Definitive Guide to Back-Office Operations and Processes

Researching traditional business operations versus progressive back-office operations can reveal which is more fitting for your company culture.

What Are Back-Office Operations?

To have a well-functioning company, one must have a back-office that supports the front office. When many customers or clients visualize any business, the operators of the store front, logo, products, or services are thought of first. The back-office is the operational areas of a company that support the front-office or customer-facing part of a company. Sometimes referred to as simply “operations”, the term back-office came about because in early building layouts, customer-facing tasks were completed in the front-office – the storefront – and the administrative, processing and fulfillment activities were done in a separate area at the back of the building, without direct customer interaction.

The front office is also seen as the revenue-generating part of the business, whereas the back-office is a cost center.

This article provides a high-level overview of back-office operations, answering the most common questions asked about back-office. We’ll illustrate how managing the many types of work, people and processes can be very challenging for traditional back-office operations and how modern back-offices are overcoming these challenges.

  • What Functions Reside in Back-Office Operations?
  • What is the Importance of the Back-Office?
  • What Industries Have Large Back-Office Operations?
  • What’s the Difference between Traditional and Modern Back-Offices?
  • What Is a Traditional Back-Office: the type of work, roles, systems, management styles and challenges?
  • What is a Modern Back-Office: they type of work, roles, systems management styles and challenges?
  • What Are the Benefits of a Modern Back-Office?
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What Functions Reside in Back-Office Operations?

The back-office can be thought of as the foundation for financial and operational success for your company. This is why the back-office generally tends to generate less money than the front-office. The traditional back-office can be broken down into two categories of functions: administrative functions that keep the company running, and customer support functions that directly fulfill the goods and service requests of customers.

Administrative functions keep the lights on and typically include:

  • Human resources (HR)
  • Information technology (IT) / Data Management
  • Legal
  • Compliance/Fraud/Risk Management
  • Procurement
  • Finance and Accounting

Customer support functions can include, but are not limited to:

  • Order fulfillment
  • Transaction processing
  • Document preparation
  • Account maintenance
  • Client services
  • Dispute resolutionCustomer onboarding

And there are many industry-specific back-office functions:

  • Claims Processing and Underwriting
  • Loans, mortgage operations
  • Credit Card processing
  • Field servicing operations

These functions often execute complex, multi-step, multi-touch processes (more than one employee or functional group contributes to the completion of the process).

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What Is the Importance of the Back-Office?

Efficient management of back-office operations allows the company to focus on its core competencies and servicing their customers. For example, efficient processes and quick access to needed data can help:

  • HR identify and attract the best talent
  • IT provides the tools and data employees need to perform their jobs
  • Compliance/risk management identify and correct non-compliant behavior before penalties are incurred.

And efficient management of back-office, customer support operations can help companies keep their promises to customers for accurate and timely delivery of goods and services. In fact, according to Aberdeen Group report, The Business Value of a Next-Generation Back-Office, the #2 cause of customer dissatisfaction is errors and delays in the back-office.

In today’s highly competitive market, great customer experience is a competitive differentiator. Retaining customers is a lot less expensive than acquiring new customers. And recent research from Aberdeen Group proves that companies who improve or modernize their back-office operations dramatically outperform their more traditional peers.

  • 2.8X greater annual increase in customer satisfaction
  • 5.4X annual increase in the number of quality SLAs met
  • 11.7X annual increase in employee productivity

Download the Aberdeen Group Report: Essentials to Modernize Your Back Office

For the remainder of this article, we will focus on what is back-office and the functions that directly support and impact the customer experience.

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What Industries Have Large Back-Office Operations?

Some industries, in particular service industries, tend to have larger back-office operations than others. For example, industries with large customer support operations and processing functions include:

  • Financial services (banking, wealth management/investment)
  • Insurance (property and casualty; life and annuities; healthcare)
  • Business Process Outsourcers (BPOs)
  • Government agencies
  • Telecoms / Cable providers
  • Retailers, especially online retailers
  • Some utilities (think your electricity provider vs. oil pipeline company)

These historically have been paper-intensive, people-intensive support functions. But with the advent of digital technologies – document scanning, workflow systems, and more recently solutions like robotic process automation – more of the work is digitized and automated.

