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ESSENTIALS TO
MODERNIZE YOURBACK OFFICEMay 2019
Omer Minkara
Vice President & Principal Analyst, Contact Center &Customer Experience Management

This document highlights the building blocks
companies must establish to build and maintain amodern back-office organization that achieves
operational efficiency and creates satisfied customers.
Traditional Back Offices versus the Modern Back Office
The back office (see sidebar) is charged with completing customer order orservice requests accurately and on time to minimize operational costs andensure business excellence. In fact, the number one goal for all back-officeorganizations is improving operational efficiency, according to a survey
Aberdeen conducted between April and May of 2019 of 354 operations leadersacross companies of all sizes and industries across the world.
However, the findings showed that unlike traditional back-office organizations,firms that modernize their back-office activities (see sidebar) do not blindly
focus on decreasing cost. They aim to balance efficiency with customercentricity to drive desired customer experience (CX) improvements. For
example, modern back offices are 7.5x more likely to cite providing customers
with greater transparency into back-office activities as a top objective (45% vs.
6%). This transparency is achieved by providing customers and managers withmore accurate and timely insight into relevant activities such as claims status.
But both modern and traditional back-office organizations face many obstacles
when pursuing these objectives. Survey findings reveal the top challenges
impacting all back-office activities are:•Inconsistent management processes•Outdated technology

Back offices have traditionally managed activities in an ad-hoc manner,
meaning different tools, processes, and skill levels among managers. This canresult in discrepancies, negatively impacting efficiency and leading toinconsistent customer experiences. Managers often don’t have full visibility into
the customer outcomes, seeing only their portion of the task or process.

Definitions
For the purposes of thisresearch, Aberdeen makes
the following definitions:
Back office: The traditionallynon-customer-facing (orbehind-the-scenes)
operations that executecustomer requests, such asorder processing,underwriting, claims, andaccount maintenance.
Modern back office:Companies that don’t justfocus on monitoring andmanaging back-officeefficiency but aim to balance
efficiency with customercentricity to drive desiredcustomer experience (CX)
improvements. In doing so,these organizations use
digital tools and AI
capabilities such as
automation to reduce manual
work and align all businessdepartments to deliver
seamless customer
experiences.

Back-office leaders also cited the absence of technology upgrade investments
and legacy systems that don’t easily integrate with newer technologies orexisting business processes as a major challenge. Together, these indicatethat back-office leaders lack the right capabilities needed to drive efficiency andcustomer satisfaction.

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The Modern Back Office
How do forward-thinking back-office leaders differentiate themselves from theirtraditional counterparts to achieve success? To answer this question, we
looked at the widely adopted capabilities present in many modern back-officeorganizations. These capabilities fall into three categories:

The ROI of Modernizing
the Back Office
Compared to their traditionalcounterparts, modern backoffice organizations enjoy:•Optimizing employee performance•Real-time management of back-office activities•Leveraging automation to improve speed and accuracy- 11.7x annual increase inemployee productivity

Optimizing Employee Performance
Activities in this category relate to back-office leaders monitoring and managing
employee performance to drive efficiency and transparency into activity status,
such as by monitoring the number of claims reviewed. For example, Figure 1
shows that modern back-office organizations are 43% more likely to measureemployee performance against established standards (70% vs. 49%). Thisrequires companies to determine, often more through art than science, what
the standard should be. An example of this is determining the reasonableaccepted average time it should take complete a task, such as reviewing a loan
application. Modern back-office organizations track employee performanceagainst these standards, and if employees take longer than average time tocomplete their tasks, their managers, equipped with visibility into theirperformance, can provide them with additional coaching and training.

- 5.4x annual increase in
number of quality servicelevel agreements (SLAs) met- 2.8x greater annual increasein customer satisfaction rates
They also report an average
15.3% year-over-year
decrease in operational costs,
compared to 1.9% increaseby traditional back-officeorganizations.

