Rethinking the organisation of the Back Office by Head of Back Office at Endesa (ETOT 2017)

From traditional projects to
rethinking the whole organisation
08/11/2017 9th ETOT Summit

Question for the audience
How often is your business starting efficiency and/or cost reduction projects?
1. Never, we are efficient enough.
2. Regularly, improvements are important in our organization.
3. Constantly, we are stretched to the limit.
4. We have only one project, but we extend it periodically.
08/11/2017 From traditional projects to rethinking the whole organisation 2

Part I: BO’s traditional projects
Traditionally BO has been involved in different projects with a common denominator:
they are about the search of efficiencies.
Typical efficiency projects are:
• Implementing a new process (or regulatory requirement) with a minimum cost.
• Optimizing current processes increasing automation.
• Cost cutting.
However, these projects typically suffer similar aches: difficulties measuring
achievements, organizational inefficiencies, the relationship with ICT and the BO’s role
itself.
08/11/2017 3From traditional projects to rethinking the whole organisation

Difficulties measuring achievements
Which KPI gives us useful insights?
• Profit earned / cost reduced: Not always available.
• FTE’s saved: Administrative staff has lower costs.
• Qualitative KPI: You can select only positive indicators.
Is it really worth to measure performance?
• Automated vs. Manual KPI gathering
• Resources consumed on internal reporting
It is deceptive to promote the use of indicators when their use involves costs that
overweight benefits.

Organizational inefficiencies (I)
In many cases the organization itself is the main barrier to efficiency improvements. This is
due to excessive use of hierarchy and internal promotion based on resources/activities
controlled.
Internal competition for resources. Lack of collaboration. Excessive use of procedures and
organizational directives. Responsibilities described as lists of tasks.
1. Process segmentation: Efficiency projects are limited by departments’ boundaries.
Departments have incentives to increase the complexity of their processes and
overvalue their importance.
2. Work duplicities: Departments only trust on work done internally. Synergies among
departments are not considered. Departments are always short of staff. Staff is ever
increasing. Competition for implementing regulatory requirements.

3. Systems organized by departments: Each department has its own systems and
databases. Complex systems’ map (like an atlas).
4. Tailoring systems: Departments attempt to implement all their tasks into their
existing systems, even where it is not efficient. High level of systems tailoring.
5. Data duplicity: Each department develops each own database with its own data set.
Multiple interfaces are required. Meetings include discussion on data accuracy.
6. Systems’ budget segmentation: Budget divided among departments. Departments
are incentivized to spend it completely . Budget always falls short.
7. And so on …
Organizational inefficiencies (II)

Business – ICT Relationship
Responsibility ambiguities: ICT is seen as a competitor. The Business considers that
tasks automated by ICT became ICT’s responsibility. ICT assumes responsibilities on
part of the business process. Bad mood relationship Business – ICT.
Tools developed by the Business: Departments develop their own tools whenever it is
posible. Use of Excel spreadsheet is the norm. Departments include staff with ICT’s
skills.
Tools provided by ICT: Business and ICT goals on tools can be different. Business
requirements on ICT’s tools can be biased by experience with tools (and Excel)
internally developed. Business staff rejects to assimilate knowledge associated with the
new tools. Business staff demands ICT the users’ manual describing their tasks.

BO’s traditional role
Traditional BO is limited to administrative tasks: The Business considers that BO’s
projects are circumscribed to administrative tasks, not including other Business’
processes. Projects scope limited by process segmentation.
Administrative BO is something from the past: Administrative tasks must be
automated or outsourced. The administrative BO does not add value to the Business
only reduces operational risk; it is a cost center.
Taking advantage of BO expertise: Working on automation and efficiency develops
new skills that can be used by the Business. But this is not about administrative tasks.
Having an administrative BO is pointless, but having staff with automation skills is
important.

