Enterprise Planning
A Back Office Perspective
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Author: Neil Bentley
© Copyright AOM International 2013
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CONTENTS
Introduction................................................................................................... 3
Key Differences .............................................................................................. 4
The 4 V’s ................................................................................................................................. 4
Volume ........................................................................................................................................................... 4
Variety ............................................................................................................................................................ 4
Variation ........................................................................................................................................................ 5
Visibility .......................................................................................................................................................... 5
The strategic role of Service Levels ........................................................................................ 5
Summary so far… ........................................................................................................................................... 6
Implications for Back Office planning ............................................................. 6
The role of Policy Stocks......................................................................................................... 6
The importance of productivity ............................................................................................. 7
The need to load balance between units ............................................................................... 7
The need for multiple time horizons...................................................................................... 7
Implications for Operations Control ............................................................... 7
Planning is nothing without control ....................................................................................... 7
Choosing style of control........................................................................................................ 7
A checklist for selecting a planning solution ................................................... 9
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Author: Neil Bentley
© Copyright AOM International 2013
Confidentiality: Public
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Introduction
The PPF asked me to talk about the differences between front office and back office planning and having spent
much of the past 20 years helping clients plan and manage their back office operations, I am very pleased to
share some thoughts.
Over that time my organisation has worked with clients from

