Shifting from a “back-office” to a “center office” model can enable adaptable and resilient enterprises of the future.

Shift from back office to "center office"

TODAY, one of the most critical business needs for executives across industries is creating resiliency and adaptability in their operations and building the foundation to do more with less in the face of shrinking budgets. The rapid pace of digital development, disruptive market forces including new customer and employee expectations, and the ongoing global health crisis have only increased the urgency of this need. Leaders are bombarded with conflicting messages about how to adapt to the pace of change in this rapidly evolving environment. Driven by the explosion of digital tools, the need for speed and agility, and the demand for proactive insights and personalized user experiences, many leaders are asking two key questions: 

• “How do we organize and deliver services within and across the business to adapt and thrive?”
• “What capabilities should we invest in to balance long-term growth and efficiency as budgets shrink?”

While looking for the answers, they must consider that the role of the back office is rapidly changing to support enhanced enterprise integration and breakdown of silos across functions. Traditional back office shared services models are becoming irrelevant as the role of digital expands, with machines and automation redefining work and its delivery. As leaders assess opportunities to streamline operations, there is a shift in focus from task execution to business outcomes and anticipation of customer needs.

A new delivery model is emerging in response to the need to reimagine the role of service delivery structures within the enterprise with a view to improving agility, quality, and speed. This new model—the center office—leverages enterprisewide data and brings together cross-functional talent to deliver end-to-end services such as procure-to-pay and order-to-cash to the enterprise. Not only that, it also delivers common cross-functional capabilities such as automation, analytics, and continuous improvement as a service while being hyperfocused on customer experience. This back-office to center office shift is likely the next evolution of global business services (GBS) and shared services and can help build the resilient and adaptable delivery models that are increasingly in demand.

In this article, we will delve into how organizations can pivot to a center office lens to build adaptable and resilient enterprises of the future and fuel the ability to do more with less. But first, consider what the future could look like with such a model to deliver services across the enterprise:

Scenario 1: Your organization is looking to integrate a recent acquisition. In many cases, it takes years to fully integrate two organizations—diverse skills, expertise, and strong program management are required to fully execute the integration. Now, what if you could call upon an experienced, cross-functional team of program managers/integration managers and seasoned change management experts within your organization to support the integration? This team comes in with defined best practices and a battle-tested implementation approach. They know the organization, the tools, and the process destination, which enable them to accelerate execution, reducing the average integration time by half.

Scenario 2: Based on customer feedback, your sales team has identified a supply chain problem. In such cases, most organizations spend weeks putting a project in place and then pulling out and manipulating data to assess the root cause. But what if you could tap into an enterprise data analytics team. This team of data scientists has access to end-to-end service-related data at the transaction level and readily pulls out accurate data from the data hub. They then run an AI-driven analysis of the transactions and develop a drillable presentation of the root causes of the supply chain issue. Armed with the information you need on the issue, you develop the corrective action plan within hours, not weeks, of receiving the feedback.

The scenarios presented above are not out of reach for an organization with a center office model. For example, a US$50 billion multinational consumer goods company with operations in 150 markets designed and cultivated a high-octane M&A integration team. This team combined processes across finance, human resources (HR), and information technology (IT) to integrate the transformation experience across the organization. It played a key role in not only accelerating the integration, but also in validating M&A synergy assumptions during due diligence. The result of the cross-functional integration capability delivered as a service: the SWAT team shortened M&A integration timelines by 50%, with each day saved from the timeline netting the company US$4 million per day.¹

There’s increasing evidence of this shift today as many organizations are reimagining how they distribute and deliver work across the enterprise.

What the center office model can look like

Shifting from a back-office to a center office mindset requires a shift from transaction execution to business outcome delivery by providing impactful insights and frictionless services. It also requires the services organization to come so close to the business and the customer that the lines between the back office and the front office begin to blur. It is important to note that the center office is not a concept that’s separate from the GBS or shared services organization, but rather the next generation of the model with a higher potential of bringing value to the enterprise through a greater concentration and sharing of skills and tools.