Read the Capita case study to learn how a complex Life and Pension processing group was able to consolidate 2,663 customer workflow processes to 250 end-to-end processes and reduce average end-to-end processing times from 35 days to just 3 days.

While digital technologies are helping streamline operations, they have created their own challenges. Let’s explore this by comparing what is back-office in a traditional and modern sense.


What’s the Difference between Traditional and Modern Back-Offices?

The front office has been undergoing a digital transformation for the last two decades, forced by the demands of a digital economy, including the proliferation of web and online service(s), self-service, and digital channels such as chat and social.

Not so much the back-office.

How organizations are managed is based on executive decisions following a traditional business ethos or modern approach.

Organizations are just now starting to realize that to get the true value of their front-office investments, they need to expand their digital transformation efforts to the back-office. As one of the world’s leading management consulting firms stated:

“The benefits of improved customer experience can be fleeting unless changes to supporting back-end operations are made as well.”

  • In a recent knowledge brief from Aberdeen, they found that a noticeable difference between traditional and modern back-offices is their focus. While traditional back offices focus solely on improving operational efficiencies, the modern back-office seeks to balance cost efficiencies with customer experience. Automated workflows to assign coaching sessions for auto-fail questions
  • Insight into quality behavior down to the question level
  • Pre-built integrations into multiple 3rd party sources for external KPIs
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What Is a Traditional Back-Office?

What Type of Work Is Performed in a Traditional Back-Office?

Traditionally, back-office was the paper pusher of the organization, with hundreds of forms and documents that needed recording, classification, analysis, processing, and filing. The work was manual, tedious, time-consuming, and error-prone.

To give you an example, not too many years ago one of our executives visited the back-office of a large national bank located in a major city. He was floored to see clotheslines strung across the room with paper documents clipped to them. Employees would walk up to the clothesline and take new work as they completed the previous piece. This visual was how the manager judged workloads and whether they were going to meet their end-of-day processing goals.

Can you imagine not having a digital/automated means of tracking work?

A small improvement from the clothesline is the use of Excel spreadsheets or Access databases to capture and track work. However, managers then become little more than a reporting analyst, spending all their time updating their spreadsheets vs. managing and developing their team members.

They are also constantly in a reactive state vs. being able to proactively manage volume fluctuations. Additionally, when different managers create their own tools, there’s no way to roll these up into comprehensive reporting for the entire organization. No matter what your business is based on, if you want a firm, productive back-office team, you need a well-integrated, formal management system.

Man and woman at a table talking with paperwork

What Are the Common Roles in a Traditional Back-Office?

Roles in the back office can run the gamut from entry-level data entry clerks to specialized knowledge workers who research, analyze data, and make judgement calls on service requests such as a property damage claim.

On the low end of the scale, roles can include:

  • Data entry and transcription
  • Document scanning
  • Document/records management
  • Transaction processing

The tasks performed are very repetitive and rules-based, sometimes making it difficult for these employees to stay engaged. But technologies like Robotic Process Automation are automating many of the traditionally performed tasks. This creates opportunities to upskill these employees to perform more complex, creative tasks that are more fulfilling.

On the higher end of the skills scale, as mentioned previously, different industries have specialist roles that require advanced knowledge, creative and critical thinking, and judgement calls. These roles include, but are not limited to:

  • An underwriter in an insurance company
  • A mortgage specialist at a bank
  • A pharmacist, in a mail-order pharmacy business
  • An operations director in a business process outsourcer

Unfortunately, it is common in traditional back-offices for the highly skilled employees to also perform the more simple administrative tasks. This isn’t the best use of time for these more expensive resources.

Be sure to assess the level of productivity your employees can average with better systems to aid with tasks that can be automated.

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What Systems Are Typically Used In a Traditional Back-Office?

Customer support operations will typically have access to the company’s Customer Relationship Management (CRM) solution. This houses customer-related data such as name, address, company, products owned, and potentially activity history depending on the sophistication of the solution and integration with other data systems.

