Avoid Technology Disaster

Stories abound in the mortgage industry of large-scale technology implementations gone awry because what was delivered by the company’s IT department was not what the business stakeholders wanted. To avoid becoming another tale of mortgage industry woe, STRATMOR Group supports the creation of Business Level Agreements (BLAs) in addition to the traditional Service Level Agreements (SLAs) for IT projects.

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In her article, “May IT Be with You; Unleashing the Power of Business Level Agreements,” STRATMOR CEO Lisa Springer explains that in most mortgage companies, IT is guided primarily by internal and external SLAs, leaving out the business measures needed to give IT a voice in, and responsibility for, achieving enterprise business goals. Springer provides supporting data that indicates the disconnect between the business units and their IT team, and she draws on the expertise of two STRATMOR Senior Partners, Len Tichy and Michael Grad, for insight into the IT/business relationship.

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“There is a fundamental misunderstanding that IT is not as central to operations as Underwriting, Processing, and Closing,” says Tichy. “In many mortgage companies, IT is viewed as a group unto itself, a non-business unit expected to do the bidding of the business units who think they really know what the company needs. This approach puts IT into a near-vendor role, often keeping IT from the critical conversations held at the Big Kid’s Table where the decisions about business goals, success measurements and reward factors are decided.”

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In effect, “IT starts with one hand tied behind its back in most implementation projects,” says Tichy. “The relationship between technology and business must move out of the traditional ‘Your sandbox, my sandbox’ paradigm to a more collaborative playground where business and technology leaders have common goals, objectives and BLAs for achieving growth and the supporting financial goals.”

Springer says Business Level Agreements can help lender leadership get everyone on the same page and working toward reaching the lenders’ Target Operating Model objectives. “A BLA requires a business framework in which to work as well as an understanding of the business impact of the services being provided. By understanding the business metrics in which success will be measured, post technology deployment, both IT and the business can focus on the achievement of operational goals.”

Springer provides illustrations of a customer-centric Target Operating Model (TOM) and shows how the various elements of the TOM could be executed with a BLA integrated. She also offers possible BLA metrics and provides information on motivating and leading IT teams. “IT needs to have a seat at the strategy table,” says Springer. “IT’s participation in strategy design ensures that the organization has a well-rounded representation of business and technical experience and problem-solving capabilities to work through the challenges of doing business.”

In a second article, “Aligning Back Office Compensation with Achieving a Superior Borrower Experience,” STRATMOR Senior Partner Dr. Matt Lind draws upon data from STRATMOR’s 2017 Compensation Connection Study and MortgageSAT Borrowers Satisfaction Program. According to Lind: “Despite the emergence of Borrower Satisfaction as a key competitive success factor, virtually no lenders incorporate it into their back-office incentive compensation. The reason for this is that they are unable to monetize satisfaction.” Lind then goes on to show how to monetize borrower satisfaction for processors and closers—two roles critical in the origination process—and how they might then be rewarded or incentivized to further improve the borrower experience.

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