The back-office is where the numbers get crunched, the paperwork gets done, and the gears keep turning to ensure that everything in the organization runs smoothly. It plays an instrumental role in ensuring that all the nitty-gritty work is taken care of and the business continues to operate as normal.
While back-office functions are essential for business, they are often repetitive, tedious, and time-consuming, making them a prime candidate for automation. Back-office automation is a complex process, encompassing both traditional and intelligent automation technologies.
Fundamental technologies like enterprise resource planning (ERP), Customer relationship management (CRM), and human resource management system (HRMS) standardize processes so that it is easier to implement intelligent automation to back-office functions in multiple departments, from finance and payroll to human resources and IT. Read on to learn about why back-office functions are primed for automation, the technologies that drive this automation, and how back-office automation can transform an organization’s processes.
Why are back office functions primed for automation?
Automation is ideal for straightforward processes that follow a defined set of business rules and require little-to-no complex decision-making. Unlike traditional automation, intelligent automation – by virtue of its cognitive capabilities – can deal with more complex processes, although they’ll still follow a set of rules. These rules outline the conditions that trigger an automated response, i.e., “if-then” scenarios.
Moreover, to justify the cost of implementing automation – which may include software licensing fees, hiring a third party for implementation, upskilling internal teams, etc. – technology champions must internally demonstrate the business value of implementing IA. This value may be cost or FTE reduction, error reduction, time saved, etc. The business value of implementing IA is amplified by the volume of a task or process; reducing errors in a low-volume process may not be worth the investment. However, improving accuracy by even 10% in a high-volume process can yield significant business value, such as cost savings.
Many back-office processes are primed for automation because they’re repetitive, high-volume, and rules-based. Automation leaders can thus justify intelligent automation investments by providing IA’s value in the back-office, automating tasks in finance, HR, data entry, etc. Some workflows can be automated entirely with digital IA bots, while others may include a human-bot-mix, such as processes where human approvals are required.
While humans are equipped with the power of complex thought, they are susceptible to getting tired, bored, and making mistakes. A 2022 study by Tessian reported that 45% of UK and US employees experienced burnout in the past 12 months, while a recent report by Verizon indicates that 68% of data breaches involve a non-malicious human element. IA helps enterprises mitigate these challenges by automating mundane, repetitive tasks, eliminating errors, and reducing human workloads.
Which technologies are used for back-office automation?
The back-office includes foundational technologies, such as ERP, CRM, financial management, and HR management suites, that standardize processes and digitize workflows. This standardization paves the way for intelligent automation (IA), which combines artificial intelligence (AI) and robotic process automation (RPA), to automate these tasks and processes.
Intelligence automation (IA) helps simplify not only rules-based back-office functions, but its cognitive capabilities also equip it to empower human workers too. This means some automated workflows will include both humans and IA bots, a combination that’s formally known as attended automation.
Intelligent automation technologies used for back-office automation include:
• RPA bots: While these bots can’t “think” the way humans can, they perform exceptionally at mimicking human interactions and software applications. RPA bots can handle routine tasks like data entry and extraction with high accuracy and speed.
• Optical character recognition (OCR) and intelligent document processing: OCR builds on traditional data extraction by converting different types of documents like PDF files and images into easily editable and searchable data. Intelligent document processing combines OCR with machine learning and natural language processing to interpret and process data from complex documents.
• Machine learning (ML): Computers equipped with ML capabilities learn from large volumes of data and experience to continuously improve upon their initial skills and perform complex tasks that may involve recognizing patterns and making decisions. For instance, ML can analyze financial data and detect anomalies that a human might not.
• Natural language processing (NLP): Traditional computers recognize predefined instructions and explicit programming, but software equipped with NLP can understand and generate human language. It helps extract relevant information from unstructured documents, identify trends and patterns in data, and answer HR queries and requests through NLP-powered chatbots.
