various hardware and software, project managers, consultants and time. Estimated
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costs over the last ten years are $50 million. Another cost associated with the spent monies
towards the IT and IS project was lost opportunity that could have arisen by investing in another
project. Lastly, after solutions were implemented there was a time frame when customer service
levels dropped before adjusting. This could have cost the company current and future customer
businesses.
Outcome
Today Northwest Farm Credit Systems is recognized as an industry leader within the
Farm Credit system. Other associations are trying to duplicate its CSC and especially the
Customer Contact Center. According to Northwest Perspective (2003), it indicated that the
customer contact center continues to exceed in every level of service when compared to industry
standards – a true sign of commitment to excellent customer service. For examples:

97 percent of calls are resolved within service level agreements

Abandonment rate is 3.4 percent

92 percent of calls are answered within 30 seconds

First call resolution is 85 percent.”
Northwest Farm Credit Services differentiated itself from its competitors by rethinking
and reengineering its business strategies using IT and IS strategies. The IT and IS strategies have
allowed NWFCS to leverage its current workforce and position itself as market leader in
products, services and technology capabilities. Northwest Farm Credit Services is an example of
a company that implemented the total Business Reengineering Process and took a chance on IT
and IS strategies.
Update on the Customer Contact Center/Call Center
Recently Farm Credit Services CSC Call center was named as a 2003 nomination for Call
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Center Magazine Customer Care Leadership Award for ‘Best Call Center Team’ (Northwest
Prespectives, 2003). The CSC/call center was also highlighted in Certiport newsletter May 2003
as Customer Support Services – Raising the Standard for Employee and Operational
Productivity. In 2002 the CSC/call center was the winner of Support Team of the Year – Best
Proactive by STI (Northwest Perspectives, 2003).
CONCLUSION
By implementing the IT and IS strategies identified by the Porter’s model and Framework
for Assessing Organization Effectiveness, Farm Credit was able to leverage its current workforce
without adding additional employees. Employees’ time and efforts were now more effective and
efficient through the use of IT. The technology provided the tools necessary to accomplish more
work with less manpower. Farm Credit could not only successfully handle its own customer base
and service issues, but could also handle other associations through outsourcing its CSC/call
center services to other organizations. NWFCS recognized that in order to survive in the highly
competitive banking industry that it had to provide customers with high quality services
(Mefford, 1993). It achieved it by fully utilizing its IT and IS strategies and creating competitive
advantages over other associations and competitors.
As explained above, the new IT and IS strategies had worked. Not only did the company
gain a competitive advantage in the market, but also it became an industry technology leader
priding itself on being on the cutting edge. Farm Credit was able to build successful entry
barriers by implementing the various IT and IS strategies. Economies of scale were recognized
due to its own internal networking systems and shifting the majority of the service issues to the
CSC/call center. Product differentiation was reached due to expanded product lines and service
Page 21
abilities.
NWFCS recognized that even though the IT, IS strategies and the BPR had been
successful, there was still work to be done. “It is increasingly difficult to provide differentiation
through customer service. Service excellence is a moving bar that constantly is being raised by
customers and by the best service providers in any industry” (Amuso et al., 1998). In order to
sustain a competitive strategic advantage, a company must constantly be changing. “All of this
needs to keep happening: An effective technology watch strategy continues forever. You need to
model your business models and processes continuously as well as the technologies likely to
enable them” (Andriole, 2002).
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REFERENCE
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Northwest Farm Credit Service, FLCA., “Motto.” Available at: www.farm-credit.com/motto/
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Figure 1: Farm Credit Services Organization Chart
Page 25
Figure 2: Porter’s Five-Forces Model
Potential New
Entrants
Bargaining
Power of
Suppliers
•US Federal Bank
• Federal Government
•Creation of Associations
Bargaining
Power of
Buyers
The Firm
Traditional competitors
•Local Banks and Credit Unions
•Other Farm Credit Services

and Reserve
• Ag America

Threat of
Substitutes
•Residential Real-Estate Lenders
• Internet Vendors
• Large Commercial Banks
• Investments Companies

•Farmers Full or Part Time
• Rural Home owners
• Ag Related Business
• Fisherman
• Timber Companies

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Figure 3. A Framework for Assessing Organization Effectiveness
Defining Direction
and Building
Infrastructure
Executing and Adapting
Sustaining
Incentives
Boundary
system
Operating Control
process
Organizational capabilities,
resources, and leadership
Partner
Value
loyalty
Units,
grouping
Environmental Context
and Resources
Purpose Core
Strategy
Values, & Core
Competencies
Creating
and
Authority
Coordinating
mechanisms
Employee
loyalty
Formal and
informal power
People
Work
Management
process
Information and
communication
infrastructure
Society and
government
loyalty
Decisions
& Action
Value
Creation
Customer
loyalty
Values and
Behavior
Technology
Shareholder
loyalty
Page 27
Figure 4. Automatic Call Distribution Flow
Recommended Line Flow Chart
For Automatic Call Distributions
800-767-0494
1
2
3
4
Help Desk
1
2
Hold
Funds Mgt.
Technical Accounting
1
2
Legal
3
Doc Prep
4
5
Fund Mgt
Contact Center
1
Express
2
Express Lease
Hold
Express Team