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Business Process Improvement vs Business Process Reengineering 

Financial Services | Banking Automation | Business Process Improvement

Business Process Improvement vs Business Process Reengineering 

April 8, 2024

Your business’s ability to change goes a long way toward contributing to long-term success. But how do you decide whether to make small changes over the long term or if a situation calls for a radical change?

To determine this, you must understand business process improvement (BPI) and reengineering (BPR). In this guide, we explain the meaning of BPI and BPR and when to use them.

What is Business Process Improvement?

Business process improvement is an ongoing process where you make small, continuous improvements to make processes more efficient.

BPI is like fine-tuning your car’s engine to make it run smoother and faster. You start by examining the engine’s current condition. Then you find areas that could use some maintenance and perform that maintenance to improve efficiency. Of course, BPI requires careful planning and execution, so it’s always smart to have a BPI specialist by your side.

Continuous improvement and data-driven decisions are key aspects of BPI. Instead of blindly chasing market trends and investing in expensive tech, you start with introspection. You use analytics to validate the need for change. And you make small changes over time to minimize disruption.

What is Business Process Reengineering?

Business process reengineering is a comprehensive process redesign exercise that helps a business improve efficiency and overall performance significantly.

Business Process Reengineering is the radical redesign of business processes to achieve dramatic improvements in productivity, cycle times, quality, and employee and customer satisfaction.

Bain & Company

There are times when your business might need a radical change, such as: 

  • When you want to build a competitive advantage 
  • To prepare for rapid growth 
  • After a merger or acquisition 
  • Organizations restructuring

Of course, this is an inclusive list. You might choose to reengineer a process to improve productivity, comply with new regulatory requirements, or introduce new technology. However, BPR is a far more extensive process than BPI. It requires effective change management and stakeholder engagement. 

BPI vs. BPR

 

While BPI and BPR share some common objectives — improved efficiency and optimal resource utilization — they differ in some key areas. Here are three key aspects where BPI and BPR differ:

Level of Change

BPI is about continuously asking yourself, “How can we make this better?” even when there’s no urgency to change a process. The focus is to identify inefficiencies, bottlenecks, and areas of waste within your current processes. For example, if you’re an online retailer, BPI could involve streamlining your order fulfillment process to reduce delivery times or using a more robust CRM to improve client relationships.

BPR involves a complete overhaul. It’s like tearing down an entire house and building it from scratch. Suppose you’re a retail company that wants to improve delivery times. But instead of optimizing the order fulfillment process, you redesign the entire supply chain, from sourcing to delivery.

Be careful, though. Companies often overwhelm themselves by overestimating their capacity for change. It’s hard to determine if a process redesign is viable without understanding your capacity for change. As David Michels and Kevin Murphy explain in their HBR article:

The current business landscape is evolving so rapidly and unpredictably that executives are full of questions about change. How much? They want to know. How fast? How sustainable? And sometimes, just how? In our experience companies can’t hope to answer these questions unless they understand their own capacity for change.

Harvard Business Review

Time Frame

Implementing BPI takes less time than implementing BPR. Think of BPI as a series of quick wins. You zoom into your process, find areas for improvement, make changes, and repeat. The exact time frame may differ based on the adjustments you want to make and could take weeks or months.

BPR is a marathon, not a race. It requires redesigning the process from scratch. A successful redesign might involve significant investments in technology and training. This requires careful consideration and meticulous execution. Naturally, redesigning and executing can take a long time, typically months or even years.

Risk and Disruption

There’s a significant divergence between BPI and BPR regarding risk and divergence. Since BPI involves making small changes, the level of disruption and risk is relatively lower.

Employees are less likely to resist these small changes because BPI builds on existing structures and practices. Plus, the changes are implemented gradually, so the transition is smoother and causes minimal disruption to your business’s day-to-day operations.

On the other hand, BPR involves challenging deeply ingrained practices and questioning conventions. Employees might have to step out of their comfort zone to execute changes of that magnitude, so there’s greater risk and disruption. Before you move forward with BPR, ensure that you and your team are prepared for that change.

