Mark McDonald

Every company has tension between its front and back offices.  You can describe that tension as the difference between what customer’s want/expect and what the company is able to deliver economically.  Filling the gap between the two is a collection of hard working people, exceptions, accommodations, deals and the like that make things work.

We have become so accustom to this tension that we almost accept it as the course of normal business.  I was having a discussion with an IT executive about the challenges their IT organization was facing.  During our conversation she made an interesting statement.

“What the business is talking about is all well and fine and I know that they are looking out for the customer, but they have to understand that I am looking out for my team and what we can do.  The business has to compromise to ask for what we can and are comfortable delivering.  After all, I have to keep my people happy and the business is just pushing too much.  ”

I could not believe what I heard so I asked for clarification.  “Are the things that the business is asking for the right things?”  The response was, “yes we have had great success, but …” and then she recited the same message.

The back office was telling the front office to back off.

The encounter got me thinking about how could such a disconnect happen.  After all if doing the things the business is asking for is creating value, why would not the back office recognize and respond to participate in value creation.

Why does the back office not really understand the front office?

Here are some thoughts on the differences between front and back office operations can be attributed to the following causes:

• Timing – front office activities respond almost by the minute to changing customer wants and competitive factors where as the back office is optimized for what they do now and making change takes time.
• Speed is related to time but not the same.  Speed from the perspective of the front office is set by the customer or market minus the cost of internal controls and the burden of aministrivia.  When the front office wants to go faster it conveniently ‘forgets’ some of these controls in the name of being market responsive.  Speed in the back office is set by the workflow its volumes and the resources assigned to the workflow.  When the back office wants to go faster it creates exceptions and ‘expedites’ processes through ad hoc workflows that drive complexity, cost and become embedded in the company structure.
• Persistence – the half-life of the front line executive is short compared to the longevity of executives running the back office.  The relative persistence of back office staff creates natural reticence for back office responsiveness.  Its just to easy to sit tight and wait, either for the front office to do it themselves, get frustrated and give up, or fail to produce results leading to termininating front office leaders.
• Economics – This is the difference between the top and bottom line.  The front office is about generating the top line, the back office about protecting the bottom line.  This makes one see up side and the other concentrate on cost.
• Scale – Scale in the front office is determined by the market opportunity and how you go about getting it.  Scale is measured in terms of revenue or customers per front office worker.
• Unit of management – the front office is concerned with customers or products often expressed in terms of revenue. More revenue is a good thing and requires the company to tailor itself to the customer needs.  Front office tailoring is seen as back office variance, cost and complexity as the back office is concerned with processes, transactions and the like that are generated by customers.

Given this list, and the other differences that have popped into our mind, it is remarkable that the front office and back office even talk to each other much less work together.  That is management’s job and the focus of tools like meetings, task forces, projects, standards, etc.  These semi-formal devices seek to build connections and shared experiences between the front and the back.

IT often sites right in the middle between the two, making it the target of both the front and back and the means for bringing the enterprise together.  That is a role CIOs and IT executives feel but often do not formerly recognize nor plan for.  Being a bridge requires an anchor at both ends, and a span with the flexibility and capacity to connect the ends.

When IT sees itself as exclusively a back office function, the bridge is incomplete and unfinished.  IT becomes a structural impediment to business change and customer service in these cases as they restrict themselves to what they know.  That was the position of the CIO mentioned at the start of this post.

CIOs can recognize their front office relevance by looking at the core rational for IT.  Namely speed and scale and adjusting their practices accordingly.  Those CIOs are concentrating on reducing cycle times within IT to deliver new solutions and services.  They are driving IT to be measured by business outcome and results rather than resources.  They recognize that there are two sides to the enterprise – front and back and they sit on the edge of both.

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Category: Strategic planning Strategy Technology     Tags: Business, Business Management, IT and Business

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