Brad Thompson

As the dust settles from the financial crisis and rates reach a historic low, lenders are turning their focus on managing an increase in loan volume while simultaneously looking to capture increased profit margin. To remain competitive, many lenders are quickly recognizing they must start automating their back office. Automation is the only way to increase profits while managing high volumes, without it, lenders are forced to increase their staff and, in turn, their costs. In order to introduce automation into an organization, these lenders will look to implement true, end-to-end, enterprise loan origination systems, offering workflow automation through an advanced rules engine.

With this need comes a hesitation to take the plunge in looking for, let alone implementing, a new loan origination solution. So many lenders have been burned in the past by unending, over-budget implementations filled with empty promises. However, there are steps that can be taken to ensure such a situation does not reoccur. Choosing the right partner (with a proven track record for delivering on their promise) and making sure your team is on board with the necessary changes can help streamline the implementation process.

The new loan origination system is no longer just a central database of record. It is a compliance window into the very heart of the transaction. The new system is a fully connected nexus at the center of an enterprise lending system that extends beyond the corporate walls to interface with partners and other service providers.
 
The loan origination system of the future makes it possible to track compliance concerns throughout the loan origination process and immediately halt a process should a concern arise.
 
While lenders are realizing that technology can be a great enabler when dealing with current market conditions, investing in technology and selecting new software is a major decision for any organization as it can significantly impact its day-to-day activities. It can be especially challenging to complete an implementation on time and within budget, while improving operational processes.

When handled correctly, not only can organizations benefit from dynamic new technology, they can also accomplish success in the implementation process. To ensure such success, lenders need to focus on the following areas to avoid implementation failures.
  • Set Proper Expectations
  • Override the “Smart Guy” in the Room
  • Need for Executive Sponsorship
  • Minimal Customization
  • Define Process
  • Define Roles
  • Internal Project Manager
  • Establish Buy-In 
Set Proper Expectations: All software implementation projects bring about change – they are solving problems, addressing pain points, seizing new opportunities and ultimately will require some change in culture.
 
Set proper expectations. If you listen to every stakeholder’s ideas and try to implement each of them from the onset, you will most likely fail. Change is difficult. Don’t try to deliver every new bell and whistle in the first phase of the project. Users are still coming to grips with the change; don’t throw too much at them. If it is not critical to day-one operations, it is not critical to phase one.

Define what a successful implementation looks like within your organization. It is okay to create your wish list and include all of the things you would like this new solution to be able to handle in the future. Define every possible process improvement the new solution can bring about, and then ask yourself, “What is the easiest way to achieve improved efficiency in the most straightforward manner?” When you determine that answer, set the proper expectation and lock down the project scope.

Projects typically become too complex for initial implementations. The most successful implementations are those that utilize a very simple approach in the first phase and add additional complexity and automation in future phases. Just because your new application has the ability to do everything under the sun and completely eliminate your entire back office, does not mean that you should tailor your phase one project to those specifications.

Override the smart guy in the room: Scott Johnson, chairman and founder of ATtask, stated, “The smart guy in the room is the person who, while you are trying to get something done, will dream up all manner of complicated scenarios that he or she perceives will be ‘absolutely essential’ for any successful system to have. This is an easy trap to fall into”. He goes on to state, “To override the ‘smart guy’, you must deliver these messages over and over and over:
  • Phase one is the minimum acceptable improvement. It is the beginning, not the end.
  • Phase one is the proof of concept – we have to prove that we can do something simple before we can do something complex.
We are designing for the masses, not for the exceptions. When objections or needs outside of the scope of phase one are presented, ask questions like, “What percentage does that particular circumstance occur right now?” or “How are we handling that right now?” There are times when a real need must be addressed through added complexity. However, if exceptions occur less than 5% of the time, affect less than 5% of the people, or worse… have never happened, throw them out or put them in a subsequent iteration.
 
Need for Executive Sponsorship: The main roadblock facing any organization implementing a new system is the lack of executive sponsorship. Every department and every user is going to want something different in the application. It is the job of the executive sponsor to help drive consensus and ultimately make the final decision to move forward. They need to decide which elements should go into phase one, which should be tabled for a later time and ultimately, control the scope of the project.

Minimal Software Customization:
Keep the scope limited to what can be accomplished in phase one of the project. Look to the project plan and only include those items that must be in the initial roll-out.

Define Process: As you define what the new system needs to accomplish and what your new lending process needs to look like, enlist feedback from each department and include them in the process. This enables departments to understand how their processes affect other groups and in reaching a consensus on the best approaches in moving forward.

Define Roles: A critical area for any implementation is ensuring that employees are assigned the appropriate roles and granted the necessary access so that they can accomplish and work on what needs to be done.

Internal Project Manager: It is absolutely critical to assign an internal project manager to work with the vendor’s project manager to ensure implementation success.

Establish Buy-In: During the implementation process, it is vital to remind your team why you are making the change and the positive outcomes that will occur when the process is complete.

In today’s lending environment, it is more important for lenders to embrace new technology now than ever before as it enables them to respond to the constantly changing market.