In addition, most back-offices have one or more workflow or business process management (BPM) solutions, case management, or a legacy transaction processing system. These are often custom designed to automate the process and document management of specific work types. In fact, organizations often have multiple BPM/workflow solutions across their organizations. Knowing how to transform these solutions to maintain functions without disrupting product development and business demands of a rapidly-changing landscape can be challenging. These solutions were created for different work types, functional groups, and/or gained through a merger or acquisition.

These solutions are limiting because they:

  • Can be difficult to integrate
  • Do not include/capture all of the work performed (e.g., manual tasks like sorting mail and scanning documents)
  • Focus on standard process completion of specific work types – exceptions need to be processed manually/outside the workflow system
  • Don’t provide managers with real-time data on their people performance and productivity (just process performance).

Download the whitepaper: 5 Ways Your BPM System is Failing Your Back Office

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What Are the Management Styles and Objectives of a Traditional Back-Office?

Aberdeen Group found that one of the top two challenges of both traditional and modern back offices is inconsistent management processes (the other being outdated technology – see section above). This is because back-offices are made up of multiple functions and teams which tend to operate in silos.

Managers have their own processes and way of managing and reporting on the work (management by Excel). This makes it difficult to roll up reporting, share resources, and get a true picture of the end-to-end process.

Traditional back offices are also very transaction-oriented vs. customer-oriented as noted by Aberdeen. Teams focus on just their part of the process, vs. ensuring the end deliverable to the customer meets or exceeds expectations.

Read the blog, Focus Your Back-Office on the Customer vs. the Transaction, to learn how a UK BPO is moving from a transaction to a customer-oriented work environment, improving efficiencies and the customer experience.

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What Are the Top Challenges of a Traditional Back-Office?

Unfortunately, as we mentioned, there are a lot of complex processes and a wide variety of activities performed in the back-office – many of which are still manual. These activities are performed by different teams and functions that operate as siloes, each with its own systems and way of working.

In this environment, it is difficult to know if you are delivering your services accurately, on time, and as cost efficiently as possible. Traditional back-office solutions likely have less flexibility than a modern office. There are a lot of management decisions made that are reactive vs. proactive, based on past experience and anecdotal evidence vs. real-time operational data, and are limited in scope (one team or function) vs. a holistic view of the entire back-office operations.

Visit Back-Office Operations: Balance Costs and Service, to learn more about back-office challenges.

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What is a Modern Back-Office?

What Type of Work Is Performed in a Modern Back-Office?

There is still a lot of paper-pushing and processing performed in the back-office. However, as more and more simple tasks are automated what remains is even more complex work items and exception handling. Many of these tasks involve cutting and pasting from one system to another, and extracting data from multiple systems to pre-populate forms, sending form response letters. Exceptions include work that the BPM/workflow/transaction processing systems reject due to an abnormality – perhaps a missing piece of data, a variable that doesn’t match the parameters, etc.

In addition, the lines between front-office and back-office solutions are starting to blur as consumers expect real-time updates on the status of their orders, and technology allows for more immediate and varied ways to access people and information. Previously back-office employees rarely interacted with the customer, back-office employees seeing an increase in activities that involve contacting or responding to customers directly.

Read the guest blog by Ken Landoline, Principal Analyst, OVUM, Back-Office Integration Coming to the Forefront in Customer Engagement, to learn more about the merging of contact centers and back-office operations.

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How are Roles Changing in the Modern Back-Office?

For employees, as mentioned above, the work is more complex and requires a different skill set: research and analysis, and critical and creative thinking. For example, handling the prior exceptions raised requires a greater knowledge of the processes and variables that can impact a service or product offering. The employee will need to use critical thinking to understand the variables and make an informed decision about the piece of work. Some are even referring to the back-office employees that handle these as “exceptionists.”

Managers will also need to improve their coaching and people development skills as automation will free them up from many of the time-consuming tasks related to reporting. And a new skill set may be required for managers in organizations that embrace robotic process automation. They’ll need to be able to “manage” their digital workforce (aka the robots) in addition to their human workforce.

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What Systems Do Modern Back-Offices Use?