Figure 1: Key Activities to Maximize Employee Performance

90%

90%

85%

Modern Back-Office Organizations
Traditional Back-Office Organizations
80%
70%

70%

50%

50%

52%

49%

46%

30%
Conduct real-time
Measure and manage Track back-office activities
employee productivity against end-to-end service reporting of back-officeactivities
goals
Percent of respondents, n=354
Source: Aberdeen, May 2019

Measure back-office
employee performanceagainst established timestandards

Forward-thinking back-office leaders are also 63% more likely to track theiractivity results against end-to-end service goals (85% vs. 52%). They do sothrough tools such as dashboards, desktop analytics, throughput andproductivity reporting, and work allocation tools to view results against service
objectives, such as processing a certain number of insurance claims each day.
Visibility towards meeting service goals allows back-office leaders to3

proactively take corrective action if the company faces the risk of not meetingits service goals.
Figure 1 also shows that modern back-office organizations are 80% more likely
to measure and manage employee productivity (90% vs. 50%). Measuring
employee productivity requires visibility into employee performance inaccurately and efficiently completing tasks. This visibility is gained by using
desktop analytics to monitor employee desktop to observe how long it takes
employees to complete tasks. Data shows that modern back-officeorganizations are 48% more likely to use desktop analytics (40% vs. 27%).

Real-time Management of Back-Office Activities and Processes
While historical activity results are helpful for back-office leaders to diagnose
operational issues including poor employee productivity or delays in taskcompletion, real-time visibility helps uncover issues as they happen. This helps
firms address back-office inefficiencies resulting in unnecessary costs andunhappy customers. Figure 1 shows that modern back-office organizations are
74% more likely to conduct real-time reporting of back-office activities andleverage that data to proactively manage their operations to ensure more timely
visibility into their performance (80% vs. 46%).
The second set of activities widely used by modern back-office organizations
are related to optimizing operations processes such as claims processing andloan origination. To optimize processes, companies must establish visibility into
operations including current process flow and time-to-completion. These
insights enable mapping key processes to document when and where theseprocesses begin, how they evolve, and how each back-office employee
influences the ability to complete them in an accurate and timely manner.
Figure 2 shows that modern back-office organizations are 80% more likely tomap end-to-end flow (90% vs. 50%) of their most valued or high-riskprocesses, and forward-thinking back-office leaders are 25% more likely to use
both process and workflow management tools to execute this activity (40% vs.
32%).

Don’t stop at analyzing
historical activity results
to spot and address
inefficiencies. Establish
real-time visibility toproactively manage yourback-office activities toachieve desired results.

Modern back-officeorganizations are 714%
more likely to decrease
operations / back-officecosts than theirtraditional counterparts.

4Figure 2: Continuously Optimize Back-Office Processes
Modern Back-Office Organizations
90%

90%

Traditional Back-Office Organizations
85%

85%

70%
50%

50%
42%
31%

30%
10%
Map end-to-end process paths Receive automated alerts forto identify bottlenecks and work at risk of missing service
variations
goals

Dynamically scheduleresources to align withvolumes / demand

Percent of respondents, n=354
Source: Aberdeen, May 2019

Real-time mapping and management of key processes is also instrumental forfirms to give customers visibility into back-office activity status – the second
most common goal driving back-office programs. Firms can accomplish thisgoal by tracking back-office activities and analyzing whether customer requests
have reached a certain point in the process, such as claims payment. This
provides customers with more transparency into the back office and its
activities.
Process optimization also helps back-office organizations uncover efficiency
issues, helping back-office leaders minimize delays in task completion, reduceunnecessary costs such as employee overtime, and reduce customer churn by
alleviating client frustration. As an example, delays in handling an auto
insurance claim are likely to frustrate the claimant / client, and would increase
the risk of the customer not renewing their auto insurance policy.
Figure 2 shows that modern back-office leaders are twice as likely to haveprocesses in place that trigger automated alerts when the company is at risk of
missing service goals such as delays in claims handling (85% vs. 42%). Backoffice leaders can use these alerts to take preventive action to mitigate issues
impacting their ability to meet service goals.

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A common reason why back-office organizations fall behind in attempts to meet
service goals is unexpected changes in activity volume. One of the many ways
this challenge impacts firms is exemplified by insurance firms facing
unexpected increases in insurance claims after a natural disaster, such as a
hurricane or earthquake. It’s vital that organizations adjust their activities whenvolume fluctuates to be available to address the clientele and their concerns
and needs.
Figure 2 shows that organizations with a modern back-office are 2.7x more
likely to align employee forecasting and scheduling activities with task volume(85% vs. 31%). Data also shows that these firms are 19% more likely to use
predictive analytics to help anticipate employee needs using changes in activity
volume (25% vs. 21%).

