Alex. Brown & Sons Incorporated,
the oldest investment firm in the United States, manages the investments
of a select, but financially active clientele. Founded in 1800,
the company has 150,000 investors worldwide, small by many standards.
Alex. Brown & Sons' personal service and one-on-one attention
to clients is one of its biggest advantages. In the last couple
of years, the company has provided a level of speed and responsiveness
that few other investment houses can match regardless of size.
It's due in part to improving customer service by utilizing CD-ROM
technology.
As with most financial institutions, Alex. Brown & Sons is awash in paper. In addition to normal paper-based communication, the company also sends monthly and quarterly statements to clients, branch offices and record keeping facilities. The mailing of duplicate statements to branch offices alone required 300,000 pages per month in 1994. With investment volumes projected to grow at a rate of 12 percent per year, the company expected increases in the associated paper, processing and distribution costs.
As statement mailings began to outpace in-house print capabilities, Alex. Brown & Sons started planning to add another a high-end, state-of-the-art printer to handle the increased volume. The estimated cost of the printer alone was $170,000. To continue serving their clients well, the company had no choice but to distribute account information each month to everyone who needed it. Fortunately, they discovered they had a choice in how information was distributed and the associated costs.
Timing is everything. Alex. Brown & Sons was about to purchase its third high-end printer and expand the current business when Larry Martin, Vice President - Operations at the company's Maryland data center, recognized the potential of CD-ROM technology. Martin realized CD-ROM could accomplish three key business goals for his company: it could improve customer service, decrease operating costs and improve productivity. Based on Martin's recommendation, Alex. Brown & Sons switched its internal operations from paper statements to CD-ROM, while continuing to send paper statements to clients. CD-ROM drives were installed at regional offices and at company headquarters, where PC-based retrieval software was used for fast access and retrieval of client information on CD-ROMs.
The cost savings were dramatic and immediate! Alex. Brown & Sons was spending over $7,500 per month to produce duplicate statements for branch offices. The company considered outsourcing those statements at an estimated cost of $10,000 per month. They also evaluated the capital expenditure of $170,000 for a new printer plus reoccurring maintenance charges. In addition, physical facility improvements were required to accommodate new hardware, additional operational staff would be needed...and increased storage facilities for additional paper volume. Today, Alex. Brown & Sons produces duplicate statements on CD-ROM at a cost of about $400 per month. They enjoy get additional savings by sending single CD-ROMs to branch offices instead of distributing hundreds of thousands of printed pages each month.
More significant than cost savings, Alex. Brown & Sons was able to increase the speed and quality of customer service with CD-ROM. Branch offices use to file thousands of statements each month. Every customer inquiry required large paper files to be retrieved and searched. Access to a specific statement could take several minutes, or longer if the statement was misfiled or misplaced. Now statements on CD-ROM are never misplaced and are retrievable in seconds. Client inquiries can be handled in moments over the phone, regardless of the level of detail required. Alex. Brown & Sons is better able to serve their high investment clientele.
Alex. Brown & Sons began by enlisting OPTIMUS Corporation to develop a custom CD-ROM solution based on the needs of the branch offices. To ease the transition from paper to CD, they used OPTIMUS' CD-ROM Services during the interim period. Alex. Brown & Sons provided OPTIMUS data for monthly statements; OPTIMUS turned data into mastered CD-ROMs to be sent to branch offices.
Today, Alex. Brown's CD-ROM production process is in-house. The company masters its own data on an IBM S/390 mainframe using OPTIMUS custom software for data conversion and indexing. An OPTImaster CD-Recordable Subsystem produces the discs using a unique compression program, so each office receives just one compact disc each month. PC-based retrieval software, which was optimized based on feedback from end-users, ensures familiarity and ease-of-use in the branch offices and headquarters. CD's arrive at branch offices within two days of the close of the statement period.
Alex. Brown & Sons recovered their entire hardware and software expenditure for in-house CD-ROM production in less than 13 months. The company enjoys additional savings every month in print-related and distribution costs. This trend will continue as their client base grows. More importantly, on-line data access and retrieval has gone from minutes to seconds for improved staff productivity and customer service levels.
Alex. Brown & Sons Incorporated was established in 1800 and is the oldest investment banking firm in the United States, employing over 2,200 people.
