Back office software generally refers to the platforms and applications that don’t interface with customers but help your employees manage core functions such as accounting and financial reporting, project management, billing, HR, and supply chain operations. The primary goal of your back office software is to optimize and automate the processes across each of these functions to boost operational efficiency and company profitability.
Ideally, the applications that make up the back office software systems will unify and share data across the various departments (accounting, sales, services, manufacturing, etc.) that generate the data. The back office solution ultimately facilitates information flow between all business functions so that its users gain meaningful insight to perform their jobs smarter and faster.
For the most part, most businesses of any size, across every industry, have utilized enterprise resource planning (ERP) software to support their back office software needs. Today’s back office processes should, and need to be on the cloud. With cloud back office software, your employees have the ability to instantly leverage advanced cloud, social and customer facing technologies to best drive growth.
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For many businesses, your back office application (ERP) is the primary application required to accurately collect, bill, and report all financial transactions. Your back office solution collects and manages the financial information related to your business (customer contracts, expenses, budgets, accounts receivable, accounts payable, payroll, etc.) to provide management reporting and visibility into total revenue, cost, and profitability.
Some back office solutions are limited to a single process/functional area, e.g., accounting or HR) while others work best for companies in specific verticals, e.g. manufacturing or healthcare. The functional areas included in various back office solutions include:
Though back office systems – e.g. ERP – have been around for decades, many business leaders have recognized the need for more nimble and customer-centric solutions to accommodate recurring revenue models (e.g. XaaS, usage-based, subscriptions) and help drive customer satisfaction and retention. While legacy systems focus everything around the physical good or, for HR-based systems, around the employee, it has become clear that this model isn’t ideal for organizations with a major services component.
Customer-centric organizations have found that connecting all back-office functions and data (ERP) to the front office (CRM) to produce one master customer record is the proven path to success. A modern back office solution should accelerate, not hinder, your journey toward becoming a more customer-centric organization.
Finance departments are known as the back office, and they have traditionally taken a back seat in terms of influencing business growth and strategy. The finance teams’ responsibilities are primarily administrative and typically include accounting, billing, and compliance. At many companies, they represent an “office of no,” the cautious money controllers, who don’t take the time to explore or need extra time to implement new innovations because of limited back office processes and systems.
But that’s changing fast. Armed with the right data and technologies, today’s finance teams can do much more than manage compliance and risk. They can provide valuable strategic guidance to sales and marketing, advance new pricing models, and streamline the path from order to cash. The key is rethinking the back office solution and demanding more from your staff and your technology.
A modern back office gives finance teams visibility into any and all revenue streams and helps unify all business-critical systems, including customer relationship management (CRM), configure-price-quote (CPQ), and revenue management tools. It allows finance teams to create forecasts and business analyses based on complete, company-wide data and to easily model what-if scenarios and new revenue and pricing strategies. It also automates and accelerates order-to-cash (O2C).
With a modern back office, finance teams achieve return on investment (ROI) by accelerating time-to-market for new products and services, adopting more profitable and compelling pricing models, and streamlining O2C. In fact, according to an analysis by MGI research, modernizing the O2C process alone typically delivers an ROI of 15–28 percent.
If you are able to modernize your back office you can empower your finance team and improve overall business performance.
At many companies, the finance department lacks advanced automation that other parts of the organization may take for granted. For example, of 378 CFOs surveyed by Grant Thornton LLC & CFO Research, less than half said that their organizations have fully automated their core financial management and planning processes.
Finance teams often rely on Excel because their ERP platforms are missing key features. For example, a growing number of businesses have introduced subscription-based and hybrid pricing models. But many popular ERPs do not support them, or they require clunky, bolt-on solutions. Finance leaders at companies with limited ERPs often find themselves in the position of either saying no to a new and potentially lucrative pricing strategy or committing to managing it with Excel.
What’s wrong with relying too heavily on Excel and similar tools? By nature, spreadsheets are not designed to synchronize with source data in real time, so the data they contain is most often out-of-date. Moreover, refreshing that data typically requires manually extracting and normalizing many different sets of data from multiple subsystems—an extremely time-consuming process. For example, creating a simple revenue forecast might require pipeline data, contract data, sales orders, billing terms, and more.