We believe that most firms do not proactively manage change risk in a way that’s commensurate with the benefits of success and the costs of failure. Effectively managing change risk is a necessary ‘muscle’ to reduce, preempt, mitigate, and manage the challenges that come with (intents of) transformation, without bringing decision paralysis or stifling innovation in the organization.

‘Managing Change Risk’, Oliver Wyman

BPI vs. BPR: What Will Work Best for You?

Choosing between BPI and BPR is a crucial strategic decision. There are multiple factors to consider, such as:

Need for Change

What’s the current state of the process and its inefficiencies? Fundamentally flawed or outdated processes call for BPR. Eliminating fundamental flaws or updating your entire process with incremental changes can take a long time — not practical. However, BPI is a more suitable choice when the process is relatively sound but has some areas of inefficiency.

Suppose you’re a software development company. You’re struggling with lengthy approval cycles, siloed communication, and inconsistent quality standards because of an outdated development process. This warrants a complete process overhaul — you can’t afford to compromise on quality for long, can you?

Alignment With Strategy

Does the process align with your strategic goals? If a process no longer meets your business’s evolving needs or is preventing you from achieving your goals, it’s time to reengineer the process. Conversely, if your process is fundamentally aligned with your strategic objectives, but requires optimization to improve efficiency and customer satisfaction, BPI is the way to go.

For example, BPR is a better choice for an ecommerce company that wants to differentiate itself through personalized customer experiences and finds its current sales process rigid and transactional. But BPI makes more sense if the process is already customer-centric and requires additional personalization.

Risk Appetite

Assess your risk appetite before reengineering a process — can your business accept the disruption that comes with dismantling a key process and reimplementing it? For example, if a small manufacturer plans to transition from traditional batch production to lean manufacturing, the cost of implementing the new process and the halted production can translate to a major cost for the business.

Available Resources

BPI is less resource-intensive than BPR. Even when you’re running low on cash or don’t have the expertise to implement a radical shift in your process, you can make small improvements to your process over time.

 

 

Enhance Business Processes with Blanc Labs

Blanc Labs helps businesses like yours not only choose the right way forward but also offers comprehensive assistance to implement incremental changes strategically or re-engineer processes from scratch. If you need help navigating a change in business process, get in touch with us.

What is the role of a Business Process Improvement Specialist? 

Financial Services | Business Process Improvement

What is the role of a Business Process Improvement Specialist? 

February 16, 2024
Business Process Improvement Specialist in Canada

What is the role of a Business Process Improvement Specialist in Canada?

Business process improvement (BPI) involves analyzing current processes, identifying room for improvement, and redesigning processes to make them more efficient. The problem? Analyzing processes, using data to find inefficiencies, and redesigning and implementing processes with minimal disruption requires skill and experience. That’s where a business process improvement specialist steps in. 

You might tackle various challenges when working to improve your processes. According to Capgemini, the most prominent business process management challenges are functional silo culture and fragmented budgets. 

Redesigning processes while tackling these challenges can be overwhelming, but specialists are equipped with the experience needed to make the transition smoother. In this guide, we discuss the business process improvement workflow and how a specialist can make things easier for you.

The Need for Business Process Improvement before Automation

You’re investing in automation to improve business processes. Before you put money on the table, it’s vital to learn how this investment will impact your business’s efficiency and bottom line.

At its core, business process improvement is about driving efficiency and improving performance through streamlined operations. A critical analysis of business processes and workflows enables you to identify bottlenecks and inefficiencies, allowing you to focus efforts on automating the right processes.

Business process improvement is undeniably mission-critical to make your business future-ready, but it’s also important to:

  • Develop a competitive advantage: Prioritizing continuous improvement and standardizing processes can help build competitive advantages like cost leadership, differentiated products or services, better quality, scalability, and agility.
  • Improve efficiency: Zeroing in on processes you can automate or streamline improves efficiency and output. For example, you can use technologies like intelligent document processing (IDP) to streamline invoice processing. This frees up your finance team to focus on more strategic tasks like cash flow analysis.
  • Elevate customer experience: Modern customers have some ground rules. They want fast responses, consistent experiences, and personalized interactions. Modern lenders provide hassle-free digital experiences to SMB clients, where document collection is a single step and approvals take hours and not weeks.  

