The ultimate guide to 2024 back office automation

Automation isn’t a 21st-century invention; its roots can be traced back to ancient civilizations. The Ancient Greeks developed automated devices, with one of the earliest examples being the water clock, invented by Ctesibius in the 3rd century BC, which used water flow to measure time.

Two thousand years have passed, and here we are facing a new wave of automation, specifically targeting the often-overlooked realm of back office tasks.

This guide will navigate these complexities, helping you understand the impact of back office automation, identify the best solutions for your needs, and prepare your organization for the future of work.

Who is this article for?
Knowledge-thirsty tech business owners or (startup) business C-level management members who want to:

• Implement back office automation within their company;
• Build a back office automation-like product.

And, of course, anyone else interested in back office automation.

What is this article going to teach?
You’ll understand the landscape of back office automation software, its various types, and implementation examples.

Why is this article necessary?
It’s a really thorough and in-depth explanation of the topic. It’s a perfect introduction to the topic for beginners and a great way to structure your knowledge if you already know something about it.

What is automation?

Automation is a broad term that encompasses a variety of technologies used to reduce human intervention in processes.

It essentially involves using machines, software, or any combination of both to perform tasks previously done manually automatically.

The main goal of automation is to minimize the need for human involvement in a task.

This can be achieved through various means, such as programming machines to follow specific instructions, using sensors to collect data and make decisions, or employing software to automate repetitive tasks.

What is back office automation?

The back office (internal operations) supports the business behind the scenes, while the front office (sales & service) interacts directly with customers to generate revenue.

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

These departments, often called the “back office,” typically handle tasks like:

• • Accounting and finance: Payroll processing, expense management, invoicing, financial reporting.
  • Human resources: Onboarding, benefits administration, employee data management.
  • Customer service: Order processing, returns management, email, and chat support.
  • Supply chain management: Inventory control, purchase orders, logistics.

What is back office automation software?

Analogically, back office automation software simplifies and streamlines tasks performed within an organization’s internal operations.

Keep in mind that “back office automation software” is a broad term that encompasses a wide range of more specific types of software:

1. Robotic Process Automation (RPA): Software robots mimic human actions on computers, automating repetitive tasks.
2. Business Process Management (BPM): Visually maps and analyzes workflows, identifying areas for improvement and automation.
3. Enterprise Resource Planning (ERP): Integrates various back office functions like finance, HR, and inventory into a single system.
4. Customer Relationship Management (CRM): Manages customer interactions throughout the sales pipeline, including automation of tasks like email marketing and lead nurturing.
5. Marketing Automation software: Automates repetitive marketing tasks like social media posting and email campaigns.
6. Document Management Software: Captures, stores, and manages electronic documents efficiently, automating workflows like approvals and version control.
7. Human Resources Management Software: Automates HR tasks like payroll processing, benefits administration, and employee onboarding.
8. Financial Management software: Automates financial processes like accounts payable, accounts receivable, and financial reporting.
9. Procurement software: Automates the procurement process, from requisitioning to purchase order fulfillment.
10. Governance, Risk, and Compliance (GRC) software: Automates tasks related to compliance with regulations and internal policies.
11. …and more

Finally, within each type of back office automation software, you can use specific software. For example, if you’re looking for Customer Relationship Management (CRM) software, you might want to check out Salesforce, HubSpot CRM, or Freshworks CRM.

Interestingly, Zapier, the “workflow automation software for everyone,” as they call themselves, doesn’t fall into any of these categories. Instead, it’s more of a cross-functional automation platform, which excels at connecting many of those functionalities across different software applications.

Now, each of these types might also fall into one of the categories below. For instance, you can have bespoke on-premise document management software for your e-commerce business.

Let’s look at the various subtypes of back office automation software.

Back office automation software by product type

Bespoke. This type of software is custom-designed and developed specifically for the needs of an individual organization. It is tailored to their unique processes, workflows, and data structures. It can be expensive and time-consuming to develop, but it offers the highest flexibility and customization.

On the shelf. This refers to pre-built, standardized back office automation software that is available for purchase off-the-shelf. It caters to a wider range of needs but may not perfectly match the specific requirements of every organization. On-the-shelf software is typically more affordable and readily available than bespoke solutions.

Back office automation software by deployment

On-premise. The software that is installed and operated on the organization’s servers and hardware. This gives them complete control over the data and security, but it also requires IT infrastructure and expertise to manage.

Cloud. This subtype is hosted and delivered by a third-party provider over the Internet. This eliminates the need for on-premises IT infrastructure and offers scalability and flexibility. However, it raises concerns about data security and vendor lock-in.

Back office automation software by industry

Here are a few examples of operations that can be automated in a specific industry, along with examples of software for that.

• • Healthcare: Streamlining patient intake, appointment scheduling, medical records management, and insurance claims processing. (Examples: Practice management software, EHR systems, pharmacy management solutions);

• • Finance: Automating accounts payable, accounts receivable, financial reporting, and compliance. (Examples: Accounting software, ERP systems, RPA tools);

• • Manufacturing: Automating inventory management, production scheduling, supply chain management, and quality control. (Examples: MES [Manufacturing Execution System], SCM [Supply Chain Management] software, QMS [Quality Management System]);

• • Retail: Automating POS transactions, inventory management, CRM, and marketing automation. (Examples: POS systems, inventory management software, CRM software, marketing automation platforms);

• • E-commerce: Automating order processing, shipping, fulfillment, customer service, and marketing campaigns. (Examples: E-commerce platforms, OMS [Order Management System], customer service software, marketing automation tools).

Benefits of back office automation

Different industries and processes benefit from automation in different ways. However, we can point out these key benefits of back office automation.

1. Productivity: Through automation (automating repetitive tasks, boosting output and speed), you’re basically freeing up your staff. They can leave mundane tasks behind and have more time for strategic work. They do more in less time.
2. Improved accuracy: Your finance specialist is most probably going through the same repetitive, manual tasks every day. No matter how accurate they are and how much attention they pay to each detail, sooner or later, they just make a typo or any other type of mistake. And a single typo in your company’s financial reports can make quite a difference, right? Here, back office automation really shines because it minimizes mistakes with automated tasks, leading to cleaner data and less rework.
3. Cost reduction: Logically,  you can reduce costs through lower labor needs, less paperwork, and fewer errors.
4. Increased employee satisfaction: Not having to do the same things repeatedly means happier staff, too. Relieving employees from mind-numbing tasks boosts morale and engagement.
5. Increased customer satisfaction: Whoever your end user is, if things go faster on your end, the end user will get whatever they want faster, too.
6. Enhanced decision-making: Finally, with real-time data insights enabled by automation, you can make better, informed decisions.

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:

Types of back office automation technologies

Here are a few typical technologies for automation efforts, the “tech backbone” of back office processes.

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.

Here are some examples of cloud-based back office automation software:

• • Robotic Process Automation (RPA): UiPath, Automation Anywhere, Blue Prism

• • Enterprise Resource Planning (ERP): Microsoft Dynamics 365, SAP Cloud Platform, Oracle Cloud ERP
  • Customer Relationship Management (CRM): Salesforce, Zoho CRM, HubSpot CRM

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.

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. Now, the HR department can save time and effort. Additionally, employee experience has improved, too.

Read the full training automation system case study.

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 automation helps Martyna save 2 hours daily on repetitive tasks.

Read the full accounting automation system case study.

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. You might want to revise the “What is back office automation software?” paragraph to see the available options again.

• • 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.

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.”

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.

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, low-code development, or any other way.