financial services,

Insurance companies,

Outsourcing operations,

Public sector operations
… And the work has ranged from relatively straightforward processing of mortgage applications, claims and
such like through to complex wealth management, claims adjustments, investigations work and so on.
… and this really makes the point about the management of back offices: there is a huge variety to consider
and we should be very careful not to make sweeping generalisations about what will or won’t work. In short,
there really is no such thing as the “average” Back Office.
It was Professor Sam Savage who coined the term “The Flaw of Averages” and this is a theme that will recur
through this discussion. It is also worth mentioning Maslow’s “Law of Instrument” which is popularly
summarised as “if you only have a hammer then you have to treat every problem as a nail”. My point here is
that a back office planning solution would not help you run a contact centre and vice versa. Enterprise
planning requires an understanding of how the operational challenges drive resourcing strategies and hence
drive planning solutions. A really good enterprise planning approach will also look at how resourcing strategies
can interact.
I intend to cover the following ground:
1.
2.
3.
The differences between front and back office that affect the planning solution
a.
The 4 V’s of operations
b.
The strategic role of SLAs
The implications for back office planning
a.
The role of Policy Stocks in planning
b.
The importance of productivity
c.
The need to load balance across units
d.
The need for multiple time horizons
The implications for operations control
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4.
a.
Remember planning is nothing without control
b.
Choosing your style of control
A checklist for considering back office solutions
Key Differences
The 4 V’s
Professor Nigel Slack (See Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack,
Stuart Chambers, and Robert Johnston 2007) gives us one of the best frameworks for considering the
differences between front and back office – and as such the different drivers of the planning solution. This is
referred to as the 4 V’s. Let’s take these in turn.
Volume
In contact centres, volumes of calls can often be very high indeed and as all statisticians know, larger numbers
make for better distributions. Things like average handling times are easier to calculate and more useable for
large volumes. But even contact centre planners understand the flaw of averages and wouldn’t plan a day on
the basis of the average number of calls per hour.
Volumes in the back office could be considerably lower with some tasks being measured in terms of one or
two per week, rather than hundreds per day. Lower volumes make for weaker averages and greater impact of
forecast error.
Variety
Contact centres do, of course, contain a lot of variety – particularly in the modern world of web chat, email
and so on forming part of the mix. But if you go to most contact centres they take phone calls with an average
handle time of somewhere between 2 and 10 minutes and aim for a service level of 80 to 90 per cent of calls
answered in 10 to 20 seconds. The call content might vary but the basic set up is very consistent.
Now in a back office we might have tasks that take a minute or an hour - some requiring a high degree of
specialist skill and others being very quick to learn. If we take into account end to end process time – and
increasingly operations do want to measure outcomes as well as activities – the we have seen variation from
“one and done” tasks that are completed in minutes to complex insurance adjusting that might take years to
complete.
A typical back office environment, like an outsourced insurance processing operation might have a mix of
service levels including same day, 3 day and 5 day service – making for a much more complex planning
environment. Indeed it seems to me that some operations have tried to avoid this complexity by either going
for a simple “next day processing” solution or (worse) for a “pulse” solution where back office work is
effectively pushed into the operation as if it were phone calls.
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Variation
By variation we mean how much the demand fluctuates above and below the average demand. Now in
contact centres we know that variation on a 30 minute basis is a big deal – and that is why it is so important to
have WFM technologies that can anticipate staffing requirements at that interval.
But is variation less of an issue in the Back Office? Actually given what I mentioned earlier about low volumes,
the variation can be significant, but often the variation we are concerned about in the back office is more the
variation from week to week and month to month (although back offices do often have shorter term, hourly,
deadlines these days and this should be taken into account). It is generally less of an issue what hour of the
day the work arrives but whether our peak work volumes occur during a holiday period or when our actuaries
are sitting their exams.
Visibility
The back office may be less immediately visible to the customer than a contact centre but it is still the shop
window for many operations. How well an operation performs its back office operation can make a significant
difference to the customer experience.
Although this has less to do with planning per se, I think that the visibility and immediacy of contact centres
versus back office work has played a significant part in thinking about the management of quality. You can’t
check and rework a phone call! As a result although contact centres do record calls for quality monitoring, a lot
of emphasis is put on getting it right first time. There is a lot of emphasis on scripting and training agents.
But with less immediacy in the back office we often see a quite old fashioned approach to quality management
that relies on supervisor checking and then reworking errors. The Total Quality ideas of “right first time” seem,
at times, to have been forgotten.
The strategic role of Service Levels
If a customer is waiting in a telephone queue it makes a lot of difference if they are answered in 2 minutes or
20 minutes. If a customer has written to their insurance company regarding a simple change of personal
circumstances, they might be entirely indifferent to whether they receive a response in 3 days or 5.
Of course the speed to decision in mortgage applications or the speed of settling a motor claim (so called
“crash to cash”) could be a competitive differentiator, but the point here is that service levels can vary
substantially and should be driven by what is important to the customer.
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Volume/Variety
High
To be clear: service levels have a significant influence on the cost of the operation, as we can see in the
following illustration.
Low
Resource to
peak demand
Smooth
Demand
Weeks
Smooth-andmatch
Days
Hours
Match resource
to demand
Seconds
As we all know pure inbound call centres are an
intrinsically expensive operating model. In order
to deliver the required levels of responsiveness,
there will be dead times in which staff are simply