“The fact is that consistency on the most common customer journeys is an important predictor of overall customer experience and loyalty. Banks, for example, saw an exceptionally strong correlation between consistency on key customer journeys and overall performance in customer experience.”

The Three Cs of customer Satisfaction, McKinsey & Company

  • Foster a culture of innovation: Striving for continuous improvement encourages critical thinking, offers your team a platform for experimentation, and rewards innovation. For example, if you’re a financial institution trying to automate your loan origination process, a culture of innovation would encourage employees to take charge of every step, from process analysis to pilot implementation.

Business Process Improvement Workflow

Before you take the first step, see if you can get a business process improvement specialist on board.

Their experience and expertise go a long way in minimizing workflow disruption and efficiently designing and executing new workflows. With that in mind, let’s talk about how you can improve business processes.

Process Mapping

Process mapping involves creating a visual representation of your current business processes. You map every step, interaction, and decision point in your workflow from start to finish when mapping a process.

This map gives you a starting point to understand how the current process works. Identifying bottlenecks or ways to make a process more efficient is easier when you can view the process rather than just verbally discussing the steps in a process.

Root Cause Analysis

Time to play detective. Root cause analysis involves digging deeper into finding the underlying reasons behind a specific problem or inefficiency. For example, if you’re a financial company experiencing delays in processing customer payments, here’s what finding the root cause might look like:

  • Why are employees encountering difficulties processing the payments? Probably because employees are spending time fixing errors in payment records.
  • Why are there discrepancies in the payment records? Maybe the outdated system is causing technical problems or employees need more training.
  • Why are we using outdated systems and not investing in training? Lack of budget.

 

This is how root cause analysis takes you to a problem’s roots. In the example above, the finance team could request additional funds in the next quarter to invest in a system upgrade and training to process customer payments faster.

Blanc Labs’ Business Process Improvement Framework

Cause and Effect Analysis

Use techniques like fishbone or Ishikawa diagrams for a visual representation of the cause-and-effect relationship between factors impacting your business processes and problems.

Categorize problems into multiple buckets like people, processes, equipment, and external factors. This will help you gain insights into various elements that impact your business processes and prioritize the ones with the biggest positive impact.

Statistical Process Control

Numbers don’t lie — statistical process control (SPC) helps you understand your process through numbers. SPC enables you to identify trends, detect abnormalities in the process, and make data-driven decisions to improve your process.

Design of Experiments

Once you’ve identified a problem, you need a systematic and structured way to identify potential improvements and test them. Experimentation helps you do exactly that.

It’s the same as stress-testing your processes under various scenarios. You design an experiment, manipulate relevant variables, and measure their impact on the business process. This enables you to understand the impact of a change before you fully implement it, allowing you to minimize disruption.

How BPI and Intelligent Automation can improve the Borrowing Experience for Small Business Owners

BEFORE
AFTER

A Frustrating Lending Experience

Small business owner_loan approval

Alex applies for a loan with a traditional commercial lender to expand her cafe into a local chain. The onboarding process is frustrating and time-consuming, with lengthy paperwork and no guidance. The lender’s inaccurate reporting and static risk assessment results in conservative loan terms that fail to acknowledge her business’s recent growth and the positive trends in the local market. This jeopardizes Alex’s ability to secure an ideal property for her new location and erodes her confidence in the lender’s support for her business growth. Throughout the process, Alex experiences an impersonal service, devoid of the understanding and support crucial for an entrepreneur.

Small business owner_loan approval

A Transformative Lending Experience

Small business owner_lending

Six months later, Alex chooses a lender with a digital platform and automated loan decisioning for her next expansion. With streamlined onboarding, automated data extraction, and intelligent chatbot, the experience is transformative. Real-time updates, automated tracking, intelligent document processing, and dynamic risk assessment make loan processing efficient and user-friendly. Alex secures her loan promptly and finds the perfect location for her new café. The chatbot also offers personalized customer experience, making Alex feel valued.

Small business owner_lending

The Role of a Business Process Improvement Specialist

Process mapping, analysis, and re-engineering require a specialist. A specialist has the knowledge and experience required to minimize workflow disruption and effectively realize process efficiencies. Here’s how a business process improvement specialist helps:

Pain Point Discovery

Think of business process improvement specialists as Sherlock Holmes. They come in, zoom into your processes, and find pain points that hinder efficiency.

