Digital Technology Helps Companies Dramatically Improve Back-Office Functions

Robots are moving from blue-collar jobs on the manufacturing line to white-collar work and are improving functions like HR, IT, finance, procurement, and legal. Many companies have already combined these functions into a centralized hub, called a shared-service organization (SSO).

Now, new technologies—including artificial intelligence and cognitive computing—are helping SSOs work smarter and faster, with cost reductions of 20 percent to 80 percent, according to a new report by The Boston Consulting Group (BCG). The report, titled How Digital Can Turbocharge Shared Services, is being released today.

To capitalize on the new digital tools, however, companies must put the right foundation in place. “Many companies are still at the starting line in terms of building an SSO that can fully tap into technology,” says Andrew Toma, a senior partner at BCG and coauthor of the report. “They still have multiple processes and an ad hoc approach that limits their ability to digitize the critical work that SSOs do.”

Rajiv Gupta, partner and Head, Technology Advantage Practice for BCG India, added: “In this latest BCG survey, we found that companies with effective shared-service organisations (SSOs) are better positioned to grow profitably. SSO’s have traditionally used technology to digitise processes. Given the high values at stake within each firm, the opportunity cost of not making progress on the basics or not deploying optimal technology is higher than ever. Most firms have taken significant steps to create SSO 2.0, but they still have a long way to go.”

To build a next-generation SSO, companies need to focus on three priorities:

• Get the basics right. The first step is to create standardized processes that cover all steps of a particular transaction—from end to end—with a strong service mindset. For example, buying products through the company’s procurement function should be a single, smooth process, making life easier on the employee who does the purchasing.

• Deploy advanced new technology. Many companies have long used automation tools like voice recognition. The next wave includes things like robotic process automation (RPA), or software robots that can navigate among screens, open files, copy and paste data, and log in and out of different systems, all with no human supervision. Even more advanced tools—such as a type of artificial intelligence known as cognitive computing—can actually make judgment calls and “learn” over time, so their performance is constantly improving. These new tools work 24/7, with greater accuracy, and they don’t require a major investment.

• Develop new capabilities. The jobs that SSOs require will change, requiring greater digital capabilities among employees. For example, rather than requiring a finance person who can handle accounting, companies will require someone who can convert accounting principles into code.

With these three elements in place, companies have a means to dramatically improve their SSO performance—and thus create far more value for the company. However, a key argument in the report is that companies cannot wait for the technological advances to slow down.

“The opportunity cost of not using these technologies is higher than ever,” says Fabrice Roghé, a BCG senior partner and coauthor of the report. “Companies need to create a plan to take action, not over the next two years but in the next quarter.”