Also, spreadsheets are not designed for collaboration, and they are difficult to share. When any part of your O2C process relies on spreadsheets, it can get bogged down. In fact, according to a classic Genpact study, 7–12 percent of combined revenue in working capital is stuck somewhere in inefficient O2C processes at top global organizations.
Moreover, the final phase of O2C—revenue recognition—is itself a complex process that’s gotten even more challenging among new accounting standards and regulations. Building spreadsheets to accurately recognize revenues per ASC 606 guidelines, for instance, is an extremely time-consuming exercise for finance teams and may require contracting third-party experts, increasing audit fees, or even hiring more staff. Maintaining these spreadsheets, scrubbing data, and running reports can fully occupy your finance team and take them away from strategic planning.
According to PwC, many businesses that built complex spreadsheets in the rush to comply with ASC 606 now face long-term risks:
“The crunch of meeting the adoption deadline may have necessitated a less than-optimal operational implementation for some companies. Brute force—an amalgam of people-managed processes, spreadsheets, and databases—was necessary to get some companies over the finish line in time. While these short-term solutions may still be holding up, the additional risk they can create and the extensive resources they typically require make them an unpalatable long-term solution.”
Generally speaking, if your back office solution is relying on legacy technology and uses spreadsheets as your primary reporting, data analysis, and collaboration tool, you will always be struggling with compliance issues and lagging O2C.
Today’s increasingly complex business models have outgrown the old-school back office system. The single revenue model—one product, one price, one time—is a dying strategy. Instead, businesses must offer flexible and personalized pricing, billing, and even monetization options. In this ultra-competitive environment, the ability to launch new models alongside traditional ones is key to sustainable growth.
While marketing and sales can propose new pricing, product, and service models, they can’t do it alone. The finance team must be able to analyze new pricing strategies and predict their success or failure. They must also be able to evaluate the performance of your existing offerings—and where you’re getting the highest margins—as well as the lifetime value of every customer.
A modern back office solution can also play a critical role in decreasing days sales outstanding (DSO) and improving the health of the balance sheet. By automating the flow or orders from sales to fulfillment to billing and revenue recognition, it can support healthy cash flows while allowing sales, marketing, order/service fulfillment, and finance teams to work together more effectively. Rather than being the “office of no,” a modern finance team can be a valuable ally for growing the business.
A modern back office system must provide a unified view of your business. This means it must run from a single data source that is structured around a master customer record, so you get a complete view of all your customers’ projects and performance obligations at all stages from what was originally contracted to deliver, to order and billing and, finally, revenue recognition. At a minimum, any modern back office platform should offer these features:
Cloud first: Cloud (or SaaS) applications are more agile and easier to maintain and upgrade. Plus, they can be accessed by any user in your organization with the right permissions and a web browser. Just make sure your system is a cloud-first application that runs on a reputable, reliable cloud platform.
Support for any and all revenue streams: A modern back office should be able to support any kind of pricing model, from fee-for-product and fee-for-service to hybrid subscription models. It should also aggregate those revenue streams, so you can get a complete picture of your earnings and margins, and keep it simple for your customers who likely have multiple contracts with your organization.
One unified data model: A modern back office should be powered by a single data model. Ideally, it should support at least 80 percent of your business processes out-of-the-box. This approach is very different from just integrating heterogeneous systems, which is brittle and requires data warehouses and a large IT staff to keep things running.
Advanced forecasting, including predictive analytics: In addition to a unified data model, a modern back office should have the tools you need to make that data actionable, and help you assess what’s already happened to better predict what will occur in the future. These include advanced forecasting methods—such as predictive time series models and machine learning—that can give you an extremely accurate view of future cash flows.
Compliance automation: Ensuring compliance with accounting standards like ASC 606 can be extremely time-consuming when you’re working with spreadsheets or legacy accounting systems. A modern back office platform should help automate many of the processes and manual tasks required to comply with complex financial reporting and revenue recognition standards.
A modern back office is instrumental in transforming finance from a cost center to a value center. With the data available in a modern, unified platform, finance can provide valuable insights on pricing models, product and service performance, and customer behavior that can increase deal size, margins, and renewal rates. With workflow automation, a modern back office allows finance to dramatically improve efficiency, reducing O2C and DSO.
