Financial Case The Problem TPAs typically receive plan sponsor data in many different formats: paper, tape, diskette, fax, email, bulletin board, spreadsheet, text file, etc. Because the information is not thoroughly edited at the client site, it is all too frequently incomplete; additionally it is often inaccurate. As a result, the TPA then expends significant staff hours to convert the information, correct and complete the data as necessary. Our clients have found that a solution like eDataGate can significantly reduce these staff hours. The time savings can be directly translated into reduced overhead/operational costs for firms with a static client base or increased work load without staff increases for a firm with a growing client base. Additionally, solutions like eDataGate that clearly place the responsibility of information entry directly into the hands of the plan sponsor, significantly reduces TPA financial responsibility. By using eDataGate, the TPA minimizes manipulation of data (key entry or conversion) and therefore reduces exposure to human error that can result in financial consequences. eDataGate addresses three distinct data collection objectives. The TPA can utilize any combination of the three: Payroll Data Collection – periodic (weekly, bi-weekly, bi-monthly etc.) by source and fund, if desired. Compliance Testing Data Collection – census data and financial data such as accrued contribution by source and compensation information collected annually or for more frequent testing. Enrollment Processing – conduct enrollments, collect investment elections, provide customized enrollment and administration forms. Study Methodolgy KeyNet Resources chose several clients to participate in this study based on their diversity in size and type of processing. They represent a cross section of small to medium size TPA firms that together provide a variety of services including: Compliance Testing Daily Valued Record Keeping Balance Forward Record Keeping Each client was asked to review their current input processing procedures and processes and identify those activities that could be eliminated or reduced as a result of implementing eDataGate. Wherever possible they were encouraged to assess the time saved, then translate that time into actual staff savings and project the savings as an annual amount. Additionally, each TPA was asked to solicit client comments regarding their experience with the product. KeyNet Resources then interviewed each TPA firm to review their findings/assessment. Observations (Advantages for TPAs) The following observations were made by the TPA firms we canvassed: The product provided the specific data that was needed, no more no less.. The required data was always complete. Specifically, setting the optional data validation test to "errors" instead of "warnings" forces the client to get it right before they sent the data to the TPA. It eliminates the need to convert the data prior to input to our record keeping system… eDataGate’s data scrubbing engine is perfect for our clients that use payroll providers or simply insist on providing data via spreadsheet like input. The engine takes all of these varied inputs, edits the data thoroughly and then converts the information into one common input format for the record keeping system. What a time saver! The product reduced or in some cases eliminated the need to do error checking on the data prior to import into our record keeping system… It eliminated high volume key entry during takeovers and annual compliance testing. It also eliminated error checking and error correction resulting from key entry we had to do prior to using this product... This significantly reduced our ongoing staffing requirements. It eliminated numerous steps in both our ongoing payroll feed processing and annual compliance work that directly resulted in staff reduction… Many of our clients are not comfortable with Excel (spread sheet programs) but find eDataGate very simple to use. Some of the clients that refused to use spreadsheets and were providing the data on paper or word processing document are now using eDataGate. Whenever data was missing or wrong in the past we were always behind in processing and the client wasn’t happy. It created conflicts with the client including misunderstandings like "I thought I sent that to you last week". The product is part of our program to give our clients a "warm and fuzzy" that our firm will always make proactive use of current technology… Time consuming phone call follow-ups for missing or invalid data have been virtually eliminated… The product eliminated our client’s concerns regarding sending us sensitive personal information via the web since the data can only be sent in encrypted format.. We project a significant staff reduction during plan takeovers since we have eliminated the need for conversions, key entry, multiple phone calls and training our clients to provide data on spreadsheets… The product has virtually eliminated the need to train our staff in data conversions since it directly interfaces with our record keeping system and is so easy to use. We eliminated the staff positions required to process payroll and compliance files. All processing is done by our administrators as part of their daily activity. It’s easy to use and is not time consuming. During our annual compliance testing crunch, it was no longer necessary to hire temps to assist in the processing… KeyNet Resources provided an upgrade to the product to all of our client’s electronically a new experience for us since the last vendor always shipped upgrades via diskettes… Our last anniversary packet was simplified since we no longer have to send data collection materials… In the past we have incurred financial consequences during takeovers either due to misinterpreting investment elections provided on paper or fax, or financial data provided on paper that had to be key entered. Since using eDataGate to collect all data electronically during the takeover process we have avoided any errors and expect that we will never have that type of financial consequence again since the client is solely responsible for providing the data in an electronic format that directly interfaces with our record keeping system… Observations (Advantages for Plan Sponsors) The following observations were made by plan sponsors to TPA firms using EDG: The product simplified entry of both the participant personal data and financial data we collect. The spread sheets we had been using were not user friendly and each time we had turnover of staff, we spent significant time clarifying how to fill our the spreadsheet and then review the data prior to sending it to the TPA. eDataGate eliminated most of these problems… We’re a small firm of less than 20 employees and have found that the census and financial contribution reports in eDataGate are being used on a regular basis in our company… We’re a large firm with over 8,000 employees located in 7 distinct payroll locations. We use eDataGate’s payroll by location features to process independently at each of our payroll sites and then consolidate the information at our home office to determine funding requirements and then pass the information to our record keeper… We like eDataGate’s history capability. We can view and print all of our payroll contributions since we started using the product. Their reports are comprehensive and useful throughout our human resources department… We appreciated our TPA providing us an assist during the takeover process. Their encouraging us to use the Enrollment processing support of eDataGate was particularly helpful… Our firm of over 5,000 employees had been conducting annual enrollments through manual procedures and forms. eDataGate has assisted significantly in this process helping us determine newly eligible employees, provided customized enrollment forms, collecting first time investment elections and then administering the plan… We do not have many PCs in our office and often share them. We use eDataGate’s password protection to inhibit access to confidential information. We also appreciate that the data is encrypted so that when we create a diskette to send to our TPA, anyone attempting to read the information on the diskette cannot. Financial Metrics The following observations were made by the TPA firms we canvassed: Today our firm handles over 500 daily valued plans. Our combined growth/turnover rate is approximately 20% annually. This means we are processing 100 client takeovers per year. Additionally, on average we are processing 26 payroll feeds for each client totaling 13,000 feeds. Based on the staff in place to handle both takeovers and payroll feeds we’ve estimated a projected savings of over six figures ($100,000+) per annum by instituting eDataGate. We do annual compliance work for over 4,000 small to medium size plans. Prior to instituting eDataGate as our census and accrued contribution data collection tool, our plan testers were spending ¾ - 1 hour per plan chasing down missing or invalid data. Additionally, we employed four temps full time for three months to handle the data conversions necessary under our old scenario. eDataGate eliminated the needs for temps and the need to chase bad or missing data. The resulting savings translates to approximately two full time regular staff as well as three of the four temps. The projected total savings is $90-100,000.