What is back-office automation? (for non-technical people)

The main goal of automation is to minimize the need for human involvement in a task, and there’s quite a lot of room for it especially in the back-office departments of many companies: HR, finance, customer service, supply chain management & IT help desk.

This guide will navigate these complexities, 1. helping you understand back office automation, and 2. explaining how to implement it in your organization.

What is back-office automation?

Front-office automation focuses on automating tasks that involve direct interaction with customers, usually in the sales & marketing (automating email campaigns, lead nurturing, or social media interactions) and customer service departments (email and chat support).

Back office automation, on the other hand, refers to the use of technology to replace manual tasks and processes in the administrative and operational departments of a business.

• Back-office technology tackles a wide range of tasks. For example, it can handle data entry, freeing up employees from tedious typing work. Document handling becomes faster and more accurate with automated systems. Invoicing and inventory control can run with minimal human input, reducing errors and saving time.
• Automation also improves how businesses respond to problems. Incident response and network monitoring can happen automatically, alerting staff only when necessary. In logistics, automated systems can track shipments and manage warehouses more effectively than manual methods.

Back-office technologies. Key components of automation

Back-office automation relies on three key interconnected elements.

1. First, data entry and management form the foundation, with automated systems handling information faster and more accurately than manual methods.
2. Next, document management streamlines the sorting, filing, and retrieval of digital files, often using OCR technology to make content searchable.
3. Finally, workflow optimization ties everything together, mapping out processes and identifying areas for improvement. This might include automating approvals or routing documents automatically.

These elements work in tandem, with data feeding into document systems, which then inform workflow processes. What technologies are the back-bone of this workflow?

Artificial intelligence (AI)

Intelligent automation is automating tasks using a combination of artificial intelligence (AI) and other technologies (like robotic process automation).

While traditional automation might involve pre-programmed instructions for repetitive tasks, AI goes beyond simple rule-based automation and brings additional functionalities like learning, reasoning, and decision-making.

Here’s how AI is transforming back office automation:

1. Unlocking unstructured data: Back office tasks often involve handling unstructured data like emails, invoices, or handwritten documents. AI, specifically computer vision and Natural Language Processing (NLP), can analyze this data, extract valuable information, and automate tasks like data entry, summarization, and categorization.
2. Making smarter decisions: Machine learning algorithms within AI can learn from historical data and make predictions about future outcomes. For example, you can use ML-powered fraud detection tools to analyze financial transactions and identify suspicious activities in real-time.
3. Enhanced self-service capabilities: AI-powered chatbots and virtual assistants can handle routine customer inquiries and requests within the back office, freeing up human resources for more complex tasks… in theory, because most people still prefer to solve their problems with a human rather than a bot.

Low-code/no-code

No-code and low-code refer to software platforms that enable individuals with limited coding experience to automate tasks and workflows.

This empowers “citizen developers” within a company to contribute to automation efforts, reducing reliance solely on professional programmers.

No-code suits moderate complexity tasks like data entry automation, report generation, email triggers, and basic data processing. For more complex tasks and workflows that require some customization or integration with other systems, low-code will be a better option.

Learn more: What is no-code, and why should every startup use it?

Cloud computing

Cloud computing refers to the delivery and maintenance of back office automation software over the Internet by a third-party provider rather than being installed and operated on an organization’s servers. Cloud-based back office automation offers reduced IT costs, easy scaling, and flexible access but raises concerns about data security, vendor lock-in, limited control, and internet dependence.

Human element in automation

Even with increased automation, humans remain vital in back-office operations.

They excel in complex decision-making, creativity, and strategic thinking—areas machines can’t easily replicate. While automated systems handle routine tasks, humans provide crucial oversight and handle exceptions.

The benefits of back-office automation

The significance of back-office automation is huge. It cuts costs, speeds up work, and reduces mistakes.

Employees can focus on more important tasks that need human creativity and decision-making. This leads to better customer service and a more competitive business overall.

By automating workflows, companies can adapt quickly to changes in their industry. They can handle growth more easily without hiring lots of new staff. In today’s fast-paced business world, back-office automation isn’t just helpful – it’s becoming essential for success.

In one episode of Pragmatic Talks, our interview series with tech industry insiders, we talked to Joe Justice, a former Tesla employee. He explained why Musk’s companies are so efficient – and it mainly has to do with automation:

What to automate? Characteristics of automatable tasks

According to Zapier, SMBs most commonly automate the following back-office tasks:

1. Manual data entry (38%)
2. Lead management (30%)
3. Document creation and organization (32%)
4. Managing inventory and distribution (27%)

As you can see, tasks best suited for automation share several key features.