Modern back-officeleaders are 2.1x more
likely than theirtraditional counterparts
to incorporate
automation within theiractivities.

Leveraging Automation to Improve Speed and Accuracy
Once companies optimize their processes and empower employees with theright tools and information, they should make the next priority driving increased
efficiency in executing tasks and processes. This helps back-office leaders
attain their number one goal of improving efficiency while also reducing costs.
Modern back-offices look at automating certain management processes suchas:•

Employee performance monitoring and measurement•

Forecasting, planning, and scheduling employees•

Allocating and tracking work against service goals

These organizations also look at leveraging technology to automate thesimpler, rules-based tasks employees perform. In fact, Figure 3 shows that
almost all modern back-office organizations automate processes with the goalof reducing human errors.

Figure 3: Improve Your Back-Office Performance with Automation
100%

95%

90%

Modern Back-Office Organizations
Traditional Back-Office Organizations

80%
60%

45%

40%

52%

55%
31%

20%

Automate processes toreduce the likelihood ofhuman error

Automate the allocation and Leverage robotic automation
tracking of work
to streamline work

Percent of respondents, n=354
Source: Aberdeen, May 20196It’s important to note that not every process can be automated. For example,
the review of a complicated medical insurance claim is better handled by atrained and knowledgeable human, but parts of this process — such ascollecting details about the claim or accessing coverage details — can becompleted through automation.
Figure 3 shows that modern back-office organizations are 81% more likely to
use robotic process automation (RPA) capability (55% vs. 31%). This refers tousing software programmed to repeatedly execute rules-based tasks andactivities with consistency and accuracy resulting in efficiency gains andimprovement in employee productivity. Those are among the reasons why
modern back-office organizations enjoy a decrease in operational costs while
creating happier customers.

Key Takeaways
The pursuit of efficiency and cost reduction have traditionally been top-of-mindfor back-office leaders. However, as companies look to differentiate themselvesfrom competitors, they increasingly rely on delivering superior customer
experiences across all departments, including the back office. Forward-thinking
back-office leaders understand their role in delivering a great customer
experience. They are far more likely to implement the building blocks allowing
them to achieve greater efficiency and economies of scale while providing
customers with improved visibility into back-office activities and faster, moreaccurate service. Additionally, decreasing operational costs remains thenumber one goal driving traditional back-office organizations. Ironically, while
traditionalists observe 1.9% increase in their costs, their peers who cite
efficiency and customer-centricity as their top objectives enjoy a 15.3% annual
decrease in their operating costs.

Modern back-officeorganizations prioritizebalancing efficiency andcustomer-centricity as
their top goal.
In comparison, traditional
back-office organizations
cite cost reduction as
their number one
objective.

Transforming a traditional back-office organization into a modern one can becomplicated. The good news is that you don’t need to test multiple strategies,
wait for their results, and improvise to discover what works. Following the leadof modern back-office organizations by replicating the building blocks they
establish in their businesses will help maximize the likelihood of achieving
similar results. These building blocks include:•Optimizing employee performance•Real-time management of back-office activities and processes•

Leveraging automation to improve speed and accuracy

We recommend carefully reviewing each building block and the tasks andtechnologies your organization excels at and lacks in its back-office activities.
Once you determine these, focus on those you can incorporate into youractivities with existing human and financial resources to get immediate benefits
and supercharge your organization’s modernization process.

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About Aberdeen Group
Since 1988, Aberdeen Group has published research that helps businesses
worldwide to improve their performance. Our analysts derive fact-based,
vendor-neutral insights from a proprietary analytical framework, which identifies
Best-in-Class organizations from primary research conducted with industry
practitioners. The resulting research content is used by hundreds of thousandsof business professionals to drive smarter decision-making and improvebusiness strategies. Aberdeen Group is headquartered in Waltham,
Massachusetts, USA.
This document is the result of primary research performed by Aberdeen Groupand represents the best analysis available at the time of publication. Unlessotherwise noted, the entire contents of this publication are copyrighted byAberdeen Group and may not be reproduced, distributed, archived, ortransmitted in any form or by any means without prior written consent byAberdeen Group.

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