The center office can take on different forms and, as organizations evolve, it can have varying levels of maturity—depending on the vision, mission, priorities, business model, and appetite of the organization for change. There are also different paths organizations can adopt to shift their work delivery lens and service delivery model to a highperforming and mature center office model (figure 2):

• Some organizations are initiating this shift by pursuing one or two end-to-end services spanning functional silos and by bringing specialization and technical assets together to optimize and better govern the end-to-end value chain. This helps process owners meet rising user expectations for faster, deeper data-driven insights.
• Others are pursuing this evolution of GBS and shared services by developing enterprisewide capabilities such as continuous improvement, M&A integration, or change management teams (figure 2). By bringing together similar skills and tools, organizations can develop cross-functional perspectives and scale to effectively deliver capabilities such as robotic process automation (RPA) design and demand management or predictive data analytics as a service. The center office, in its cross-functional and enterprise delivery capacity, becomes the natural repository, incubator, and talent hub for these capabilities.

What's more, unforeseen events such as the ongoing pandemic underscore the importance of improving virtual collaboration, reducing manual processes, leveraging partner ecosystems and accessing flexible talent pools, such as gig workers. During such times, the ability to make quick decisions, adapt resources and processes, and operate digitally and virtually is a differentiator. The center office model can enable an organization to be more resilient by deploying cross-functional teams to distribute the workload across functions and businesses, including providing access to the ecosystem of external partners to complement internal operations. 

Adopting a center office mindset can enable the service delivery organization to become the central nervous system of the enterprise.

What it takes to pivot to the center office

In our research, we observed three key characteristics across organizations that are successfully redefining the role of their back office service delivery and embodying the shift to the center office. These organizations:

1. Deliver specialized cross-functional capabilities as-a-service to the enterprise
2. Overcome a distributed technology landscape with cross-functional scale and digital capabilities and tools
3. Hyperfocus on customer and user experience, not just on efficiency

Organizations that are leading the way in realizing service delivery maturity and value for the business demonstrate all these characteristics.

Capabilities as-a-service

Over the years, most GBS or shared services organizations, by virtue of being in the business of delivering and improving services, develop certain inherent capabilities. These capabilities—such as continuous improvement, transition and program management, change management, and knowledge management—are in demand across the enterprise. However, different teams source these capabilities or build them in pockets across the enterprise, creating redundancies in cost and staffing. Once brought together and delivered through a shared services organization, these capabilities can easily be scaled and leveraged across the enterprise to deliver cost and talent benefits.

Leading organizations that realize this are embracing the center office model to enhance business flexibility and responsiveness to market changes while driving efficiencies. They recognize the value of leveraging a common, centralized hub to develop, expand, and deploy certain capabilities such as analytics and reporting, intelligent automation, and customer experience management across the enterprise. One Deloitte study found that companies with an enterprisewide strategy for intelligent automation reduced costs by an average of 24% and increased revenue by an average of 8%. By contrast, organizations without an enterprisewide strategy reduce costs by 14% and increase revenue by 3% on average.²

As organizations face unexpected pressures such as the ongoing global pandemic, the center office structure can deliver specialized skills and best practices in the most cost-efficient way while balancing the workload across different sites, locations, or regions. A culture that fosters specialized shared capabilities also helps grow talent by affording employees the opportunity to shape leading practices and methodologies as well as lead diverse projects that address complex business issues.

Overcoming a distributed technology landscape

Many organizations struggle with the historical legacy of partially integrated acquisitions and systemic underinvestment in end-to-end technology solutions, resulting in a fragmented systems landscape. Our research shows, 90% of shared services organizations believe increasing digital capability is fundamental to achieving their GBS objectives.³ However, only 26% employ an array of digital assets including cloud, RPA, and single-instance enterprise resource planning tools.⁴ This means while many organizations are implementing cloud technologies, most are yet to fully develop a digital asset pool that can help integrate their technology systems in a shareable way.

In a global survey of 1,200 executives,⁵ respondents identified reliability and functionality of information systems as the top internal risk, given challenges such as potential cyberattacks and data privacy regulation. However, many organizations—particularly those with a highly federated technology infrastructure—don’t have the kind of funds required to overhaul their technology landscape into a single solution. Therefore, digital solutions that don’t break the bank but can integrate data and processes without requiring a full technology shift can be critical enablers of data availability and accuracy.

