The terms “front office” and “back office” refer to distinct business processes within a company, based on the physical location where businesses have traditionally performed these functions. Front office functions, for example, refer to front-facing tasks or interactions, whereas back office functions had more with supporting work that occurred behind the scenes.
However, these processes are less clearly defined in modern businesses, where functions often have little to do with location.
As a result, staff members may experience considerable confusion over front- and back office roles, making it difficult to know exactly where to prioritize improvements to operational efficiency.
This guide identifies the differences between these processes and discusses the synergies between them. It also explores the collaboration, functions, roles, and challenges of front- and back office processes in driving operational success.
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Front office: the face of the organization
The front office is the face of the organization, so it has primary responsibility for dealing with current and prospective clients. It handles marketing and sales functions like order processing.
In addition, front office staff perform post-sales customer service by ensuring customers are satisfied with their purchase. These functions mean that the front office is directly responsible for the company’s revenue growth.
Major roles in the front office are thus customer-facing and may be summarized as follows:
- Marketing, advertising, and PR
- Customer service
Importance of the front office
Marketing and sales departments support the front office through a variety of processes, such as promotional campaigns that drive customer research. These activities help the organization learn the customers’ needs, while also advertising or enabling customer engagement and brand enforcement.
Front office processes also include customer service, which includes following up with customers to resolve issues after a sale or service. Technical support is a critical front office function because it directly affects the customer and the organization’s revenue stream, even though it often takes place in a physical back office.
Back office: the backbone of operations
The back office forms the backbone of an organization’s operations. In contrast to the front office, the back office consists of business processes that don’t directly generate revenue for the organization.
Those that work on back office processes don’t typically interact with customers, although they do perform administrative functions essential for the organization’s daily operations. These operational areas generally include the following:
- Finance and accounting
- Regulatory compliance
- Payroll and benefits administration
Each of these general back office departments and processes include specific functions. For example, IT tasks include computer system design, database maintenance, financial maintenance, and the tech side of onboarding new hires, all of which are essential for sustaining a business.
Importance of the back office
Many organizations place a higher priority on front office processes since they generate revenue, but this benefit wouldn’t be possible without back office procedures. As a result, back office roles and responsibilities shouldn’t take a back seat to those in the front office.
Their importance is particularly apparent in online businesses, where the IT department provides front offices with vital support. These processes improve business operations by supporting planning and monitoring.
The capabilities that customers see are often the result of data collection, strategic and operational thinking on the back end. Back office responsibilities and roles provide an essential foundation for the front office to build on.
They require a dedicated team to manage these mission-critical business processes that take place behind the scenes in most businesses, providing the front office with the support they need to continue creating new revenue streams.
Back office teams thus play a crucial role in developing and performing processes that help their organizations succeed.
Front office vs. back office: key differences
Modern businesses often blur the lines between front and back office functions, largely due to technological advances. Below is a table summarizing some of the key differences between these two operational areas. Keep reading for a more in-depth overview.
|Front office||Back office|
|Focus and objectives||Customer-centric approach||Process-oriented approach|
|Types of business processes||Core processes||Support and long-tail|
|Types of interactions||External (customers or clients)||Internal (employees, suppliers, vendors, or approvers)|
|Performance metrics and evaluation||Customer satisfaction metrics||Efficiency metrics|
Focus and objectives
The front office focuses on customers, while the back office focuses on processes. While their focus is different, they both help ensure an organization’s overall success. However, front office employees generally have the immediate objective of increasing the company’s revenue, including acquiring new customers and generating sales with existing ones.
On the other hand, back office staff members seek to improve the bottom line by finding new ways to cut capital expenses and operating costs. For example, they may study financial documents to identify sources of excess capital spending, providing opportunities for making recommendations on spending reduction.
Back office staff can also reduce operating expenses by performing preventative maintenance. Consider the case of back office employees who work in an IT department. Maintaining computer systems is a major part of their jobs, which minimizes the risk of major repairs that can eat up an operating budget. Implementing new systems is another way that back office staff can reduce operating expenses.
Types of business processes
Core processes create value for customers and generate revenue. These types of processes are known to be structured and clearly defined and easily managed and automated.
Common core business processes include:
- Customer Support
- Product development
These processes would be considered front office.
Support processes enable the fulfillment of core processes. Similar to core processes, these types of processes are known to be structured and clearly defined and easily managed and automated.
Common support processes include:
- HR processes
- Finance processes
- IT processes
- Request management
- Contract review
- Vendor approval
These processes would be considered back office.
Long-tail processes are typically those unstructured ad hoc or make-shift processes deployed to fill gaps in core and support processes. While these processes exist throughout the organization and complement and enable the core and support processes, they aren’t easily automated and can create management issues.
Common long-tail processes include:
- Manual approval workflows
- New hire requests
- Contractor management
- Budget requests for special projects
- Fleet management
These processes would also be considered back office.
Types of interactions
The type of interactions for front and back office staff is a significant difference between these two areas. In general, front office staff engage in interactions with entities external to the organization, while the back office primarily engages with entities within the company.
For example, the front office handles direct communications with clients, so both prospective and existing clients are typically very familiar with these staff members. In comparison, back office team members normally don’t have any contact with clients, since they work behind the scenes.
The marketing department also works with customers in after-sales services, primarily for the purposes of maintaining customer relations and generating future sales. The interactions of the back office team are with the company’s other departments, especially accounting, administration, finance, and IT departments.
Performance metrics and evaluation
The front and back offices also use different metrics to evaluate performance. The front office metrics focus on customer satisfaction and back office metrics that deal with efficiency.
Customer satisfaction is the degree to which the front office meets or exceeds customer expectations. These metrics measure the value and impact of customer attributes such as loyalty, referrals and retention. Measuring customer satisfaction requires an organization to collect feedback from its customers, which can take the form of surveys, ratings, reviews, and testimonials.
Specific metrics useful for evaluating front office performance and quantifying customer satisfaction include:
- Customer effort score (CES),
- Customer satisfaction score (CSAT), and
- Net promoter score (NPS).
High scores on these metrics also indicate the back office is delivering quality services in a timely manner, which provides value for customers.
Metrics for back office performance include cost per transaction (CPT), which is the average cost of a task or process. It measures operational efficiency, which affects an organization’s financial bottom line.
Calculating CPT requires a company to determine the total cost of back office operations, including equipment, software, operating overhead and outsourcing costs.
Divide this total cost by the total number of processed transactions to obtain the CPT for a particular time frame. A low CPT indicates high back office performance in optimizing processes, minimizing waste and leveraging available technology.
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