The world is now ‘on demand’, but why are so many back offices still living in the past?

Blog photo back officefinalll

This week we have a guest blog from Mark Robinson, who has founded and sold several consultancies. His latest venture is professional services automation specialist, Kimble Applications, of which he is a co-founder.

Twenty or 30 years ago we organized our lives around how the world worked. We worked 9-5 because we had to be in the office to get work done, we sat down to watch a certain TV show at a certain time because that was the only chance we’d have to view it and we picked up a paper in the morning to get our news fix as that’s how we kept up with current events. That already seems like a long time ago now doesn’t it? These days we have flexible working, we can catch up on TV shows when and where it suits us and we can get a constant feed of news through our mobile phones. This has all been enabled through technology. But one area which has yet to embrace this new way of working is the back office.

Today, the back office is much the same as it’s been for decades. Invoicing is done at month end, as are payment runs and expenses, which are often physically uploaded, checked, approved and forwarded to finance. Resource planning is based on imperfect forecasting, often using a range of spreadsheets and a finger in the wind approach. Timesheets can take weeks to verify, leaving consultancy owners with little idea of how they are performing against budgets. This all adds up to challenges for any management team who wants to know how the business is doing at that exact point in time, as they have no idea how accurate or up to date the information they are using is. Imagine how much more quickly you could grow your consultancy if you had on demand information that showed you how the business was doing right then, allowing you to fix any problems much earlier and make decisions faster that improve your company performance.

That the back office is so behind is even more surprising given that we now accept that front offices need to function ‘on demand’. We know consultancies have to be responsive to clients’ requests and needs, so why are we leaving the back office wallowing in the past when they should be joined up with the front office and just as responsive?

The fact is that we now have the technology to make the back office on demand, which can bring huge benefits to consultancies. Rather than running a variety of untrustworthy spreadsheets or old fashioned packages, the correctly designed cloud application means that we can have a single, unifying system based around the processes the cloud enables into which we enter information as it happens and access from anywhere. This destroys the silos that previously existed between departments. From senior management, sales people, project managers, consultants and associates, every time anyone changed anything, the overall performance reporting would be updated across the system in real-time, so that whenever you looked at the information on the system, you know it’s completely accurate and a snapshot of where the business is at that time.

A client (or you, for that matter) wants to know what the status of a project is, how much time and money has been spent on it? They don’t have to wait until the next reporting run: you can tell them instantly. You’d be able to enter and approve expenses and timesheets from anywhere, at any time, and from any device. You’d know what capacity and skillsets you have on the bench at any given moment, and for how long, allowing better resource planning and pursuit of new business.

And alongside all of this, everyone in the business would have the same level or clarity meaning every employee understands how their actions can impact the business, empowering them to make a real difference to the growth of the consultancy.

And professional services automation (PSA) tools make a huge difference to the bottom line too. Invoices can be produced more quickly and are error-free, meaning they get paid more quickly, improving the company’s cashflow. Because much of the work is now automated, this frees up the back office to concentrate on more added-value work, meaning companies can grow without having to increase the headcount of non-revenue generating staff. Service Performance Insight is a global research, consulting and training organization dedicated to helping professional service organizations make quantum improvements in productivity and profit. Its last benchmark found that firms using PSA software saw more than a 6% increase in their billable resource utilization. On average, firms using PSA earned an extra $11,000 of revenue per consultant than those that have yet to adopt it and enjoy nearly 75% stronger profit margins as measured by EBITDA.

This technology is with us now. It’s time for consultancies to move their back offices from the past and into the on demand present. Just because it’s the way we’ve always done it, it doesn’t mean it’s the way we should continue to work.

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