First, they’re often repetitive, involving the same actions done over and over. These tasks usually follow clear, rule-based processes with little variation. High-volume tasks, where large amounts of work need processing, are prime candidates.

Ideal automatable tasks also have low exception rates, meaning they rarely need special handling.

Data-intensive operations, which involve managing or analyzing lots of information, are well-suited for automation too. For example, data entry, form processing, and routine report generation fit these criteria. By focusing on tasks with these attributes, businesses can maximize the benefits of automation, saving time and reducing errors in their operations.

Finance and accounting

One area where back office automation has had a significant impact is in finance and accounting.

With (AI-powered) accounting automation, tasks such as payroll processing, expense management, and invoicing, businesses can save time and money while reducing errors.

Check this example of a successful invoice automation process we integrated within our finance department.

Human resources

Back office automation can also be used to streamline human resources processes, such as onboarding, benefits administration, and employee data management.

We’ve used automation to streamline the employee training processes in Pragmatic Coders, and are now working on implementing an internal AI chatbot that can answer any HR-related question (from where to send invoices to what’s my team’s integration budget and how to use it.)

Customer service

Back office automation can also improve the efficiency of customer service operations.

If you company offers help desk services, automating tasks such as order processing, returns management, and customer data management can help you both reduce costs and boost customer satisfaction.

Supply chain management

The primary challenge in supply chain management is ensuring efficient and reliable flow of goods and services while minimizing costs and risks.

Automation addresses this by streamlining processes, improving visibility, and enabling data-driven decision-making.

Information technology

The internal IT help desk plays a crucial role in supporting employees and ensuring the smooth operation of IT systems within an organization.

However, traditional help desk models can often be time-consuming, labor-intensive, and prone to errors.

By automating tasks such as IT help desk support, network management, and data backup, businesses can reduce IT costs and improve their overall IT performance.

5 back-office areas that should be automated

Back office automation examples

No hollow words. We’re praising back office automation because we’re actually implementing it within Pragmatic Coders.

Below, I’ll shortly describe two use cases of how we automated the back office tasks for our HR & finance departments. For an even more in-depth explanation, I encourage you to read the full case studies.

Training automation system for our HR department

Problem: Our HR department struggled with managing employee training as the company grew. Manual tasks were time-consuming and inefficient.

Challenge: Develop a training management system quickly and affordably.

Solution: We used low-code platform (Adalo) to build an MVP with core features:

• • Employees self-enroll in training;

• • Instructors manage dates and attendance;

• • The system integrates with calendars to send a notification for training updates and generates reports.

Outcome: Thanks to leveraging low-code and perfect Product Management, we delivered the system in less than 3 weeks, and observed a real productivity boost. The long and time-consuming process of managing internal employee training is now history. All the work on an employee’s side ends when they click “Accept.” Since the meetings are automatically added to their Google Calendars, they don’t have to do it manually. And once they’ve attended a training session, they don’t even have to sign the attendance list.

Read the full training automation system case study.

How to automate back-office finance tasks? Our AI & low-code accounting automation system

Problem: Martyna (our finance specialist) spent 2 hours daily on manual bookkeeping tasks: organizing financial data from different departments, manually entering invoice data into various systems, and moving files. She wanted to automate these tasks.

Solution:

• • Implemented AI-powered OCR (Rossum) for data extraction from invoices;

• • Used Zapier to automate data flow between systems (Gmail, Rossum, Google Sheets, Google Drive, Productive);

• • Created formulas in Google Sheets for automatic categorization and organization.

Outcome: This is a great example of AI streamlining tasks and processes. This automation helps Martyna save 2 hours daily on repetitive tasks, and helped us save costs, as the monthly cost of Rossum and Zapier combined is significantly lower than Martyna’s hourly wage. Finally, the data is automatically moved through each part of the workflow, which reduces the chance of typos and human error, and Martyna has more time for other activities.

Read the full accounting automation system case study.

Challenges in back-office automation

While back-office automation offers many benefits, it also comes with its share of hurdles.

One major challenge is integrating new automated systems with existing software. This can be like fitting puzzle pieces from different sets.

Another issue is staff adoption. Employees may resist change or struggle to learn new tools, slowing down the transition.

Data security is a growing concern, especially with strict regulations like GDPR and HIPAA. Companies must ensure their automated systems have strong encryption and access controls to protect sensitive information. Regular security audits are necessary but can be time-consuming. Despite these challenges, many businesses find that the long-term benefits of RPA (Robotic Process Automation) outweigh the initial difficulties.

Automation is a good message for business owners.

