Back-Office improvement : When outsourcing is not an option

University essay from KTH/Skolan för informations- och kommunikationsteknik (ICT)


Many organizations within service industries such as government agencies, banking, healthcare, and healthcare decide to structure their business with the back office – front office design; in this setting the back office handles tasks not involving the customer, while front office involves those activities that deal with the customer through some form of contact or receive input from them. When the time comes than an organization wishes to improve the back office area and achieve enhanced efficiency, and speed; it is commonly suggested that outsourcing will help introduce the intended gains. However, outsourcing is not always the right option for an organization, depending on the activities the back office performs and the organization’s size might not make it a supreme candidate for this. It is at this point that the organizations are left standing in the cold as no alternatives are suggested; therefore creating a push towards outsourcing that might end unsuccessfully.

This thesis work focused on reviewing organizational design theories and proven keys of back office improvement to establish a basic set of guidelines which will help introduce improvement in a back office area as an attempt to provide an alternative outsourcing. The methodology consisted of a case study performed at a Swedish Mobile VoIP provide, as a complement both literature review and interviews were performed to help gather information. Literature review was mainly focused on getting the background and current state of the problem identified; the validity of using the guidelines were confirmed through a first set of interviews held at the organization. The resulting guidelines take back office configuration and design together with improvement opportunities, all points lead to finding that they can be mapped together. This combination is both effective for improvement and revisiting organizational design.

The produced guidelines are as follows: 1. Reduce – definition of back office and back office activities (remove unnecessary activities or lessen their demand); 2. Redesign – decoupling decisions (activities kept in the back office should be broken into separate tasks only if results are not compromised, eliminating unnecessary interdependencies); and 3. Restructure – organizational arrangements (changes in physical placement can improve knowledge sharing and support an open communication). The results of implementing such guidelines were evaluated through a second set of interviews which were also held at the selected organization. The final evaluation of changes within the organization concluded in positive effects as was intended. Further work in the area is needed to help define a more complete and detailed set of guidelines, the ones resulting from this thesis work surely serve as a foundation.

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