Nearly a decade ago, SLM Corp., more commonly known as Sallie Mae, began the process of transforming itself into a private company after a quarter century as a government-sponsored provider of education loans. Last year, it completed the privatization process.

SLM's private-loan business, which still focuses on providing funds for education, was growing at 30% or more per year. "We wanted to continue that growth rate, but our systems were old and designed for federally guaranteed loan processing," says CIO Robert Autor. With systems ranging in age from five to 20 years, the company needed to get costs under control and create a user-friendly environment, he says. Guaranteed loan processing was automated, but the private-loan business wasn't.

"The entire back-office origination process was manual, so loans were moved from status to status manually, underwriting was manual, and not all documents were in electronic form," Autor explains. While customers could get some information online, many requests required a phone call. On average, 5.7 calls were needed to complete a private-loan application versus 1.5 calls for a guaranteed loan. Last year, SLM received 2 million calls that were answered by 400 employees.

To keep up with demand and plan for future growth, the company, which supplements its call-center staff with temporary employees during peak loan periods, needed to automate its private-loan business to make it more efficient, speed response time, and minimize the need for one-on-one interaction with customers. It wasn't enough to look at the systems that were in place and optimize them based on what was there. It took some convincing, but the technology team bought into the idea of creating a whole new environment, one that would take the customer through the private-loan process from start to finish, automating most of it. "The project had a lot of visibility, which made it very desirable to our staff," Autor says.

The CIO and other executives decided to license a methodology from Accelero Consulting Inc. Accelero encourages customers to put the technology aside, develop a picture of how they want to operate, and then decide what system requirements will let them operate in that fashion. Technologists are involved in the process from the start to ensure that the plans don't drift from what's possible.

Typically, companies hire Accelero to sit in on the working sessions, document results, and create the flow chart from what's at the client site to what will be developed, says Karen Ridenair, VP of professional services at Accelero. But Autor wanted his people to be in charge of creating the system. So SML licensed the methodology and hired Accelero to train SLM employees on it.

The result was a plan for a companywide private-credit-automation initiative, the first phase of which was deployed this year. "We simplified the product and application architecture," Autor says. SLM also cut the number of loan application forms from more than 100 to 14. The IT team developed an engine to serve online loan applications dynamically, automatically pre-qualify them, and give potential borrowers an immediate decision. Document-imaging and electronic-signature functionality eliminated mounds of paper and let the system process loans from start to finish. In addition, the company developed a status capability that automatically E-mails borrowers about updates or changes to their accounts.

To do this, SLM is running a production pilot of business-process-management software from Fuego. The software lets business analysts simulate new processes and estimate how much it costs to run them. It also lets SLM monitor its call centers. When a problem arises, the software routes the E-mail correspondence involved to an appropriate call-center rep. It also monitors call-center reps' response times and automatically escalates problems to managers if they aren't addressed within two hours.

SLM decided to build the system itself because there aren't many, if any, packages on the market that handle student loans, Autor says. With the new system, he estimates the company will need 600 fewer employees in 2009 than if it hadn't made the change, and it will be 45% more productive and save about $4.4 million this year.

Another advantage of the process-optimization effort, Autor says, is that SLM now has a motivated team of IT people able to apply what they've learned to other areas, making SLM primed and ready for new challenges.

Illustration By Paul Watson

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