You can scale your company and boost productivity without scaling the back office teams. It’s crucial simply not to go overboard with it (remember Suumit Shah, CEO of an Indian e-commerce company, who announced on Twitter that he had replaced 90% of the customer service team with an AI chatbot?).

On the other hand, there’s the so-called automation paradox.

It describes the counterintuitive phenomenon where as systems become sophisticated, they require more and more higher-level human monitoring, adaptation, and expertise to prevent unforeseen issues and manage their complexities.

While it won’t be a problem with small-scale back office management and automation systems, the maintenance costs go in thousands of dollars in case of huge companies like BWM, Coca-Cola, JP Morgan Chase or Walmart that use SAP (German back office management provider) software and need highly skilled technological specialists to maintain and manage it.

Tips for a successful back office automation implementation

Here are some best practices for implementing back office automation:

Before you begin:

• • Identify your goals: What processes do you want to automate? What are your desired outcomes? Clearly define your objectives to guide your selection and implementation.

• • Evaluate current processes: Analyze your existing workflows to identify repetitive, manual tasks ripe for automation. Prioritize high-impact processes with the potential for human error reduction and efficiency gains. You can create a workflow scheme in Miro or another tool. With a visual representation of a process, it will be much easier to explain it to those (e.g., developers) responsible for implementing it.

During implementation:

• • Choose the right tools: Select software that aligns with your budget, technical expertise, and specific needs.

• • Start small and scale gradually: Implement automation in phases, beginning with one or two processes before expanding to avoid overwhelming your team and risking potential disruptions.

• • Develop clear documentation: Create thorough documentation covering processes, roles, responsibilities, and troubleshooting steps. This ensures smooth user adoption and facilitates future maintenance.

• • Test thoroughly: Ensure the automation solution works as planned before deployment. Conduct thorough testing with various scenarios and data sets to identify and address issues.

• • Train your team: Provide comprehensive training for users on how to interact with the automated system and handle potential exceptions.

After implementation:

• • Monitor performance & continuously improve: Track key metrics to evaluate the effectiveness of your automation efforts. Regularly assess your automated processes and identify opportunities for further optimization.

What’s the future of back office automation?

The global back office automation market is expected to hit $10.98 billion by 2027, driven by a 10.78% CAGR.

The market will expect significant growth in the years to come. Apart from the benefits I named earlier, there are a few more factors that fuel it:

• • The surge in cloud technology adoption – cloud-based automation solutions offer easy access, scalability, and lower upfront costs;
  • Government initiatives promoting automation adoption;
  • The rise of AI, blockchain, and RPA;
  • The increasing focus on customer experience.

Emerging technologies and trends

The landscape of back-office automation is rapidly evolving, with several interconnected technologies driving change.

Artificial Intelligence (AI) and Machine Learning (ML) form the foundation, enabling systems to learn and make decisions autonomously.

• An interesting example of how AI and ML can be used in back-office automation is the concept of cognitive automation. It uses AI and ML to handle complex, judgment-based tasks that were previously reserved for humans. Unlike traditional automation, cognitive systems can understand unstructured data, learn from experience, and make decisions based on multiple factors.

These technologies power Robotic Process Automation (RPA), which acts as a tireless digital workforce, streamlining repetitive tasks. As RPA handles routine operations, it generates vast amounts of data.

This is where big data analysis comes in, making sense of this information and uncovering valuable insights.

The Internet of Things (IoT) further expands this data ecosystem, connecting devices and systems to create a web of real-time information.

All of this data and automation requires robust security, which is where blockchain technology shines. It offers secure, transparent record-keeping, particularly useful in finance and supply chain management.

Together, these technologies form a synergistic network, each enhancing the others’ capabilities. AI improves RPA’s decision-making, IoT provides data for ML models, and blockchain secures the entire system.

Back-office automation trends in fintech

Automation is really changing back-office processes. We can see more and more companies implementing or have implemented automation already.

Let’s take the financial industry, for example. Over 50% of banking and financial organization CEOs aim to simplify operations through process automation. Additionally, automation and AI are expected to undertake 10-25% of banking tasks, according to McKinsey.

Simon Dawson, the Head of Engineering at Atom Bank and our current client, marked the same tendency within his organization: “We’re not looking to massively scale the workforce as we scale the customer base because we want it to be an automated, lean back end.”

Conclusion

This guide’s here to get you ready for what’s coming, and shine a light on how to make the most of back office automation.

Need help implementing custom automation into your business operations? Or maybe you want to build an automation app?

Just hop on a call with our team.

Together, we’ll find the best solution to match your needs, be it through AI integration, custom AI development, low-code development, or any other way.