With the increasing squeeze on margins in financial services organizations, companies may need to look beyond their operational areas and to their back office to further reduce expenses.
If your organization is thinking of launching an initiative in the back office, here are five ways to boost your success:
1. Understand its uniqueness. “Back office” is a handy term to lump together the non-operational functions of IT, Finance, Human Resources, Actuarial, Risk Management and Law. However, each back office function is unique. The approach to each is best done with functionally experienced and highly credible facilitators.
2. Assess each area before deciding the right approach. This helps to get a better understanding of each area and its challenges. It also helps to identify vestiges of past decisions that have created misplaced operational work for the back office.
3. Benchmark each function against the industry, but use the results primarily for needs awareness and priority setting, not for making decisions or judging effectiveness. For example, some IT functions deal with multiple platforms and/or high-maintenance legacy systems, versus a single platform and more modern system. Some finance areas must contend with corporate structures that add reporting demands.
4. Use the appropriate methodologies. For example, in IT, rather than dive in to look for unnecessary costs, a good first step is to prepare a roadmap linked to the overall company strategy. In all areas, functional analysis techniques that identify customers served—enabling the computation of importance, reliability, cost and value—are essential in recommendation development.
5. Plan the implementation of recommendations. Once the recommendations have been developed and agreed to, a detailed plan on sequence, schedule, assigned responsibility and impact measures should be prepared and approved by the staff.
Well-executed initiatives in the back office will deliver bottom-line savings, plus positive effects on the service operations.
This column originally appeared at Insurance Networking News.
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