Once you’ve modernized your back office, measurable results come quickly. Some examples from businesses that have transitioned off of legacy platforms and spreadsheets include:
Seagate: Although Seagate’s IT Recovery services group helps find and restore customer data, the company was unable to report on the real-time performance of their business. Their legacy financial system did not integrate easily with their Salesforce CRM and offered no visibility into invoices, payments, and overall customer service. By switching to Certinia applications built for the Salesforce Platform, Seagate reduced O2C from 42 to 14 days, and period close from 11 to 5 days.
Motus: Motus is a leader in mobile workforce management software. As a startup, they relied on QuickBooks for critical back office functions. As they grew, QuickBooks could not keep up. They supplemented QuickBooks with spreadsheets and, over time, it became increasingly painful and time-consuming to generate accurate reports. After replacing QuickBooks and spreadsheets with automation from Certinia, month-end reconciliation became 99 percent faster and month-end close improved from weeks to days.
10Fold: This fast-paced, growing client services business operates on a fixed-fee model and tight margins—where rich and timely data determine success. Like most emerging businesses, they started out managing financials with spreadsheets and special-purpose apps. As they grew, they found that not having a single, integrated system for finance and client projects was slowing down cash flows. With Certinia, 10Fold got their DSOs down from 60 to 15 days in just two months.
Eliminating back office bottlenecks—and transitioning to a modern back office—is one of the most important things you can do for your business. It empowers finance to go beyond compliance and control and unlock new revenue models. It also delivers operational efficiencies that can reduce O2C and DSO. Overall, your modern back office delivers a high ROI that can improve your bottom line in just a few months.
To take the first step toward modernizing your back office, look at your company’s O2C, ask yourself if you can do better, and start documenting your requirements for a growth-centric back office.
Most businesses are familiar with Salesforce CRM—and many of them use it. You may not, however,be as familiar with the Salesforce Platform. The Salesforce Platform provides a unified data model that acts as a “single source of truth” for your whole organization. It can power CRM as well as fully integrated back office functionality.
Certinia applications, which include Finance, Billing, and Revenue Recognition, are built to run on the Salesforce Platform. Because they are designed around a master customer record, you get a complete picture of customer touchpoints for your entire company. Because they integrate with CRM and other applications, you can automate complex workflows and compliance reporting—and accelerate O2C.
Connects your front and back office To build a business that supports customer retention, you must be able to manage the entire customer lifecycle on one system. That can be done by connecting your back-office functions (ERP)—namely financials, billing, and product and service delivery—to your front office (CRM), so you can create a comprehensive view of your customers.
With Certinia ERP, everyone using the back office solution – sales, finance, service delivery, support, and beyond – gains real-time access to all the customer information that matters most. Instead of waiting days or even weeks for teams to be in sync, everyone from sellers to accountants can do their work with the same view of critical customer data.
Supports new services & subscriptions models
Today’s customers expect your business models to meet their needs at every turn. Optimized for services-centric companies, a modern ERP system is flexible enough to help you more rapidly adapt your offerings to support subscription-based contracts, complex contracts, or a blend of business models.
Deliver full business transparency
Don’t wait for the monthly close or a quarterly review to make game-changing decisions for your business. Build predictability into your business enterprise-wide. A modern ERP enables users to make more intelligent decisions based on future impact and profitability, aligning actions at the individual and team level to overall business goals. Instead of guessing, know in real-time when to capitalize on product upgrades or cross-sells, or which customers need proactive outreach to prevent them from churning.
By empowering your front and back office employees with a more unified, continuous lens across the customer lifecycle, your business can be more transparent, data-driven, and easier to forecast.
Certinia is the leading Cloud ERP solution on the Salesforce platform. Certinia ERP management software powers customer-first back office needs. We assure that our ERP and back office software will give you access to better insights on capacity, backlog and skills availability. With Certinia you are able to:
For a more crisp, visible and instantly accessible software – choose Certinia ERP.
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Certinia ERP is a customer-centric, end-to-end enterprise resource planning solution built on the Salesforce platform. By keeping the focus on the customer, Certinia, helps companies accelerate high growth, deliver maximum value and increase efficiencies.