Although significant investment is made in acquiring and retaining customers, this is increasingly becoming more difficult to achieve. The ability to deliver both requires a commitment to improve service levels, demonstrate compliance, and deliver at a lower cost base. The rapid adoption of technology, increasing regulation, changing customer behavior, and a requirement to operate within tighter margins just to keep pace with the competition are combining to disrupt traditional customer service models. Back-office is redefining the future of work.
What is the Back Office?
Organizations are made up of several departments but only two main operational systems. These systems are known as the back office and the front office. Back-office business processes support the customer-facing business processes or front-office processes. The key difference between these two systems is that the back office serves as a business’s cost center, whereas the front office generates revenue. In other words, the back office supports while the front office generates. Together, both drive business value.
Back Office is the Future
For many years, the front office has received significant investment to drive down costs and improve service performance to customers. Thanks to large cost bases and direct customer contact, it has been the obvious place to optimize. However, customer interactions with front-line staff are decreasing as more and more customers interact with organizations digitally. As customers now use self-service options, submit requests online, and download the standard information required, it is the back office rather than the front office that will play the pivotal role in creating service differentiation
Industries With Most Back Office Processes
Some industries have more back-office processes than others, especially service industries with large customer support operations. These include:
- Financial services (banking, investment, wealth management)
- Government agencies
- Insurance (healthcare, life, property, and casualty)
- Telecom providers
- Retailers (online)
Traditional back-office operations need to transform from mere transaction processing functions. Future industry-leading service providers will be decided by how they evolve their back office processes to become more intelligent and centered on customer efficiency, increasingly proactive and focused on continuous improvement, enabling them to deliver consistent value-added service at a competitive cost on a sustainable basis.
The practice of outsourcing back-office processes is in a period of upheaval. Driving factors in this disruption include a mass labor force shortage, and a market whose focus has shifted from cost-cutting to process improvement. Some of the ways the back office is revolutionizing the industry are by automating business processes, making use of AI and machine learning, automating robotic processes, and using blockchain technology.
Outsourcing back office processes brings mixed results. Businesses that find reliable partners to outsource enjoy its convenience and find it to be cost-effective. As you consider back office software, weigh the impact on control and data security and the impact on employee and customer satisfaction.