This is becoming increasingly possible with digital advancements of workflow tools, orchestration softwares and cloud-based products (such as ServiceNow, Salesforce, Appian, etc.) that offer integrated suites of applications designed to create a consumer-like service experience irrespective of where the source data sits. Such capabilities bridge systemic gaps, bringing together information across business segments and data sources and unifying the technology landscape to provide better solutions to the enterprise without the need to migrate data or systems.

Cross-functional delivery models are increasingly enabling deploying and managing such tools and capabilities, in addition to, process mining tools such as Celonis⁶ or Bonita BPM⁷ to diagnose process and control issues and optimize outcomes for the business. When these assets are managed by the center office, they can be deployed more quickly across business units. Business units can also benefit from organizational lessons learned in other parts of the enterprise. In addition, the process improvement and performance management rigor often found in service delivery organizations can be combined with these tools to create a truly valuable impact on the enterprise, including:  

• Remediation of operational issues through reduction of duplicative manual entry
• Risk mitigation and improved performance through KPI tracking and improvement
• Elevated customer and employee experience with easier to access information for transactions from start to finish
• Reduction of time-to-market for new services through faster market analysis from minimum viable product testing

Hyperfocus on customer experience (beyond costs)

“Work the way we live” is an emerging theme disrupting how work is delivered across the enterprise. This concept takes off on the premise that as individuals, we have access to cutting-edge technologies and a high degree of personalization, and, as employees, we can and should expect a similar level of modernization and personalization at work. To implement this concept, successful service delivery organizations need to provide easy-to-access, easy-to-use, personalized service and tools. The center office, with its hyperfocus on the customer/user experience, is uniquely positioned to use its large-scale access and digital-savvy capabilities to successfully deliver on this expectation. To provide meaningful customer experiences, organizations need to embed the following principles in their programs, processes, and technology:

• Collaboration and engagement: Encourage active collaboration and engagement to provide customers/users the ability and avenues to influence, shape, and align on goals.
• Accessibility: Offer availability and accessibility to the right information at the right time across stakeholders.
• Personalization: Provide proactive and predictive personalized insights and offerings based on individual history and preferences.

There are two main ways in which a center office model can drive superior customer experiences for the enterprise. These are:

• Deliberately creating forums for active collaboration with customers
• Personalizing the digital experience for users and customers

To begin with, shifting to the center office model requires organizations to adopt and embed passion around customer service in the culture at all levels. This can be fostered by encouraging and demonstrating collaborative and open behaviors, offering incentives, and organizing customer connect meetings/events.

Putting the customer/user at the heart of everything and intimately understanding their needs, wants, and pain points is integral to the center office shift. Successful service delivery organizations set their annual plan against the goals of the business. The center office model takes it a step further by measuring what matters to the customer—the outcomes and impact of services delivered against the priorities of the business—rather than just reporting on internal operations. It organizes regular customer summits and joint forums that bring customers, business leaders, and delivery teams together (often, including third-party partners) to not only set joint priorities and assess progress, but also to share performance against the outcomes, establish proactive feedback loops across levels, and jointly identify innovation opportunities. This is what true collaboration and engagement looks like from a human interaction and governance lens.

The other side of the customer experience is digital experience. While 51% of shared services organizations surveyed by Deloitte in 2019 said they were already achieving or exceeding their objectives around digital experience, 84% said they expect to increase their focus on digital experience and 49% expect to significantly increase their focus on it in the next 3–5 years.⁸

To meet rising user expectations, next-generation delivery organizations are emphasizing personalized, user-centric approaches while delivering services. They’re enabling users to choose how they want to interface—through chatbots, calls, apps, email, or text—for both proactive and reactive interactions. Users can also set reminders and alerts for different requirements depending on the type of request; for example, invoice reminders sent to customers via email or annual enrollment reminders sent to employees through text.

A unified and consistent customer interface enables users to request services, report on issues, and receive feedback on these issues regardless of the number of functional areas and systems involved in their resolution. To offer such personalized digital experiences, organizations need to develop a targeted channel strategy tailored to different customer segments and frequently reassess it based on usage and feedback data.

