Understanding business processes

In this section we give an overview of two business processes that are carried at the HFRS. They are used to illustrate the BP and BPO results that are presented in the following two sections (Modeling and optimization and Discussion).

1.1. National Housing Saving Schema (NHSS)

The government implemented the conditions of the NHSS in resolutions passed in 1999 and 2000.

The main motivation for NHSS was to promote long-term savings deposits and to increase the quantity of long-term housing loans under favorable terms to citizens. The National Housing

E-Democracy & E-Participation 97 Program enforced in 2000 established the NHSS as a continuing project. Note that several other EU member states, like for example Austria, Germany and Czech Republic, offer similar legislative contexts for savings in housing. Since 1999 the NHSS received a remarkable attention and was very popular among the citizens (Cestnik and Kern, 2007).

At the end of 2010 the total number of savers included in the NHSS exceeded 103,000. The percentage of the savers that broke the contract prematurely is 19%. On the other hand, 70% of the rest of the savers, which is almost 72,000, have already completed their contracts and, consequently, acquired the rights for state premium accruals and the housing loan under favorable terms. The total amount saved within the completed contracts is over €605m. The sum includes

€474mof capital payments, €90m of bank interests and revalorisation, and €41 million of state premium accruals. From the polls performed by the HFRS it can be estimated that more than a half of the saved money was actually spent in housing; in contrast, only about 10% of the successful savers actually consumed their right for a NHSS housing loan. The radical decrease of the interest rates for bank loans in the last few years is considered the most influential factor for such a surprisingly low share, as the favorable terms of the NHSS loan lost most of their advantages compared to the general loan terms offered by banks. At present there are still over 11,000 citizens actively saving money in the NHSS; their capital payments amount was over €69m at the end of 2010.

Figure 1: Data flow diagram showing participants and top-level business processes for the NHSS.

The NHSS operations are executed by several participants, including the HFRS and selected business banks. The underlying business process is shown in a data flow diagram (Hay, 2002) in Figure 1. There are three different participants involved in the process: (1) the HFRS, (2) business banks and (3) citizens (Cestnik and Kern, 2007). The role of the HFRS is central, since it carries out the process and is responsible for direct communication with the other two participants.

Each participating actor has a different goal. Citizens included in the NHSS want to get a profitable revenue for the saved money and possibly a loan at the end of the saving period.

Participating banks include the NHSS in their services portfolio and are trying to increase their market share by acquiring new customers. The HFRS controls the distribution of the public money;

in fact, the HFRS validates the compliance to the NHSS criteria for each saving account, for which it requires relevant data from banks. Providing high quality e-services to citizens contributes to the general awareness about NHSS in public.

1.2. Housing Subventions (HS)

The second business process considered for analysis by BA and BPO is granting housing subventions to young families. According to the housing legislation passed in 2006, the HFRS has announced five consecutive yearly calls for granting subventions to young families (Kern and Cestnik, 2007; 2008). The purpose of the act and the corresponding public calls was to grant yearly subventions to beneficiaries as an incentive mechanism for first-time buying or constructing housing facilities. Slovenian citizens were encouraged to apply to the call. The eligibility of each applicant is determined according to the enforced legislative regulation. In order to obtain the yearly subvention, each applicant had to fulfill three criteria. First, the applicant’s family had to have a young family status. Second, the applicant had to hold a contract for buying a housing real estate or a legally binding building permit for the construction of an individual house. And third, the earnings per applicant’s family member should not exceed one half of the average salary in the Republic of Slovenia in the year preceding the last.

Table 1: The earmarked and granted amount for housing subventions in five consecutive years.

Year Earmarked

amount in €

All applications Approved applications

Granted amount in €

2006 € 758.275,00 322 177 € 107.360,00

2007 € 2.377.854,00 1.361 988 € 1.077.638,50

2008 € 3.653.756,00 2.478 1.908 € 2.158.896,00

2009 € 3.367.000,00 5.589 4.263 € 4.466.736,00

2010 € 5.215.821,00 9.026 6.821 *€ 7.200.000,00

The earmarked and granted amounts, as well as the number of received and approved applications for housing subventions, are shown in Table 1. In the first three years the earmarked amount was much higher than the granted one. On one hand this indicated that the planning procedure was based on overly optimistic expectations, while on the other hand one might consider also investigating other contributing factors such as, for example, whether the potential beneficiaries had been properly informed about the calls. The situation, however, changed dramatically in 2009 and 2010, when granted amount substantially exceeded the earmarked amount, forcing the HFRS’s officers to take actions to obtain more resources from the state budget.

The number of applications to the calls exhibits exponential growth in the first five years (see Figure 2). Note that the share of rejected applications remains at about one fifth each year.

Although such growth is not expected to last, it is hard to guess when it will reach the equilibrium point (Kern and Cestnik, 2010).