The Scalable Back Office: Low Overhead, High Performance
Updated: Nov 19, 2020
We’ve moved from the mechanical age to the digital age. A smartphone does so much more than a classic wristwatch, but the productivity difference between a disciplined user and a serial social media surfer is substantial. Similarly, cloud technology has given us back office tools capable of so much more, but how the tools are used is what will determine who succeeds.
With all of this power at hand, firms can gain a tremendous return on an investment in a scalable back office, with low capital costs. The results are realized in the form of scaling on lower overhead, improved processes across the board, or cultural outcomes associated with better employee experience. The opportunity is particularly attractive for companies entering a period of significant growth.
This piece will look at three critical factors that can position an expanding firm’s back office for scalable success. First, organizations can build an information supply chain to move data throughout the firm that results in productivity gains. Second, organizations must be disciplined about matching the right skills to the required roles, recognizing that the required roles have changed. Finally, organizations have to build a culture that balances bottom-up input with top-down decision authority.
Information Supply Chain
Back offices are typically either wedged into a single Enterprise Resource Planning (ERP) system or run on accounting software and spreadsheets. Online products are busting these models, enabling firms to quickly deliver more convenient services to employees (and customers!) without capital investment. For example, it costs less than $10/month to move an employee’s expense tracking process to Expensify, which will integrate seamlessly with most corporate credit cards, automatically catalog photographed receipts, automatically submit reports, and electronically reimburse the user. It also integrates with most accounting software and can be queried by developers to integrate with a firm’s other systems.
These integrations lead to more automation and better information. More automation means that employees spend less time performing repetitive tasks (building spreadsheets), and more time making decisions (interpreting results). Better information means that employees get better outcomes when they make decisions. For example, a salesperson can effectively prioritize their time if they know how many qualified leads it takes today to achieve their revenue goal in three months. That answer should automatically be in the palm of their hand via a tool like Microsoft Power BI’s phone app.
Right People, Right Roles
Pursuing this strategy requires organizations to think differently about staffing. Using a vendor for IT services like networking or help desk makes more sense; those areas are becoming more standardized services. Conversely, building and maintaining institutional knowledge around one’s data and integrations has become critical, suggesting that firms should consider their own staff in software development and analytics.
Beyond tech roles, adding systems-oriented skills across the board can help motivated employees achieve their productivity goals, improving outcomes. Firms should invest across the board in skill set development in areas like advanced Excel, business intelligence, and systems administration (e.g., users who can handle day-to-day setup tweaks to the HRIS system). These will empower people to automate, and keep things from slowing down when turnover happens.
Structured Management, Freedom to Fail
While cloud technology has touched off a revolution in how people work, culture remains the bedrock. Getting it right, however, is not easy. After all, if everybody did it right, then nobody would have an advantage.
I have worked in both disciplined and ad hoc cultures, and the differences in encouraging self-starting behavior are stark. In my view, disciplined culture is about adherence to a framework, within which people have freedom.
This starts with the firm’s cultural values, which should be lived and demonstrated. Employees should always have goals, set to a cycle, and they should be SMART. Not only that, they should be at the intersection of the employee’s skills, their passions, and what makes economic sense for the business.
Within that framework, however, employees should be empowered to chart their own course towards the assigned point B. They should have a supportive forum to report progress (or lack thereof), identify issues, and recommend resolutions, which fosters ownership.
Finally, the framework must be preserved. If your people know where they’re free to be creative, then they will do so. But if issues are ignored, check-ins are skipped, goals aren’t set on time or tracked, then people will revert to waiting for orders.
Cloud technologies have fundamentally altered how back offices should be structured, and businesses must adapt to gain an advantage over competitors, or at least keep up. For firms with growth plans, this is great news: you can scale off a much smaller capital investment and smaller staff than before. Doing so, however, requires thinking differently about how – and in whom - resources should be invested, while staying true to timeless cultural concepts.