They don’t just observe. They conduct interviews and surveys, ask the right questions, and listen attentively to discover areas that are inefficient, error-prone, and not aligned with organizational goals. The discovery phase is vital — it sets the stage for targeted improvements.

Process Analysis

When the specialist finds room for improvement in a process, they pull up their sleeves and start dissecting it.

They map every step, decision point, and interaction in your process and use techniques like value stream mapping, data analysis, and flowcharting to take a closer look at how the process currently operates and where bottlenecks and inefficiencies lie. This lays the groundwork for informed and data-backed decision-making and process design.

Opportunity Analysis

Insights from process analysis equip the specialist to shift focus to opportunity analysis. They consider the benefits of addressing a pain point and improving the process versus the cost — do the monetary benefits of redesigning the process justify (and exceed) the cost of making those improvements?

Cost-benefit analysis requires input from multiple experts. For example, if a process redesign could improve customer experience, what would be the benefit, in monetary terms, of improved customer experience? The specialist might need insights from multiple teams like sales and accounting to understand the monetary impact.

They also consider the risks of redesigning the process. Will the redesign require significant changes? How long will it take the employees to get through the learning curve and achieve full efficiency? The specialist understands these risks and identifies ways to mitigate them.

Implementation Design

After factoring in the costs and risks associated with redesigning a process and verifying the viability of a process redesign, the specialist transitions into creating and implementing a more efficient process design.

The redesigned process might involve one or multiple changes like a more efficient workflow, new technology, or a redesigned organizational structure. For example, the specialist might use enterprise automation solutions to automate repetitive tasks, potentially multiplying your team’s productivity or include GenAI to enable the next level of customer service.

The specialist develops a detailed implementation plan including the details of redesign, clear timelines, responsibilities, and performance metrics. They collaborate with stakeholders during this phase to ensure buy-in and alignment with organizational objectives.

Business Process Improvement Integration

Process improvement isn’t a one-off activity. To truly reap the benefits of process improvement, the specialist must integrate the improvement initiatives into the organization’s culture.

The specialist can help you develop change management strategies to inculcate a culture rooted in continuous improvement; this is vital to engaging employees across the organization and encouraging them to contribute ideas that drive change.

For example, the specialist can train teams to build applications quickly using low-code platforms. This enables teams to solve problems independently and quickly. Of course, there are many ways to develop a culture of continuous improvement depending on factors like industry. For example, Bill Keen, CEO of Keen Wealth Advisors, explains:

“By owning mistakes and building processes to prevent the mistakes that do occur from happening again, you will build trust among your customers and a culture of continuous improvement among your staff.”

With training and efficient feedback mechanisms, you can sustain process improvements for a long time and ingrain them in your company’s DNA.

Business Process Improvement with Blanc Labs

We firmly believe that transformation happens over time and that process improvement is an ongoing journey. Our approach helps you practically redesign processes effectively and consistently, and in a way that fits your business’s unique needs.

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Capitalizing on the Open Banking Opportunity

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The open banking opportunity:

61% workers who say that the introduction of AI has improved productivity.
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$77 billion
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However, as highlighted by GartnerÂČ, a concerning 85% of AI projects ultimately fail to meet their expected business value. Among the numerous factors contributing to these shortcomings, common culprits include misaligned expectations, inadequate planning, and limited comprehension of the technology and its practical applications. When all these factors are considered, they collectively underscore a single underlying issue: an inadequate understanding of the process.

The Cost of No Change

Every business, regardless of its size or industry, operates within a complex web of processes. These processes, when left unoptimized, can lead to chaos, inefficiency, and missed opportunities. Employees may find themselves bogged down in manual tasks, information silos, and redundant workflows. Meanwhile, customers may experience reduced satisfaction due to prolonged or unclear processes and excessive touchpoints, potentially leading to attrition. This chaos not only hampers productivity but can also erode customer satisfaction and profitability.

 

Âč PricewaterhouseCoopers, “PWC 2022 AI Business Survey”, online: PwC
ÂČ“Gartner says nearly half of CIOs are planning to deploy artificial intelligence”, (13 February 2018), online: Gartner

Array’s researchÂł reveals alarming realities within organizations:

Financial Costs:

Inefficiencies cost 20-30% of revenue.