Part II: Challenges ahead
• Regulatory burdens: Regulatory requirements increase steadily pushing for
automation and cost reduction projects.
• New technologies: They present opportunities and threats to the business. They are
opportunities for increasing efficiency. Innovation as a skill.
• The digital transformation: Digital revolution will affect businesses and also
represents an additional requirement for automation and cost cutting.
Automation and cost cutting are included in all posible scenarios.

Part III: Rethinking the organisation
One single vision
Single process: There is only one process that involves all the departments. All
departments’ processes and procedures must be shared.
Single systems’ map: Systems do not belong to departments but to the Business.
Duplicities must be identified and removed due to their costs and the operational risk
involved. Specialization of systems is required.
Single systems’ budget: It is a consequence of the single systems map. Avoid
reporting assigning budget to departments.

Remove the fat
Stop internal work: Internal work is ineffective by definition and must be automated or
discontinued. We must be critical with such type of work. “what if we don’t do this?”
Centralization of tasks: It is efficient but can be seen as aggressive.
Manage duplicities through transversal workgroups: Performing similar tasks in
different departments may be a requirement for the good running of the business. A solution
is to define workgroups transversal to the different departments with the aim of optimizing
the works, unifying the tools and eliminate any duplicity that could be detected. No tasks or
staff are moved away from the departments.
Achieve full automation: Apply “Autonomation”, used in Lean Manufacturing and Toyota’s
Jidoka principle. Even controls must be automated, designing processes that only stop
when failures are detected. Only monitoring and improvement activities performed by the
staff.
Question manual tasks: Ask “Is this truly needed?”

Empowering your staff (and BO’s new role)
Tasks will be different: Manual tasks will disappear and there will be new tasks related
with monitoring and improvement of processes.
Higher responsibilities and new skills are required: The employee must assume
responsibility on the correct running of the process, not on performing himself the tasks.
This imply more autonomy, making its own decisions, flexibility and collaboration. Could
you transform the traditional BO staff?
Technological edge: New skills include knowledge of new technologies (digital
transformation) and innovation. Our staff must be constantly learning and experiencing
the new tools, ideas and technologies affecting its work.
BO’s new role: BO staff must develops specialized skills related with efficiency and
automation and assume the role of process specialist. We must motivate our staff to
evolve into the new role. Opportunity to develop talent.

ICT Engagement
Accept that tools require differentiated roles: ICT => Technical role. Business =>
Process role. Tools’ selection, implementation, use, monitoring and improvement must
involve both ICT and Business. All decisions made jointly by ICT and the Business.
Accept rethinking the process: ICT must have some knowledge of the business and the
business must have some knowledge of tools. The use of tools must be oriented to extract
the maximum value from them, in some cases requiring the modification of the process in
order to take advantage of new capabilities of the tool.
Synchronise organisations and needs: Adjusting business teams, ICT teams and tools
in order to fit together for the extraction of the best possible value of our resources. ICT
must organize itself according to the Business needs. If Business’ systems are not
organized by departments, ICT must not organize itself according to Business’
departments.
¿ICT staff working mixed with Business staff? ¿Transversal workgroups?

The flexible organisation
AGILE Methodology.
Recommended video: https://www.youtube.com/watch?v=NcB0ZKWAPA0&feature=youtu.be
08/11/2017 14
¿How to apply AGILE to a traditional organisation?
Managers/Coachs: Mangers must now act as
coachs, no bosses. They have access to all
resources available. They work as a team.
Units/Squads: Empowered and responsible for
the execution.
Workgroups/Chapters: Improving efficiency
transversally to the units.
¿Do we still need a FO/MO/BO organisation?
From traditional projects to rethinking the whole organisation

16/08/2018 15
Thanks
From traditional projects to rethinking the whole organisation
Antonio Sevilla Cervantes
Endesa’s Back Office
antonio.sevilla@enel.com

Rethinking the organisation of the Back Office by Head of Back Office at Endesa (ETOT 2017)

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