• Generative AI: Generative AI enables machines to move beyond simply following predefined rules to perform tasks and generate outputs independently. Generative AI models such as Generative Adversarial Networks (GANs) and language models like Generative Pretrained Transform can produce unique content and creative solutions across various domains.
5 Intelligent back office automation examples
Intelligent automation simplifies various processes in the back office. Here are five practical examples of intelligent back-office automation.
1. Intelligent Automation-Powered Recruitment
Intelligent automation can deploy AI algorithms to screen resumes and analyze candidate profiles to find the best match for the position. In addition, AI tools can also address candidate queries and schedule interviews. AI-powered chatbots can help create a positive and engaging experience for candidates by keeping them updated with their application status and answering their questions.
2. Automation of Human Resource Management
Considering that human resource management involves both tedious, repetitive processes and problem-solving or cognitive processes, intelligent automation of HR management can help significantly decrease costs, as reported by 40% of companies in a McKinsey survey. IA can automate HR through:
- Employee data management
- Empowering virtual assistants to address employee queries and provide information on company policies
- Simplification of payroll processing by collecting clock-in and clock-out data, accounting for overtime and commissions, etc.
- Management of travel and other expenses by automatically processing receipts (using OCR) and cross-checking payment requests with company policies and allowances
3. Automation of Finance Operations
According to the McKinsey Finance Transformation Report from 2019, approximately 42% of finance operations can be fully automated with 19% of operations mostly automated. In finance operations, intelligent automation can:
- Automate the accounts receivable process by processing incoming orders, generating the required documents, entering order information into the ERP software, and subsequently speeding up the collections process.
- Speed up the accounts payable process by automating invoice processing, matching purchase orders, asking for required approvals, and enhancing accuracy in data entry.
- Support financial decision-making by offering real-time insights, financial analysis, and predictions.
- Facilitate record-keeping through digitizing and organizing documents, using OCR for extracting relevant information from unstructured documents like receipts, and reducing manual errors in record-keeping.
4. Supply chain automation
Supply chain management involves numerous steps, stakeholders, and tasks including production planning and order processing, thereby generating documents like purchase orders, invoices, delivery records and customs documentation. Back-office automation software using OCR and image recognition technologies can extract data, group information and route documents to the appropriate personnel.
AI-powered predictive analytics software can also analyze supply chain data to inform strategic staff and inventory planning.
5. IT department automation
Interestingly, the IT department can be further automated, as well. For instance:
- AI-powered bots can process software requests and approvals and automatically install software.
- Monitor server performance and prepare reports.
- Identify and fix system error.
- Automate data backup and recovery.
- Process multiple transactions simultaneously.
- And improve cybersecurity by detecting malware and viruses and eliminating unauthorized logins.
5 Benefits of back-office automation
Back-office automation holistically improves business processes and:
- Reduces operational costs. Automation of back-office processes frees employees up to focus on less mundane, repetitive tasks, improving productivity. In contrast to human employees, automation software can operate round the clock, including holidays and weekends, completing a greater volume of work with fewer errors.
RPA in the back-office has been shown to reduce operational costs by 40% by simplifying processes like accounts payable and allowing employees to focus on more meaningful work. - Helps prevent employee burnout. Employees are subject to human limitations, including boredom and physical and mental exhaustion. The back office suffers from particularly high turnover, with 27% of company leaders surveyed responding that their employees resign due to the monotony of work or in pursuance of more interesting work.
McKinsey estimates that around 64% of data processing and 69% of data collection activities can feasibly be automated, which significantly reduces the burden on human employees.
Business process automation through IA could reduce employee workloads, increase productivity, and redirect their attention towards more interesting work, and resultantly, reduce employee burnout. - Increases data processing speed. Intelligent automation bots equipped with technologies like OCR, ML, and NLP process both structured and unstructured data quickly and efficiently. Unlike human employees, automation solutions do not require rest or downtime, and can work 24/7 to increase data processing speed. This reduces the problem of delays in decision-making, which, as McKinsey reports, stem from inefficient processes that slow down the agility of business processes.
