Reclaim time and improve efficiencies to grow your business.
The title landscape is more complex than ever before, and companies are naturally hungry for new ideas.
With an average of six to nine systems or applications being used by title companies to generate commitments1 and a limited view of key performance indicators (KPIs),
an already hectic operational environment is becoming even more stressful as new regulations and service level agreement (SLA) challenges put pressure on organizations.
Some of the most time-consuming tasks for title insurance companies include title evidence packages and search solutions. The countless hours of tedious manual labor these search packages require has grown. This may help explain why many title search companies remain unaware of new time- and money-saving technologies and models that can reduce repetitive tasks, while streamlining and consolidating processes with more efficient partners. Freeing up these resources allows the title company to focus on high-value activities in the title chain – particularly customer service, sales, and business development.
This white paper describes how companies can divest themselves of daily low-margin tasks to free up time and resources and then outlines the concept of maximum- value core competencies, offering examples and ideas for implementation
Follow the leaders: Minimize low-margin tasks
Every title company knows the burden of daily tasks and challenges, which result in many missed opportunities. Fortunately, there are a few simple best practices – well established by some of the biggest companies in the world – that can help free up time and resources. These well-studied best practices involve smart outsourcing and management of the supply chain.
A few examples will help illuminate this idea. Apple, for instance, is perhaps the most successful company of the modern era, producing hit product after hit product and building up nearly $200B in cash reserves. Everyone knows its legendary branding and exceptional consumer technology, but few consumers appreciate how critical supply chain management is to Apple’s success. For instance, in 2015, Gartner created an entirely new category, the “Master” category for supply-chain management, in its annual survey of supply chain management issues because Apple and one other company were so consistently at or near the top of the field.2
Apple has some of the highest margins in the electronics world because, while its products proudly say “Designed in California,” they are built by a global network of hundreds of carefully designed subcontracting partners3 working in an astonishingly complex but smoothly running machine.
Most users of Apple products don’t realize there are LG displays or Samsung chips inside, as most manufacturing processes – plastic molding injection, chip soldering and display lamination – are outsourced to companies that specialize in these areas. Outsourcing simply makes sense for Apple, allowing the company to concentrate on what
it is best at – coming up with ideas for new must-have consumer technologies and then marketing them like no one else.
Google has tapped into this principle to provide the means for other companies to simplify their supply chains. Take its Google Docs platform, for instance. By making it simple for businesses to outsource the installation and maintenance of their basic office software, eliminating the need to deal with licenses and updates, Google empowers its customers to concentrate more on what they care about – growing their own businesses. This powerful idea has similarly influenced inexpensive “Chromebooks,” which take away the need to update the computer’s software and simply “let one work.” The wildly successful response of schools and businesses has proven the value of the concept.
Consider a couple of others: Square – the maker of a small device that plugs into a user’s smartphone and processes credit card payments – allows people to sell their products and services anywhere, freeing them to do what they’re best at – talking with customers and making great products. Square’s device eliminates the users’ need to spend days on the minutiae of setting up and maintaining cash registers. Square offers companies an easier, more efficient supply chain, an opportunity
which has been utilized by many companies. In fact, such devices have opened up whole new cottage industries of people who might not otherwise be able to obtain the infrastructure necessary to do business. Uber, similarly, has decoupled transportation services from infrastructure costs, allowing drivers to tap into the added value of their cars, a previously underutilized asset, which provides consumers transportation with greater flexibility and better affordability.
We’re seeing a trend toward “everything as a service” (XaaS) as the world realizes the advantages of shifting processes to the most effective producers available. The momentous trend toward “leveraging” one’s fixed assets shouldn’t be surprising since XaaS reduces costs, provides flexibility and delivers scalability. Most importantly, this XaaS movement can increase quality by offloading tasks to specialists. After all, quality doesn’t matter until it matters.
Outsourcing reduces costs and frees up resources for high-value activities
Research shows that many title insurance agents and companies are paying more for title evidence packages and search solutions than they think. In a first-ever
survey of the industry conducted by RedVision, the cost of these packages and solutions were found to be some 30 percent higher than title agents and companies were generally aware.4
This fact represents a major opportunity for cost savings, which can come about in a number of ways:
1. Automation and increased efficiency through the use of “technology accelerators.”
The use of indexed title plants, for instance, can help mortgage companies manage their supply chains more efficiently.5 “Straightthrough processing” similarly reduces the number of manual steps and duplicated efforts.6
2. Utilize better-equipped external parties to potentially reduce risk.
RedVision, for example, offers nationwide title evidence packages and search solutions that are built on industry best practice standards and comply with state and federal regulations and major underwriter requirements.
3. A potential reduction in errors.
Specialized vendors often have proven systems that increase the quality of their product, reducing the risk of costly mistakes later. Incoming abstract data, for instance, can be tied in with national providers that have upfront and automated verification and validation at order entry, such as MLS.7
Using reclaimed time and resources to earn more from core competencies
Jim Collins’ landmark business book Good to Great: Why Some Companies Make the Leap and Others Don’t8 identified a central trait among great companies. This massive research undertaking9 found that companies that excel focus their energy relentlessly on the things they can be “the best in the world at.” In other words, smart companies reduce or eliminate the parts of their business that don’t give them strong returns. Collins calls it the “stop-doing list.”
