Consider a typical accounting back-office scenario: a company wants to increase efficiency by reducing the number of exceptions. Finding out what is causing the exceptions becomes a long, arduous task. Eventually, the whole project is put on the back burner.
The question then arises: why is making a few changes to a back office process or managing exceptions so difficult?
In a typical back office, the customer is probably running a number of systems and applications, so the environment is app-centric, not process-centric. This makes change difficult. In an in-house environment, holding payments for a day to manage cash flow merely requires a call to a person in accounts payable. In an outsourced environment, things work very differently. That inability to walk down to the accounting department and "see" what is going on can cause concern for some customers, because it is such a change from how they are used to operating.
To effectively manage exceptions and increase efficiency and control, clients need an integrated way to visualize the required data at one time, in one place. Without that transparency, that visibility into everything that's happening with a specific customer or supplier, they cannot clearly see what is causing the exceptions.
For example, in a traditional outsourced back office, if a company wanted to gain efficiencies by reducing the number of exceptions, there was really no way to quickly identify the vendors who were consistently causing these exceptions. That made it difficult to find the root cause and determine what action was needed. Did the company need to educate the vendor to ensure invoices were received on time? Or did it need to educate the processor to ensure all data was properly validated? This seemingly simple analysis was complicated to complete.
The smartest way to mitigate this issue is to put process intelligence on top of existing back office systems — so the technology augments the customer's existing core systems, rather than altering them. If done correctly, an independent, standalone add-on technology can provide back office visibility and enable efficient business process management without system reconfiguration. By adding a standalone technology 'layer', companies can gain the agility to make process changes as business needs demand. For example, if a company wanted to increase its early payment discount spread, it could view the vendors, negotiate the spread and then add a code into the add-on technology layer to make sure the allocation is done by the due date.
Today, companies are relying on their outsourcing partners to find innovative ways to help them solve business problems and gain a competitive advantage. Service providers should create the types of innovation that eliminate their customers' pain and contribute to their ongoing success.
Read more about how to bring more visibility into back-office operations in the article, 'Adding Visibility and Efficiency to the Back Office.'