- Improves accuracy. While humans possess exceptional creative thinking and problem-solving abilities, making mistakes is a fundamental part of being human. Fortunately, human errors can be eliminated in back-office processes through automation. A survey by Deloitte reports that 90% of respondents claim that using technology has improved accuracy in their organizations.
The increase in accuracy provided by back-office automation is crucial, considering that organizations lose an average of $15 million a year due to poor data quality. - Improves compliance. Back-office automation helps organizations improve their regulatory compliance by as much as 92%, according to Deloitte’s findings. Automation not only speeds up the compliance process but also reduces the likelihood of errors.
Tips for automating the back office with Intelligent Automation
If you’re considering automating back-office processes with intelligent automation, here are a few practical tips to help you get started:
- Identify processes to be automated: Identify processes and tasks that can be easily automated and would provide the most value. To do so, relevant decision-makers must consider which processes are good candidates for automation, which can be easily piloted, how to engage stakeholders in the automation process, and the takeaways from the pilot. Good candidates for automation may be processes that involve interaction between humans and computers, are time-consuming, are performed frequently, and are rules-based.
- Create an enterprise-wide strategy for automation: A survey conducted by Deloitte revealed that implementing an enterprise-wide strategy for intelligent automation translated to more substantial business benefits. Companies that build an enterprise-wide strategy reduce costs by around 24% and increase revenues by around 8%, while those without an enterprise-wide strategy reduce costs by around 14% and increase revenues by approximately 3%.
Book a consultation with M.M. for expert help in developing an enterprise-wide automation strategy tailored to your business needs. - Select the right tools: Choose automation tools that best meet your needs and goals. For instance, select RPA tools for tasks that require little independent thinking and IA-powered tools for more complex tasks. In addition, combining RPA with AI is seen to be highly impactful in terms of increasing revenue. Deloitte reports that companies combining the two technologies see an 8% increase in revenue on average, while companies that do not, see an increase of only 3% on average.
- Clearly define goals: Set ambitious but achievable automation goals. In addition to creating an overarching strategy for automation, organizations must define what they are looking to gain from this automation. Companies must clearly define their goals, evaluate how the program would help them achieve their goals, set indicators to measure progress, and think about how achieving these goals would drive business impact.
These goals should be ambitious but realistic and should be focused on meaningful impact for the business. - Inculcate ownership for the automation drive: Develop ownership among employees to take charge of the shift towards automations. Companies can do this by educating employees about how automation can add value to their work, and not replace it and training them so that they can make the best use of the automation tools.
In addition, UiPath suggests that organizations must define which persons would be responsible for deploying automation software, ensuring that the company meets its automation goals, and evaluating performance. It is also crucial to plan how the changes brought through automation would be managed. Establishing a Center of Excellence (CoE) with clear roles and responsibilities may be instrumental in helping companies manage their drive towards automation and inculcate ownership for the same. - Implement incrementally and continuously monitor progress: Begin with small-scale automation projects to gauge impact and obtain buy-in from stakeholders before moving on to more encompassing automation. Working in phases makes it easy to manage the program. As with any new upgrade or technology, it is important to monitor the process and evaluate its impacts to ensure that the goals are being met. Consistent monitoring also helps to redirect processes where required and improve faulty processes.
Summary: Intelligent Back-office Automation
By combining IA-based technologies with basic automation tools, intelligent automation can transform operations across organizations and empower employees to work on more strategic and engaging tasks. The back-office is specifically primed for automation as it encompasses a host of operations that are time-consuming and repetitive, and automating them would result in cost reduction, better employee engagement, and greater accuracy.
While the benefits of back-office automation are quite intuitive, it is important that businesses are careful in beginning their automation journey. Selecting the processes to be automated, choosing the right tools, getting employees on-board, and continuously improving upon processes is crucial to reaping the full benefits of back-office automation.
In embracing the ever-evolving dynamics of automation technologies, businesses can continue to optimize their back-office processes, and consequently, redefine the way they do business.
