Page 97 - DCAP306_DCAP511_E-COMMERCE_AND_E-BUSINESS

E-Commerce and E-Business

IBM Credit

Case Study
T
he IBM Credit Corporation is in the trade of financing computers, services, and software
that IBM Corporation sells. When a field sales representative in IBM invoked a request for
financing, the process of dealing with the request involved five steps namely:
1. One of the central office’s operators wrote down the appeal on a sheet of paper.

2. Then, the appeal was dispatched to the credit department where one of the specialists checked the
creditworthiness of the potential borrower, then wrote the outcome on a sheet of paper and
finally, dispatched it to the Business Practice department.
3. Then, the Business Practice department was responsible for modifying the loan covenant with
respect to the customer request. Special terms would be attached to the request form as per the
request.
4. Next, the appeal was sent to the Price department to determine the suitable interest rate to charge
the customer.
5. Lastly, the administration department converted all the details into a quote letter to be delivered
to the sales representative field.
This overall process consumed six days on an average. From the point of view of a sales representative,
the turnaround was too high and could make a customer approach another computer vendor.
IBM Credit tried to enhance this process in many ways. For instance, they decided to install a control
desk to answer queries of sales representative about the request status. Instead of forwarding the
appeal to the Business Process department, each department could return the appeal to the control
desk. At the control desk, the administrator could log the completion of every step prior to sending out
the appeal again. This solution only increased the turnaround time.
Further, two senior managers at the IBM Credit considered a request and went through all of the five
steps. They discovered that a total of just 90 minutes was required to perform the actual work. So, it
became clear that the issue did not lie in the tasks and performance of people, but in the structure of the
process as a whole.
Finally, IBM Credit replaced their specialists like credit checkers, and so on with the generalists.
The old-process design assumed that each of the requests was unique and hard to process and
therefore, the intervention of four highly trained specialists was required. But this assumption was
incorrect as most of the requests were straightforward and simple. The tasks to be performed were, find
a credit rating in the database, plug numbers into the standard model, and pull clauses from the file.
These tasks could be done by any individual who is supported by an easy to use computer system.
Therefore, IBM Credit developed a sophisticated and new computer to assist the generalists. In almost
all situations, the system offers data and guidance to generalists.
The latest turnaround became four hours instead of six days. Thus, the organization achieved a
performance breakthrough by reengineering its processes.

Questions:
1. Discuss the five steps which were involved initially for processing a request from a field sales
representative in IBM Credit.
2. Explain the various ways that were used by IBM Credit to enhance their process.

Source: http://www.doc.ic.ac.uk/~nd/surprise_95/journal/vol2/tmkl/article2.html

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