Time Costs: 

Employees lose 26% of their day to avoidable chores.

Recruitment Costs:

Each employee costs $4,129 and 42 days to be trained.

Amid these sobering statistics, businesses have adopted Business Process Improvement as a systematic, analytical approach to understanding, prioritizing, and measuring the impact of how to make their operations run more efficiently.

 

³Saunders, Dave, “How Much is Inefficiency Costing Your Business”, (19 November 2020), online: Electronic Data
Capture, Mobile Data Collection – Array Survey App

53% of IT decision-makers say that Cloud ERP (Enterprise Resource Planning) software is a worthwhile investment
Man working
50%
of companies spend up to $25 on each manually processed invoice
64%
of sales reps allocate their hours to non-revenue tasks
30%
of specialist IT time is consumed by basic, low-level activities

Download the Full Whitepaper

From Chaos to Clarity_Business Process Improvement_Blanc Labs

Our teams have compiled insights and best practices in this practical and outcome focused whitepaper.  Our learnings are based on numerous successful client engagements, research, and industry partners.

Business leaders seeking practical advice to advance their BPI capabilities will find value in the topics covered in the whitepaper.  These include:

  • A step-by-step approach on how to conduct Business Process Improvement within an enterprise operating environment
  • Practical implications of using Business Process Improvement with Intelligent Automation
  • Case Studies on the successful use of Business Process Improvement in mid-sized to enterprise organizations

 

From Chaos to Clarity

 

You consent to receive communication from Blanc Labs by providing us with your contact information. You can unsubscribe at any time. Please review our Privacy Policy for further details. 

Authors:

Luciano Lera Bossi
Luciano Lera Bossi
BPI & Intelligent Automation Lead

“Our commitment is to evolve your business processes in a way that’s both data-driven and adaptable, fostering an environment where continuous improvement is the norm, and each step leads to a more effective and empowering operational experience.”

David Liu
David Liu
Lead-CoE Consultant

“In the race for growth, inefficiencies hold companies back. Success unfolds in continuous refinement—where processes evolve, innovation thrives, and excellence becomes ingrained.”

The Value of Speed: C.D. Howe Institute policy research quantifies the benefits of a modern payment ecosystem in Canada

Financial Services | Insights | Payments

The Value of Speed: C.D. Howe Institute policy research quantifies the benefits of a modern payment ecosystem in Canada

January 10, 2024
payment cards

With Consumer Directed Banking back on track for 2025, there is perhaps cause for optimism that a long awaited evolution in Canada’s payments ecosystem could become a reality over the next few years.

In addition to providing a comprehensive summary of the benefits of a faster, more open and competitive payments ecosystem, the opportunity cost of not evolving our payments landscape to include real-time payments (RTR) has been well documented in a recent research paper by the C.D. Howe Institute.  The paper also discusses specific actions that government and regulators can take to create a more innovative, competitive and fair payments ecosystem in Canada.

The full paper is available for download directly from the C.D. Howe Institutes website but it is worth highlighting several key themes/stats from the paper.  Many of these themes are already reflected in our payment strategies and implementation approaches for our clients.

Our team is optimistic about a better future for Canadian payments and will be following developments in this space closely.  As always, we look forward to working with ecosystem participants to learn more about their perspectives and how they view the considerable opportunity to win in our payments economy.

$3.25 Billion

Anticipated Impact to CDN economy over 5 years.

20.5 Billion

Total Payment Transactions in 2022

$2.23 Billion

Projected 5 year savings with RTR

RTR By The Numbers

The C.D. Howe Institute team provided some excellent analysis on the expected economic impact to Canada’s economy with a more competitive payments landscape enabled by RTR adoption.

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2023 Fall Economic Update on Consumer-Driven Banking đŸ„ł

Financial Services | Digital Banking | Fintech | Open Banking

2023 Fall Economic Update on Consumer-Driven Banking đŸ„ł

November 29, 2023

When we attended the CLA Lenders Summit a few weeks ago, it seemed like everyone was ready to sign the death certificate for Open Banking in Canada. Very little, if any, material progress had been communicated on behalf of the government to create a regulatory framework or policy mandate to make good on the promise or timelines defined by an Advisory Committee on Open Banking Report which became the mandate of Abraham Tachjian, who was appointed as Canada’s Open Banking lead, by the Liberal government in 2022.