The journey to unlocking value

While the value of shifting to the center office model—likely the next evolution of GBS and shared services—is clear, the journey to adopting such a model is not easy. There are critical lessons organizations looking to make this shift can learn from those that have done it successfully. Here are some steps they can incorporate in their journey:

1. Ensure chief executive sponsorship: The back-office to center office shift is impossible to make unless the topmost executives make it their top priority and declare it a strategic business priority. Given the cross-functional nature of this shift, the sponsorship of the executive leadership is essential to overcome political and organizational dynamics and historical orthodoxies that can get in the way of change.
2. Confirm that the shift is a shared leadership ambition: Even with topmost executive sponsorship in place, lack of a clearly articulated shared ambition among the broader leadership and their teams can be a significant roadblock in the shift. Bring key leaders and stakeholders across functions and businesses into a series of dialogues to align them on a common ambition and translate this into common goals for the business.
3. Initiate a fundamental mindset shift (cost center to business center): One of the biggest challenges in shifting to the center office model is the traditional view of service delivery organizations, which have long been considered a transactional cost center or an unnecessary “allocation” that costs money without demonstrating value. To break the mold, the center office must be run like a business, including measuring performance, with performance assessment based on meaningful outcomes that customers and businesses care about.
4. Build a purposeful brand: Cultivating a brand that embodies the value proposition, is business- and customer-focused, and presents a rich career promise to its team members is critical for the center office. A brand supports the idea that the center office is a “partner,” rather than the more transactional “order taker” of traditional shared services. Share success stories across the enterprise to influence the hearts and minds of customers and other stakeholders.
5. Create cross-functional capabilities: To realize the full value of shifting to the center office model, it is essential to break down functional silos to deliver efficient processes and business insights across functions, as this is what ultimately leads to efficiency and growth. This requires rethinking traditional teaming and incentive structures, workspaces, collaboration technologies, and governance platforms. It also requires measuring team performance as a unit in addition to individual performance.

Finally, remember one size does not fit all: The key to shifting the lens and mindset from the back office to the center office lies in moving from transactions and tasks to anticipating and delivering on business outcomes. It is also essential to enhance sharing of scalable capabilities across the enterprise to do more with less. There is no single model that can serve as a silver bullet for organizations. The right model is different for each organization and it depends on the shared ambition of its leaders, current distribution of work and organizational structures, the level of maturity of existing capabilities, and the culture and level of executive sponsorship.

Shifting the lens—a need of the hour

Change is the new normal and it transcends geographical borders and industries. Disruptive events such as the ongoing COVID-19 health and economic crisis, market trends, and rapidly changing technology are forcing organizations to adapt fast and be prepared to do it frequently. These shifts require reimagining work and how it’s delivered across the enterprise.

Shifting from a back office, order-taking mentality to a center office lens requires a shift from executing transactions and tasks to delivering business outcomes and value and becoming so close to the business and customer that the lines between the back office and the front office begin to blur. Ultimately, the enterprise exists to serve the business objective or mission and it is time to reimagine delivery of work as a single value chain that cuts across functions, regions, and business segments. Organizations that renew their perspective on what kind of work and capabilities can be delivered on a shared, seamless basis across the enterprise can outperform their competitors.

As executives and leaders across industries determine ways to emerge successfully from the current crisis, the shift to a center office–like model can serve as a catalyst to propel the enterprise into a new future. Service delivery organizations that offer specialized capabilities as-a-service—eliminating redundancies, hyperfocusing on the customer and the business, and leveraging cross-functional data and talent to drive innovation—are positioned to deliver impactful insights and efficient, frictionless services across the enterprise. They are also primed to deliver material business outcomes and help the organization remain resilient in the face of crises.

Global Business Services and Enterprise Services Transformation

Deloitte’s Global Business Services (GBS) and Enterprise Services Transformation practice works closely with executives to transform the delivery of work and services across the enterprise including design and implementation of operating models that align with their business strategy. The team helps organizations achieve the next level of performance through reimagination of service delivery that often includes set up of new/enhanced delivery centers, establishment of new processes, standards, policies, governance, teams, and infrastructure.

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