The 11th topic in my series of “Ask the experts – why companies to go through transformation”, focuses on front end problems and back end problems.
Transformation programmes will often take place in a particular function of a business, where there is a specific problem. This may be at the “front end” of the business, focusing on customer engagement, sales and marketing processes; or the “back end” of the business, such as finance and accounting, HR processes and IT systems.
At the “front end”, companies with a large customer base will have a key focus on customer engagement, whether it is front line staff in supermarkets, or call centre staff in mobile phone companies and banks. Unless the “front end” of the business is working in harmony with the needs of the customer, customer engagement will not happen. Similarly, in businesses with low volume/ high value offerings, such as aircraft engines or luxury goods, unless there is an understanding of what drives customers to make a purchase, competitive positions in markets can be lost very quickly.
As a result, there has been a major driver for businesses to embark on transformation programmes to turn around business performance where there is a perceived “front end problem”. Some examples of where this will manifest itself is in a high level of customer complaints in banks, or a high amount of customer ‘churn’ in mobile phone companies, or a large decline in footfall in retail companies.
Transformation programmes with a focus on excellent customer engagement will start with the human side. Employee engagement is key here, as customer engagement will not happen without well trained and motivated front line staff. A technology solution will back this up: a well defined CRM system that captures the right data and enables understanding of the drivers of customers to make a purchase, will create a strong foundation for improved customer engagement.
The “back end” of a business is not seen by customers, but when it goes wrong it can have a devastating effect.
There is a natural tendency for Directors to pay less attention to the back end of the business: what the customer does not see does not matter, and if the business is reporting good profits, which compare favourably with other companies in its sector, there is little incentive to improve a bloated and inefficient back end operation.
Until it all goes wrong.
The HR function is a strong case in point. An ineffective HR function can quickly lead to a disenchanted workforce, resulting in very costly high levels of staff turnover. Issues such as effective communication with the workforce; fairness and consistency in numeration schemes, including salary, benefits and bonuses; plus progressive training programmes, can improve business effectiveness significantly. Also, talent attraction (my personal key area of interest), talent management and development is key to business success, particularly in highly competitive markets for the best staff.
Finance and accounting systems can, on the surface, report good profits, whereas in fact it is heading towards loss, or bankruptcy (witness the Enron debacle a few years back).
IT systems are no less of an issue. The highly publicised and damaging downtime on RBS systems last year, where customers were unable to access their accounts or withdraw cash, is a manifestation of the problem that most major banks have: the need for transformation programmes to keep hardware and applications up to date.
For many organisations, transformation is a continuum – seen as not something that has a start and end, but carries on over time. For more on this, see an article by the CFO of Ford on why he thinks transformation is a way of life.
Next topic in the series (coming soon): Cloud.