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The Back Office Explained

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August 9, 2023

The people we see making a success of a project or initiative do not represent the entire story. Custom-visible roles get the recognition, but it is often the work of a back-office team that makes everything they do possible. Without people handling critical functions like accounting and IT, a business might cease to function.

What do we mean by ‘the back office’?

The back office of a business consists of administrative and support teams. These people don’t interact directly with customers or carry out processes that generate revenue. Instead, they carry out the work that enables their client-facing colleagues to attract business, serve customers and reap revenue.

Just as important is the work they do to give businesses:

  • Strategic forecasting.
  • Planning.
  • Monitoring and measuring data.

It is this work that helps track performance and inform decision-making. Essentially, the back office is like the engine of the business that keeps it running smoothly. Things like financial management, advanced forecasting and administrative functions all take place in the back office.

The more efficiently the back office operates, the better it will do at supporting the business. With the right tools, back-office employees can do things like identifying impending inventory stockout so that you can order more to avoid sales being hurt. Seamless communication is required to make sure this happens efficiently.

How does the back office work?

Employees from the front office, like people in sales, interact with customers. Some organisations, particularly in finance, have a middle office that manages business risk. The back office provides administrative and support functions.

So what back-office roles are there?

Roles in the back office span various business departments. They include everything from data-entry clerks to highly-skilled researchers. Here are some examples:

  • Information Technology: Employees here will manage and maintain the tech infrastructure of the business. This includes platforms and applications, where they provide tech support, serve as network admins and various other tasks.
  • Finance and Accounting: Accountants, bookkeepers and financial analysts are responsible for all the financial close tasks like bookkeeping, tax preparation, managing investments and developing financial strategies.
  • Legal: Back-office staff prepare contracts and other legal documents. They will also carry out research, manage case files and offer advice on legal stances.
  • Procurement: This includes researching prices for products, materials and services, evaluating suppliers, monitoring the statuses of orders and contracts and more.
  • HR: This is where all the groundwork is laid for recruitment, hiring and development. These personnel also manage things like benefits and employee files, among other things.

Back Office: The Traditional vs. The Modern

In order to thrive in a competitive business environment, many time-consuming back-office processes need to be automated. This requires cutting-edge software like ERP solutions. The traditional back office sits at the opposite end of the spectrum, with many labour-intensive, error prone manual tasks. This is not really compatible with the modern world, but it is still common in 2023.

How important is the back office?

An efficient back office enables the entire company to maintain focus on its core competencies. For example, if the accounting department is very good at tracking expenses and processing invoices, the front office need only focus on customer interactions and sales in their work.

Strategic planning is another crucial function of the back office. Streamlined, integrated systems and accurate data are a recipe for business leaders to make decisions on the basis of reliable, real-time information. This drives strategy and results in a decreased time to market when new products and services are being prepared.

When companies employ digital transformation in their back office, they start to outperform their peers. This can boost customer satisfaction and employee productivity by huge amounts, according to research. What’s more, an effective back office enables a shift in focus onto insights and innovation, rather than getting bogged down with number-crunching and reports. This means greater job satisfaction and a reduced staff turnover.

Challenges For The Back Office

Disparate platforms are the chief cause of challenges in the back office. With siloed software and multiple data sources, workflows are slow and more labour is required to maintain progress. Here are some common challenges:

Managing Change

The transition to modern back-office systems means letting go of old processes. Some are reluctant to do this, even with all the efficiencies of the newer systems. What’s more, if you try to update processes without first refining and reassessing those processes, certain inefficiencies may remain. Change management is a complicated but necessary challenge for back-office staff to face.

Limited Operational Visibility

Poor customer outcomes arise from lack of visibility into back-office tasks. When reports are manually created and only semi-regular, they don’t always disclose the full gamut of issues the back office faces. When data is inaccessible, managers can drill down into key business areas to gain insight into problems and identify areas for improvement.

The Need For Real-time Data from the Supply Chain

Supply chains commonly face issues like:

  • Shortages.
  • Rising costs.
  • Shifts in buyer behaviour.

These make it difficult to manage customer and partner expectations. Real-time data makes it easier, but only modern technology like ERP systems makes this possible. The recent global issues with supply chains have cemented the need to have inventory management solutions coupled with supply chains to access real-time data and react in an agile way.

What industries have back-office operations?

Virtually all companies have back-office systems. But they are larger and more sophisticated in certain industries. These include

  • Service: Substantial customer support operations and customer-processing functions mean sophisticated back-office operations are needed.
  • Government Agencies: With many service functions in their operations, these groups often need large back offices.
  • Financial Services: Banks, insurance companies and wealth management groups require comprehensive record-keeping.
  • Retail: These operations, particularly online ones, must have an extensive back-office system.

Upgrade Your Back Office to Modern Systems

We have mentioned ERP a few times in this article. Solutions like NetSuite enable a unified view of all back-office operations, thanks to operating on a central data source and robust integration of software. Incorporate an all-in-one cloud business management solution to streamline and automate critical business processes.

This ensures accuracy and data integrity whilst transitioning the back office from a cost centre to a value centre. All departments, including the front office, will become more efficient and productive, providing better experiences for customers across the board.

Why Choose Eventura as your ERP Implementation Partner?

Eventura has been providing robust business solutions to countless organisations for over two decades. We are ERP experts and can identify all of your business needs, including issues surrounding supply chain, and deliver a comprehensive ERP solution that works for you.

As Sage 200 Partners and NetSuite Solution Providers, we can help you identify which solution will fit your business needs the best. Our expert team of business analysts, developers, consultants, technicians and support staff can guide you through your entire project, from initial scoping through to implementation and on-going support.

We’re also managed IT service providers meaning we can help you identify your entire IT infrastructure requirements from day one. If you would like to speak to one of our ERP experts to discuss your options or request a free demo, you can request a free call back here.

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