Prudential Financial Case Study

First came paper. Next, microfilm (but the paper remained). Those two storage “technologies” have been used in combination for decades, and while they were effective in their time, limitations abounded. For starters, there has always been the storage space issue for growing paper piles – a problem still plaguing many companies, even those using today’s new technologies in other areas.

 As is the case with most companies, the employee benefits department at Prudential Securities faced a paper-microfilm process that was becoming more labor-intensive and increasingly ineffective. Prudential Securities, Inc. is a diversified global securities firm and is a unit of Prudential Financial, Inc. (NYSE:PRU).  Prudential Financial companies, with approximately $590 billion in total assets under management and administration as of December 31, 2001, serve individual and institutional customers worldwide, offering a variety of products and services, including life insurance, property and casualty insurance, mutual funds, annuities, pension and retirement related services and administration, asset management, securities brokerage, banking and trust services, real estate brokerage franchises and relocation services. 

Prudential Securities, needed to find a way to keep the information flowing and benefit processes for approximately 15,000 global employees moving while, at the same time, taming its fast-multiplying stacks of paper documents and replacing its cumbersome microfilm retrieval system.

Prudential Securities once again turned to technology – in the potent duo of electronic imaging and the Web – to move to the next level of document storage and retrieval. After a three-year track record of success, the company is convinced that it made the right move.  

According to Pat Chukurov, first vice president and director of Group Insurance Programs at Prudential Securities, said the firm, like many other businesses, had only partially solved its paper pushing problems several years ago when it  transferred every document to microfilm and stored the paper locally. But microfilm’s inflexibility, combined with the aforementioned mounting paper trails generated in the benefits administration business process, led to a search for smarter ways to work.

Prudential Securities’s old paper-based system was typical of most benefits departments today:  Retrieving files took way too much time; files often went missing; re-filing was often necessary and, perhaps most importantly, there was no backup plan for the documents.

 “We’ve always had paper benefits records that we needed to retain for years and years,” Chukurov says. “For example, beneficiaries for employee insurance policies are all recorded on those documents, as well as employee choices as to what benefits they receive. It can get very complicated and difficult to manage.”  

When it began looking for an alternative nearly four years ago, Prudential Securities decided to seek out an outsourcing partner to manage the documents. It chose to give its microfilm vendor, microMEDIA Imaging Systems, of Lake Success, N.Y., first crack at coming up with a workable solution.  “For a number of years, microMEDIA had helped us out with microfilm,” Chukurov says. “But it was time for a change, so we asked them to take a stab at it.”  

Being a technologically sophisticated company (it offers a highly functional employee Human Resources portal), Prudential Securities wanted a high-level, technology-based document storage/retrieval solution. Prudential Securities met with Joe Wise, microMEDIA president, and explained what it needed to upgrade its paper/microfilm process into a smoothly humming system.

 “We knew we needed an electronic solution, one through which we could access document images easily through our PCs,” says Chukurov. “We wanted to be able to pull up an employee’s entire document collection and print it if necessary, and that was it. In essence, we wanted to get rid of the majority of paper handling for our benefits staff.”

 According to Chukurov, Prudential Securities had been microfilming for several years. After discussing the situation with Wise, Chukurov and her staff decided Prudential Securities might prefer an e-approach, which meant not only scanning in documents and making them quickly accessible online, but also storing the digitized documents off-site.

 “One big problem with microfilm is that you have one copy and one reader/printer,” Chukurov says. “We had at least a dozen people in the benefits area who needed access at one point or another, so using the Web is much more efficient and easier.”

Chukurov explains that her 14-member staff uses microMEDIA’s services primarily for benefit designation document retrieval. “If there is a discrepancy, we have the original document at our fingertips,” she says, adding that the system went online in April 2001. “When an employee calls, whether it’s for a 401(k) designation or coverage election, we can call up that person’s file, see how many images have been scanned, and click on the thumbnail image to see, print or even e-mail the larger document.”

Of course, outsourcing the process eliminates the costs and administration of an in-house imaging system. Benefits specialists recall files in a matter of seconds without leaving their desks. Pertinent documents are saved, printed on laser printers or attached to Lotus Notes e-mails. microMEDIA, which picks up new documents for input on a weekly basis, scans, indexes and archives all documents.

Data security and employee privacy also are concerns, especially since the document images are stored off-site (once scanned and the files are backed up, paper documents are shredded). With that in mind, passwords and data transfer on the system within Prudential Securities are tightly controlled. In addition, microMEDIA’s dedicated servers are hosted at a secure server farm in Alexandria, Va., which is not only is extremely secure from the outside, it even has a diesel generator for backup in case of a major power blackout. As an added protection layer, microMEDIA maintains images of all documents in the database at its Long Island facility.

 “There really is one hundred percent redundancy,” Chukurov says. “Our employee records are as secure as they can be in today’s world.” Prudential clearly was thinking about security way before the tragic events of Sept. 11.  “If you only have one set of paper or scanned documents in a single place and a Disaster-Recovery strikes, the files are gone forever,” Chukurov says. “You can never recover them.”

 While the Prudential Securities situation may seem like no major tech breakthrough to some, the number of Human Resources departments still overwhelmed by paper might surprise you – despite the fact that the electronic imaging technology has existed for several years. In fact, Prudential has been using microMEDIA’s services for three years.

Surprisingly, Wise says the majority of Human Resources departments are still using paper or microfilm in some form for document storage and retrieval. And even though they keep financial data and employee data on a computer, those files are electronic, not document-based. So the specific pieces of paper that are signed as part of the benefits process are not stored electronically.

“People may have PeopleSoft and other HR systems, but they forget about these important pieces of paper, including legal and tracking documents,” Wise says. “Most employee medical files are also still on paper.

“Prudential Securities clearly was ahead of the curve by making the move to document imaging three years ago,” he adds. “It’s proven to be a smart business strategy.”

To that end, Chukurov is convinced that Prudential Securities took the right path, even though her department hasn’t done an official return-on-investment (ROI) analysis.  “For one thing, we’re not leasing space to store massive amounts of paper documents,” she says. “And with New York City real estate costs, we know that’s a major savings right away.”