Success, he said, is the intersection of three things: your passion, doing what you can to be the best in the world at a particular task or skill, and your “economic engine” (the metric that would best show progress, whether “profit or cash flow per ‘x’ ”).10
And when you concentrate on this intersection, Collins says, you become a “hedgehog” – an idea which comes from the “ancient Greek parable that states: ‘The fox knows many things, but the hedgehog knows one big thing.’ ”11 This focused outlook enables such things as business process transformation, continuous improvement models, and an overall “quality” approach.
Apple is an especially interesting example of this because, as was seen above, it is one of only two companies in Gartner’s “Master” category for supply-chain management. It could be stated that supply-chain management is Apple’s “one big thing,” but this conclusion misses the point. Apple’s ultra-efficient management of its supply chain enables the company to do what it’s truly the best at in the world: creating one home-run product idea after another. In fact, this is widely recognized as one of Steve Jobs’ greatest skills: ensuring that expertise like Apple’s supply-chain management was only ever a means to an end, a tactic in the service of a strategy. Apple, Google, Square and Uber all show us that the future belongs to “hedgehogs.”
What’s your inner Apple?
So, what does this all mean for title companies? Remembering that 80 to 90 percent of title search processes are manual,12 a framework for considering these issues might begin with some broad observations.
It is important to recall what’s being sought here, which are the activities that only the company itself can do, like spending time with its customers, learning about their needs and helping them solve problems no one else can. Customers aren’t concerned with the behind-the-scenes minutiae of who completed the chain sheet, for instance. Those tasks are simply a given for them. They won’t pay extra for it. In light of this, owners and managers must carefully scrutinize their processes and costs involved in these tasks.
Companies tend to know what these growth areas are because they’re at the top of everyone’s mental “wish list.” Some are the fairly obvious “low-hanging fruit.” Often these are the best practices that evolve in most industries over time – things that might fall into the category of “service improvement.”
One offering that could please title companies’ customers is enhanced speed. Outsourcing could lead to quicker turnaround times in processing, as well as realtime reporting. As already mentioned, reduced errors are almost certain to be well received and title companies may be better able to match supply and demand as well, providing special services for volume clients, for example.13
The true potential of this approach, though, predominately involves “high-touch” activities. A few examples of such activities include the following:
- Closing execution
- Exception handling
- Customer service
After all, these are things that simply can’t be outsourced. These activities depend on a company’s particular knowledge, voice and relationship with its customers. These are truly tasks that no one else in the world can do. Customers reward companies that deepen their expertise in areas like these with stronger relationships, increased loyalty and higher spending.
These high-touch activities provide greater returns for invested resources, maximizing profits from existing customers, developing systems to help the company move toward serving more lucrative customers, and opening up new fields of business. The end result is an infinite loop of possibility.14
A Forward Thinking Model For The Title Industry
As an example of the supply chain models discussed, here are the main differentiators RedVision offers prospective clients:
- Freedom to choose how little or how much is self-produced
- Optimize supply chain with data, certified experts and vetted partners
- Eliminate the waste spent on unnecessary software seat licenses
- Scale with a variable cost model that aligns with volume fluctuations
- Put an end to the “hire to fire” pains
- Differentiate with an external focus
Based on an industry survey conducted by RedVision, title evidence packages and search solutions are far more expensive than most title agents and companies think. The most successful companies in the world – such as Apple – are hyper-focused on maximizing the value of their supply-chain. These companies use the freed resources to focus on only one thing – what they can be the best at in the world.
Outsourcing title searches to fewer and more efficient partners with investments and expertise in the latest technologies can enable title companies to climb the title value chain, concentrate on higher-margin activities, and improve their bottom lines.
1 Accenture, May 16, 2016. “Key Insights On True Title Origination Costs and What Title Companies Can Do About Them.”
2 Gartner, May 14, 2015. “Gartner Announces Rankings ofIts 2015 Supply Chain Top 25.”
3 CompareCamp.com, September 17, 2014.
4 Accenture, May 16, 2016. “Key Insights On True Title Origination Costs and What Title Companies Can Do About Them.”
5 RedVision, March 27, 2015. “Guide to Best Practices: Navigating Uncharted Waters in 2015 and Beyond.”
6 Mortgage Compliance Magazine, April 8, 2016.
7 Accenture, May 16, 2016. “Key Insights On True Title Origination Costs and What Title Companies Can Do About Them.”
8 Good to Great: Why Some Companies Make the Leap...And Others Don’t. Jim Collins. HarperBusiness, 2001.
9 Publisher’s Weekly, September 3, 2001. “Collins’s 21-person research team (at his management research firm) read and coded 6,000 articles, generated more than 2,000 pages of interview transcripts and created 384 megabytes of computer data in a five-year project.”
10 Fast Company, October, 2001.
11 MindTools.com, “The Hedgehog Concept – Strategy Skills Training From MindTools.com.”
12 RedVision, May 30, 2013.
13 Accenture, May 16, 2016. “Key Insights On True Title Origination Costs and What Title Companies Can Do About Them.”
14 Tools like Cost-Volume-Profit (CVP) analysis can be useful in looking more carefully at activities and business functions in this sense. Link 1 and Link 2.