AT§T's Back Office Overhaul

It goes without saying that a global corporation such as AT&T has invested in high-speed check imaging and processing equipment to handle the large volumes of bill payments it receives on a daily basis. But, what happens when a payment can't be processed in this automated, high-speed environment? Where does it go? And, what series of actions must take place to ensure that payment is posted? This is an area with which AT&T's Billing Operations Remittance Management Organization (RMO) is very familiar.

AT&T's RMO maintains several lockboxes (i.e. centralized corporate locations or PO boxes where payments are sent to be processed) to minimize mail transit time and accelerate payment deposits. The company maintains an internal lockbox in its Lisle, IL corporate office and also outsources some lockbox processing to a few external providers as well. In 1997, AT&T's Billing Operations RMO moved to an automated, image-based payment processing platform, based on software by Wausau Financial Systems, for its lockbox operations. Prior to the imaging initiative, these lockboxes processed under 5 million payments a month combined. Within a few years under the automated platform, the Lisle site alone was processing more than 12 million payments per month with no additional personnel.

As impressive as these gains are, the lockbox imaging platform isn't perfect. For example, not all payments can be processed by the high-speed imaging system. The equipment is only designed to handle checks and remittance documents (i.e. payment stubs), and payments can only be processed if sufficient account information is presented with the payment. If absent, the payment is marked as an exception item, routed out of the high-speed process, and sent to the RMO's back office.

Historically, back office employees were charged with looking up account information, contacting customers, and other exploration efforts to ensure the information required to process the payment was obtained. At one point, approximately 5% of the total number of payments received by AT&T's RMO fell into the exception category, resulting in more than 1 million items a month funneling into the back office. Plus, the amount of manual labor necessary to process these payments made them extremely costly.

"At one time, the cost to process exception payments that entered our back office approached the cost to process all the payments within the high-speed lockbox environment," says Brad Saunders, the group manager of remittance for AT&T. Given the success automation had on its lockbox operations, AT&T's RMO turned its attention to automating its back office. While more difficult to identify and remedy, the company soon discovered that automating certain back office functions required little or no capital expenditures.

IDENTIFY EXCEPTIONS THAT HINDER REMITTANCE PROCESSING
The exception items AT&T's back office regularly receives come in a variety of flavors. One of the most common occurs when a customer sends a check payment without the payment stub and doesn't reference his account or writes the wrong account information on the check.

"Many customers believe that their phone number is their account number, but it's not," says Saunders. "They write their phone number on a check, thinking they've provided us with the proper account information, but we can't post to that phone number." In these instances, the paper check was typically pulled from the high-speed process and sent to a back office operator. This employee would navigate through screens in various accounts receivable (AR) systems to associate a name, address, or phone number contained on the check with the proper account number. The operator would then write this account number on the paper check and send it back through the high-speed lockbox for processing. There were several steps and many chances for error inherent to this process.

AT&T's RMO also receives many check-only payments from home banking companies. "Many customers sign up to pay bills online through their bank," says Saunders. "These banks simply turn around and cut us a check on the customer's behalf. These payments never include remittance documents and typically provide a phone number as the account reference."

BACK OFFICE AUTOMATION BEGINS WITH EMULATION
Given the different types of exception items it deals with, AT&T's RMO found it difficult to find a single solution that would collectively automate its entire back office. "The imaging platform was our magic bullet on the lockbox side, but we quickly realized there is no magic bullet for the back office," says Greg Arlt, manager of remittance systems and technology for AT&T Billing Operations RMO. "So rather than looking at the back office from a macro level, we started examining each process from a micro level to determine how we could automate each function individually."

An area of initial focus was automating the account lookup process for check-only payments. AT&T's RMO drew on its existing relationship with Wausau Financial Systems to develop a software module that would reduce the number of steps necessary to locate account information within the various AR systems. Saunders, Arlt, and Wausau technicians spent hours studying back office operators and found that, depending on the criteria used to look up an account number (i.e. phone number, name, address), there is a set keystroke pattern that must be entered. AT&T's RMO and Wausau wrote a program called Emulation that automates these keystrokes. Now, a name or phone number can be entered as search criteria and the software will automatically cycle through the various AR systems to locate the desired account number.

Emulation also integrates with the lockbox imaging platform, allowing exception checks to be imaged up front rather than pulled from the high-speed process. Check images are now sent to a back office operator who keys in the search criteria from the electronic file. Once Emulation locates the account information, the operator verifies the information is correct and links it to the image by hitting the enter key, completing the transaction. "Under the old manual process, a back office operator could process between 50 and 70 check-only payments an hour," says Arlt. "With Emulation, productivity jumped to 250 to 300 items an hour. Plus, since fewer steps are required, the chances for human error have been dramatically reduced."

AT&T's RMO and Wausau took Emulation a step further when it came to processing the check-only payments it receives from home banking companies. They noticed that each of these companies always prints the customer's phone number on the same spot on the check. They created templates within the lockbox imaging platform to read these areas of the check and use optical character recognition (OCR) to automatically populate the search criteria to launch the Emulation process. AT&T's RMO labels this application Auto Emulation. With Auto Emulation, operators can process as many as 350 to 400 check-only payments an hour.

EXCEPTIONS PROCESSING PRODUCTIVITY TRIPLED FOR A FEW THOUSAND BUCKS
The back office workgroup responsible for looking up account information has remained the same size since the implementation of the Emulation technology, but productivity has more than tripled. "Under the old system, we estimate we would have needed to hire an additional 140 operators over time to achieve the productivity figures our existing operators get using Emulation today," says Saunders. "When you look at it that way, we're saving millions a year in expenses."

How much would you pay for the technology to avoid substantial costs such as these? If you use AT&T's RMO as an example, considerably less than you think. "Emulation and Auto Emulation were small tools that didn't require any capital spending, just some developmental fees and time," says Saunders. "When all was said and done, I think the total investment was only a few thousand dollars."

AT&T's RMO has not yet finished perfecting its Emulation tools. The company is developing check analyzer software that will allow it to parse out the account lookup information (i.e. phone number, name, address, etc.) contained on personal checks. By identifying this data, it can automatically populate the Emulation search field for all check-only payments, not just those it receives from home banking companies. AT&T's RMO is also looking to incorporate handwriting recognition software into the imaging platform so that handwritten phone numbers on checks can be identified to automatically populate the Emulation search field.