Fast-forward to Wednesday November 21st, 2023 when Finance Minister Chrystia Freeland provided her 2023 Fall Economic Update, our team, as well as many of our clients and industry collaborators were taken by surprise when the Liberals laid out a framework and timeline for Canada to implement a Consumer-Driven Banking approach.

Aside from a snazzy rebrand of the open banking moniker, the policy statement on Consumer-Driven Banking outlined the goal of “adopting legislation and fully implementing the necessary governance framework by 2025”. It would seem from the update, part of the government’s motivation for moving ahead with consumer-driven banking is a focus on the affordability crises facing many Canadians. The Consumer-Driven Banking policy statement was listed under the header of “Making Life More Affordable” in the economic update.  The update for Canada now seems to be following a similar path to how policy is being shaped and implemented in the US.

Our Take:

As long-term believers in the benefits of Open Banking, we are thrilled to learn of the renewed commitment to making consumer-directed banking a reality in Canada.  While there is still a lot of work to be done as well as the additional hurdle of new  legislation being tabled during an election cycle, we are committed to the potential  benefits of Consumer Directed Banking for banking customers and the significant opportunity for innovation and collaboration in the Canadian financial services sector.

You can read the full Fall Economic Statement here but if you are short on time, ChatGPT did a pretty good job of summarizing the statement in bullets, below.

 

Introduction to Consumer-Driven Banking:

    • Allows secure transfer of financial data via API.
    • Aims to replace unsecure screen-scraping.
    • Enables access to data-driven financial services.

Benefits of Consumer-driven Banking:

    • Consumers gain secure access to innovative financial tools.
    • Greater control over financial data for improved outcomes.
    • Small businesses experience reduced administrative burden.

Policy Objectives:

    • Safety and soundness of the financial sector.
    • Consumer financial well-being and protection.
    • Economic growth and international competitiveness.

Core Framework Elements:

    • Governance: Oversight and management of the system.
    • Scope: Types of data, participants, and expansion pace.
    • Accreditation: Requirements for participating in data sharing.
    • Common Rules: Privacy, security, and liability guidelines.
    • Technical Standards: Establishment and oversight of data flow.

Course of Action (Legislation in 2024):

    • Phased approach to scope, oversight, and screen-scraping elimination.
    • Key elements codified in legislation.
    • Mandate to a government-led entity for supervision and enforcement.

Governance (Effective Oversight):

    • Government-led entity to supervise and enforce the framework.
    • Model for provincial entities to “opt-in” to governance.
    • Strong governance framework to ensure compliance.

Scope (Phased Implementation):

    • Initial phase includes federally-regulated financial institutions.
    • Opt-in option for credit unions and third parties.
    • Reciprocal access for all entities to promote data portability.

Accreditation (Trusted Data Sharing):

    • Formal framework for entities collecting consumer data.
    • Regular reporting for accreditation maintenance.
    • Exemption for federally-regulated banks and credit unions.

Common Rules (Transparent Foundation):

    • Privacy, security, and liability obligations.
    • Compliance as a condition for data access.
    • Complements existing legislation.

Privacy (Protection Measures):

    • Participants must comply with legislative frameworks.
    • Specific privacy rules for financial data sharing.
    • Consent dashboards for real-time consumer control.

Liability (Clear Structure):

    • Statutory contractual relationship between participants.
    • Liability moves with the data and rests with the party at fault.
    • Internal policies and procedures for complaint handling.

Security (Protecting Consumer Data):

    • Clear security requirements for accredited entities.
    • Oversight of security standards in legislation.
    • Ongoing reporting obligations for data protection.

Single Technical Standard:

    • Mandate for a single technical standard.
    • Legislation to outline principles and oversight.

Next Steps for consumer-driven banking:

    • Department of Finance aims to implement the framework by 2025.
    • Ongoing engagement with industry stakeholders.
    • Legislative framework development and phased implementation.

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