Modern back offices continue to use CRM and BPM/workflow systems but are adding in cloud-based solutions that leverage APIs to integrate with existing systems more easily. A rip and replace of old systems is costly, time-consuming, and disruptive.

However, layering on solutions that can integrate through APIs is a workaround. RPA can also be used to capture data from these systems without actually integrating with them. Nonetheless, many consider this a temporary band-aid until organizations can update their core legacy systems.

Organizations are also embracing back-office solutions that automate not just the work performed by employees, but management processes too. Verint® Workforce Engagement™ solutions have been specifically designed to help back-office operations standardize and automate many management functions:

  • Automated Quality Management automates many of the tasks related to quality reviews
  • Operations Visualizer automates the capture of employee desktop activity and transforms this data into employee performance scorecards to help managing and improve performance
  • Operations Manager automates the capture, prioritization and allocation of work as well as tracks the work against service goals
  • Workforce Management automates time-off management and the creation of employee schedules.

And modern back offices are embracing technologies that not only do tasks for the employees and managers as listed above, but help the employee and manager by providing real-time guidance and resources:

  • Knowledge Management delivers real-time resources to the employee desktop based on context and work currently being performed
  • Process Assistant is like having a personal coach and recommends next steps based on the current work type and process.

Technology is changing at a rapid pace. Management techniques are evolving, harnessing creativity and furthering employee wellness. Modern back offices will continue to explore AI-enabled solutions as they become available.

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How Do Management Styles and Objectives Differ in a Modern Back-Office?

Managers in modern back-offices have a more collaborative approach to managing the business because they focus on the end-to-end customer journey, not just their step in the process. To support this collaboration, they typically:

  • Have a consistent reporting framework, with access to real-time activity data, so performance across functions can be equitably assessed
  • Follow a common operational methodology that standardizes many of the common management processes, such as scheduling, work allocation and tracking, performance management, etc.
  • Are able to move multi-skilled resources between teams to address peaks and valleys in work volumes.

Customer Success Story

A non-profit healthcare insurer used Operations Visualizer to create a standardized framework for managing employee productivity, resulting in a 16% improvement in employee productivity, or almost 800 hours per week. Read this healthcare insurer’s case study.

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Customer Success Story

The Customer Care Center of a large UK bank was comprised of 7 teams who managed both phone requests and processing work. Tasks ranged from customer complaints and name changes, to credit card disputes and foreign transactions, as well as handling and distributing postal requests and managing a number of customer helplines. The bank wanted all employees within the center to work as one in order to achieve consistency and improve end-to-end performance.

The bank implemented Verint Operations Manager and Operational Management Methodology to improve their capacity planning and performance reporting capabilities. All teams were required to focus on reducing standard hours of work and improving the quality and turnaround of work.

The solution provided them with real-time activity intelligence to help identify improvement opportunities. The operational management methodology helped them streamline, simplify, and achieve consistent management practices. The bank:

  • Improved performance by 20%
  • Reduced backlogs by 64%
  • Increased throughput and effectiveness levels.
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What Are the Top Challenges of a Modern Back-Office?

The biggest hurdle back-offices have to overcome is the perception that they are simply a cost center and not a potential competitive advantage. As leading analyst firm OVUM stated in their report, Keeping Customer Promises: Time for the Back-Office to Come to the Forefront, digital transformation needs to be extended to the back office because “it is the myriad of connections that go on behind the scenes, from the front to the back-office, that will deliver on the promises being made to customers.”

And many organizations are still at the early stages of transformation. In our survey of back-office managers, we found that only 14% had automated tracking of work against SLAs. That’s a very small percentage of organizations who can confidently state whether they met their turnaround time promises to their customers.

Tackle the Top 3 Challenges in Back-Office Operations

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What Are the Benefits of a Modern Back-Office?

Modern back offices outperform their peers on a number of key performance metrics:

  • 11.7X annual increase in employee productivity
  • 5.4X annual increase in quality SLAs met
  • 2.8X greater annual increase in CSAT rates
  • 15.3X average year-over-year decrease in operational costs, vs. a -1.5% for traditional back offices.

Learn more about the benefits of a modern back-office by visiting Verint Back-Office Operations: Balance Costs and Service.

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Back-Office Innovators