Reducing Risk by Automating Cash Management & Securities Pricing
Janus Capital Group, a Denver CO-based investment management firm with 1,200 employees and $174 billion in assets, tossed its internal workflow solutions for an automated core business processes in cash management and securities pricing.
The change led to a 98.6% reduction in manual steps and dramatically improved compliance response time, explains Josh Seeman, director of process and software quality at Janus. He explains his company’s efforts at the recent Appian World User Conference this past April in Washington.
Janus had originally created its own workflow solution to track transactions, he says. Having determined that its homegrown approach would not be adequately scalable in its heavily regulated industry, the company adopted a modern Work Platform from Appian, used in-house under the name of the Janus Task Resource Automation Center (JTRAC). Janus began taking these steps toward automating core processes in 2011.
Cash management and securities pricing
According to Seeman, investment operations was the first group within Janus to implement JTRAC, in the area of cash management. Automation has enabled the process to accommodate future growth. Janus was able to reduce manual steps in the cash management process by 98.6%. Rather than having to monitor cash percentages continually, portfolio managers are now routinely updated by email if cash falls outside of set limits, or if other conditions require direct action, he says.
Following that effort, Janus’s Security Operations team began working with the system to support the securities pricing process. The JTRAC system reduced the need for team resources in the process, eliminated paper-based reporting, and automated end-of-day reporting requirements. The system manages the tasks, dependencies, and file uploads necessary for the pricing of Janus’s mutual funds.
In the past, a specialist from within the team was required to understand legacy processes, in order to assign tasks based on regulatory reporting standards before any daily accounting could begin. By automating that role, the process time was improved by ten minutes per day -- a huge savings where even a single minute is significant -- and it dramatically reduced risk to the company from being out of compliance with federal regulations.
Getting started
Strategically, Janus team members knew they would need to start by automating processes to enhance control, reduce risk, increase efficiency, and improve accountability. Automation would allow for better compliance monitoring and record keeping, enhancing control with business rules (and understanding exceptions to those rules).
In preparing for the automation process, Janus staffers first created a “tier-based” ranking of tasks. Tiers one and two were typically tasks of high value and critical to internal or external operations, with either enterprise-wide or cross-functional impact to the business. These tasks are financial, reputational, or regulatory initiatives that represent a high risk to Janus if they are not properly handled. Tier three, according to Seeman, dealt with more routine departmental or standalone requirements.
Processes selected for automation fell into the categories of business rule automation, department management, and case management. These were the processes that would show value to the organization quickly. They also would be big enough in scope to have people invested in ensuring the success of the implementation.
Handling automation appropriately at Janus required establishing governance over how the processes were put in place, he explains. A cross-organizational committee oversaw process design standards, integration and architecture standards, and governance standards. This committee was itself managed by an enterprise steering committee.
Processes were improved before automation, rather than automating processes and refining them afterwards. The company was focused on ways to cut unnecessary work steps and to process higher volumes of transactions -- and more complex transactions -- without increasing staffing.
From the very first successes, ongoing process automation discussions now ensure that better controls are continually put in place to reduce risk further still across the organization. Processes are categorized, prioritized, and discussed so that the organization is fully invested in the success of the automation initiative.
Lessons learned
He notes that Janus now has better visibility into daily activities and better communication among functional silos. But for other companies looking for the same benefits, automating processes is not without some hurdles that need to be cleared.
Executive ownership is essential. Senior executives must be champions of the process and involved along the way.
Process is universal, but processing is industry-specific. Seeman stresses that colleagues should look at best practices, not just within the investment and securities industry, but wherever process automation is being done.
Do not underestimate the need for human change management. According to him, if something is new, it is likely to be met with resistance. Companies need to be prepared to handle that potential opposition.
Include IT in decision-making. He says that his company routinely involves his IT colleagues for their perspective on the complexity of integrating a particular process into the overall system.
Down the road, he notes that Janus will apply what the company has learned in the early successes of automating cash management and securities pricing across many of Janus’s other operational responsibilities. The work will be the underpinning for a case management approach to Janus’s business.
Evan McDonnell is Appian's Vice President of Industry Practices and is responsible for guiding the company to meet the needs of specific industries. Evan has an extensive background in enterprise and SaaS software. He was most recently Vice President of Marketing at CodeRyte, ... View Full Bio
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