waiting. No matter how perfectly the actual staff
schedule matches the modelled requirement
there will be some “dead time” - and that is even
before we allow for shrinkage (that might not
happen) and the practicalities of scheduling real
people.
Service (responsiveness)
On the other hand, in the back office it may be
possible to carry some work from one hour to the next or even from one week to the next meaning that
demand can be smoothed and there is less need to staff up to peak volumes. So the greater the required
responsiveness, the more costly the operating model.
This is why many operations are becoming increasingly interested in blending highly responsive tasks such as
calls with other tasks that don’t need to be processed immediately.
Summary so far…
So a back office planning solution needs to cope with considerably variety in task types – particularly with a
variety of service levels. It needs to cater for lower volume, which means that average volumes can be
meaningless and may mean that any variety has a bigger impact on the plan. And with lower visibility it
remains very important that issues surrounding quality are consciously kept “in sight and in mind”.
Implications for Back Office planning
I want to focus on four aspects of back office planning that I think are most often overlooked.
The role of Policy Stocks
We have talked about the strategic role of service levels and how a blend of more or less time critical work can
help to create more efficient capacity utilisation. Part of this involves smoothing demand by allowing a work in
progress buffer between the incoming work and the processing of that work. We call this buffer of work in
progress a “policy stock”. This is because it is a stock of work deliberately planned for to smooth the output of
work.
Little’s law will give an indication the average level of work in progress for a given average work volume and a
given SLA, but planners should take into account both the variation in demand and the flexibility/variability of
resource in order to set a policy stock that will smooth demand as much as possible while putting an emphasis
on meeting service level targets.
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The importance of productivity
Given what we have said about variation and variety, it is important to be able to treat productivity as on the
planning variables.
Too many approaches to planning seem to rely on a rather outdated “work study” approach reminiscent of
manufacturing environments. This means that standards times that are built into plans are often taken to be
100% correct but this will rarely be the case. Small changes in the mix of work, process innovations or even
changes to the make-up of a team can all affect productivity. If productivity is not planned to a realistic – and
maybe challenging level – then there is really very little point in having a plan in the first place.
The need to load balance between units
The back office can often contain many very different units – all working side-by-side. In one Life and Pensions
back office we came across an operation with multiple products working on New Business, Policy Adjustments
and Premium Administration across a number of different technology platforms. Each small silo carried
contingent staff to cover things like surges of work or shortages of resource, leading to a very sub-optimal
outcome. The same scenario can arise in banks, public sector operations and so on.
This is not to say that these sorts of complexity cannot arise in a contact centre, but any planning approach
must fundamentally assist the discussion and active movement of work or resource between units – breaking
down silos and creating more optimal staffing models.
The need for multiple time horizons
There is a temptation for planning to focus on one time horizon – whether that is planning for 30 minute time
intervals or planning for days in the week but the profile of the four V’s means that back office planning really
must work over different time horizons. For example, there is little point in planning in 30 minute intervals for
tasks that take hours to complete!
Planning with policy stocks to smooth demand will often require good weekly planning to make sure that
service levels are met and that policy stocks are maintained but it may be equally important to plan over the
longer term to ensure that skills are developed sufficient to meet changing demand patterns.
Implications for Operations Control
Planning is nothing without control
Although we don’t have time to get into operations control in detail here, we should never forget that
planning is a means to an end, not an end in itself. The purpose of the plan is to help set the operation up to be
able to deliver the best quality and service as efficiently as possible – and then to guide tactical decision
making as circumstances unfold. Sticking slavishly to a plan is rarely going to produce the best outcome.
Choosing style of control
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For this reason, deciding on the style of operations control is important. With longer task times, greater variety
and potentially more nuanced decisions around task priority than might be found in a contact centre our view
is that more emphasis needs to be given to embedding control with the team leader and with team members
themselves.
Command
and control
Automated
Basis of control
Coach and
co-ordinate
Our view is that it is important to choose consciously the type of control you introduce to match your attitude
towards your staff. The figure below illustrates the point.
Part of
the process
Difficult to
manage
Greatest
Asset
Attitude to people
If the staff are seen by the operation to be simply part of the process – perhaps the bit that just hasn’t been
automated yet – then a method of control that seeks to automate the flow of work to the staff and to reduce
their discretion would be consistent. (It might not be a very rewarding job of course!)
Similarly if the prevailing view of management is that staff are difficult to manage – maybe even untrustworthy
and out for what they can get – then a command and control approach that watches their every move and
challenges poor performance robustly might fit that mind-set.
On the other hand, if managers believe that their staff are an important asset worthy of nurturing and
developing then a more collaborative approach – one based on coaching skills and co-ordinating efforts – will
be more appropriate.
My point here is not to make a value judgment on management styles but only to point out the risks of mixed
messages.
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A checklist for selecting a planning solution

Do we have coherent method, skills and tools?

Are they compatible with operating context?

Cope with low(er) volume, high variety

Cope with volume variability appropriately

Allow for planning of different and changing service levels

Can we aggregate plans across differing operating contexts?

Do we have control process necessary to deliver the plans?

Are they compatible with management context?
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