Protect the confidentiality of business information
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This will prevent information leakage and distraction of employees from their main tasks. It is important to allocate a certain group of employees to a separate office, which will ensure their confidentiality and protect them from unwanted interference.
Increase Your Profits by 10X: 5 Key Metrics You Must Track
Alexander Kuleshov
Alexander Kuleshov
General Director of Sales Generator LLC
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Back Office Creation Stages
A large number of companies in Russia from various sectors of the economy, from mining and telecommunications to retail and tourism, decide to centralize their office processes. For example, the organizations "Norilsk Nickel Joint-Stock Company", "Sibur Centralized Office Services", "NMLK Corporate Solutions Center", "MTS Joint-Stock Company" employ several thousand people.
Back Office Creation Stages
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Such centralized structures may have different names, but their essence is the same - these are specialized departments that unite all the auxiliary functions of the enterprise: accounting, procurement, logistics, personnel management, IT infrastructure, marketing. All these aspects together constitute the functionality of office work.
Centralizing these capabilities brings three significant benefits to businesses:
significant reduction (up to 30%) in the costs of performing support functions;
improving back office productivity;
an effective mechanism for monitoring its operation.
It is taken into account that the larger the organization, the more benefit it will derive from centralizing support functions. However, based on our experience in creating and implementing the GANDIVA management system for the back office, it can be stated that visible results from merging service centers can be achieved even by medium and small enterprises.
What needs to be done for this?
Step 1: Analyze the need for change
First, identify all the supporting functions that are performed at the company and are necessary to ensure its core business. Each company will have its own list. However, most often it includes:
organization of accounting and tax services, control over finances;
conducting procurement and supply;
asset and real estate management;
development and support of IT structures;
personnel management and HR activities;
marketing and advertising strategies;
Providing customer support and service.
It is important to look closely at the dynamics of the costs of supporting these core functions. Rising costs of supporting the back office may be a signal that a change is needed. If costs are increasing faster than the overall volume of business, then it is time to change.
A situation where revenue is growing but profits are not increasing indicates inefficient use of enterprise resources. This is especially true for companies that are expanding their branch network or launching new business areas.
The next criterion is whether the branches have their own back offices or divisions. This may serve as an incentive to review the overall structure of the company, especially if each back office has unique business processes (e.g. recruiting, IT infrastructure administration) that differ from similar procedures in other parts of the organization.
Analyze the need for change
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One important indicator is an increase in dissatisfaction among key employees with the quality or speed of tasks performed by back office staff. It is necessary to analyze the number of complaints about the work of employees engaged in auxiliary functions, even if they are not always justified. If you notice an increase in this indicator, this indicates the need to make changes. Employees engaged in direct company responsibilities must be confident in the deadlines for completing their tasks and in the quality of the work of back office staff.
In addition, the general business need for increased efficiency in resource use and improved manageability also points to the need for change. If necessary, the company is ready to create a centralized back office, even partially. Perhaps there is no need to allocate it into a separate legal entity if the business is small. In this case, combining support functions in an existing division will be sufficient. The economic logic of these changes will remain.
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Step 2: Standardize Business Processes
When working on a centralized back office, it is necessary to review all business processes and achieve their unity. For example, if the maintenance of the IT infrastructure is different in the branches of the company, when creating a common IT service, it is necessary to make the algorithms uniform.
Standardization provides an opportunity to get rid of unnecessary operations in business and optimize those that are really important. This will significantly reduce the costs of administrative activities and improve the quality of their implementation. In addition, well-organized business processes will be easier to concentrate and automate. However, to conduct an audit of all operations, it may be necessary to involve a qualified specialist.