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What is Back-Office Reform? How COVID-19 sped up changes

[April 28, 2021] BY Worker's Resort Editorial Team

Drastic pandemic-induced work reforms 

While the pandemic has affected remote work, online meetings, and other ways of working in Japan, there is also growing interest in the way people work in administrative roles such as accounting, finance, and general affairs.

Viewing COVID-19 as a time of change, “back office reform” is an attempt to bring about radical changes in back-office operations. In 2020, there was a growing movement among Japanese companies to drive this forward. In this article, we will look at the background of back-office reform and the many related conferences that reflect growing enthusiasm around the subject. 

Why back office reform is picking up steam in Japan

Looking back on Japanese society in 2020, remote work spread rapidly due to the state of emergency in early spring. However, the rate at which remote work was being implemented differed greatly depending on the job category.

Persol Research and Consulting Co., a Japanese human resources consulting firm, conducted a survey titled, “Third Emergency Survey on the Impact of COVID-19 Countermeasures on Telework” in 2020. According to the study, the rate that Japanese companies were implementing remote work as of May and June 2020 was as follows: 66.1% for planning and marketing roles, 54.3% for sales promotion and sales planning roles, 47.0% for sales personnel (corporate) roles, 37.1% for general affairs and human resources roles, and 31.7% for finance, accounting, and legal roles. There was more than a 30% gap between planning/marketing jobs and finance/accounting/legal jobs.

This was at a time when many Japanese people were feeling a great deal of anxiety about the spread of the coronavirus and were feeling uneasy about going out due to the state of emergency. Even so, 70% of the Japanese workers in back-office departments had to go to the office.

This was because these companies were still using undigitized processes like paper invoices, payment management, and paper expense operations. Many Japanese still stamp paper documents with a hanko (also known as an inkan, a name engraved on a piece of wood or stone, which is used in Japan as a personal, official, or group seal in place of a signature), and many employees must come to work because of this. In addition, accounting departments still receive and send out many paper invoices, and so accounting and finance staff have no choice but to come to the office for processing.

On the other hand, it is also true that the coronavirus has brought to light the reality of back-office operations, which has increased the momentum to change things. An example of this is the “Making Accounting More Free” project.

This project focuses on reformation within accounting departments. The project was launched by Robot Payment Corporation, a Japanese company that provides a cloud invoicing system called “Billing Management Robot.” In response to the company’s call for change, more than 100 companies, including IT tool companies, have gathered as sponsors. On September 30, 2020, the company placed a 15-page ad in the Asahi Shimbun, Japan’s second-largest daily newspaper, and submitted a petition to the Ministry of Economy, Trade and Industry (METI) to expand IT implementation subsidies and promote industry-government-academia collaborations to improve the way accounting departments work.

The group has also estimated the financial effects of digitizing invoices. The yearly reduction in postage costs alone amounting to about 591.29 billion yen (about 5.5 billion USD) and labor costs to about 551.13 billion yen (about 5.1 billion USD).

A conference showcasing the ideal back office

The “Making Accounting More Free” project held an accounting-focused online conference on October 22, 2020. The event featured a three-part panel discussion. In addition to 10 accounting companies, their clients participated in the panel discussion, where they analyzed the current situation and discussed issues and solutions from their respective standpoints.

According to the event report, they also discussed how they would like accounting departments to look once IT tools are implemented, thereby eliminating the need for paper invoices. For example, to increase their value, they should look beyond efficiency and develop the communication skills to explain to upper management about the highly specialized nature of their work.

There was also a back-office-focused conference held three months earlier on July 29, 2020. The concept of this conference was to bring together companies that endorse going paperless, the use of cloud management operations in the back office, and to explore the future of the back office through panel discussions and successful case studies. The main topics discussed were the know-how needed to go paperless, how to get rid of the hanko, as well as the cloud services needed to achieve this.

The Japanese government also gets involved in the movement

Info Mart Corporation, one of the sponsors of the “Make Accounting More Free” project, is a Japanese company that provides a BtoB Platform Invoice service that prepares invoices on the cloud. It held an event called, “Less is More. An Event to Discover Back Office Issues in the Age of the New Normal.”

Less is More,” which is also the name of the owned-media site operated by Info Mart, is a phrase left behind by Mies van der Rohe, one of the three great masters of modern architecture. The choice of words is typical of the company, which aims to create a paperless society through cloud systems that replace paper transactions in the corporate world.

This event was held online three times in July, August, and November 2020. Each time, experts in various fields gave keynote speeches, and B2B cloud service companies participated as well. 

Kikuzo Sodeyama led the first keynote session. Sodeyama is a Japanese tax accountant and director of SKJ Sogo Tax Accountant Office. He is also an alumnus of the National Tax Agency and participated in the drafting of the Electronic Bookkeeping Act (a law for the electronic storage of transaction documents such as contracts and invoices) as an information technology specialist. 

The other speaker was Mr. Hidenori Kim, President of Hite & Co., who has more than 25 years of practical experience in general affairs and facility management, and has worked for major corporations in Japan and overseas.

Kim, who gave a lecture on the theme of a “Practical Guide to General Affairs Strategy and Finance in the Age of the New Normal,” noted that COVID-19, which has advanced remote work in Japan, is also a time of opportunity to review the costs required to maintain, operate, and manage facilities. In general, facility costs are said to cost 1 to 1.5 million yen per person per year, and depending on the rate of remote work implementation, costs could be reduced by hundreds of millions of yen. 

In the second and third sessions, the keynote speeches covered a variety of topics about the COVID era. In particular, the third session featured speakers from METI and the Small and Medium Enterprise Agency (SME) in charge of digital transformation (DX), indicating a growing momentum in which the public and private sectors are working together to promote DX and back-office reform.

Related article: Why is DX A Must? The truth behind Japan’s 2025 Digital Cliff

Which service is best for you? Cloud-based business support services are growing in Japan

The lineup of companies that participated in the first session alone is quite extensive, each with unique characteristics. The following is a brief profile of each service (all companies are Japanese).

Ashita-team Inc.’s “Zettai! Evaluation®︎ZERO” and “Ashita-no-Cloud” (Human Resources, Evaluation)

Ashita-team, a human resource consulting firm, is a one-stop-shop for HR evaluation system consulting, cloud services, and outsourcing. It supports education, evaluation, and talent management, which are indispensable for organizational transformation. It also helps to create optimal teams through human resource development and corporate growth.

ALTED Corp.’s “X-point Cloud” (Workflow)

With a mission to create new approaches to working in Japan, ALTED provides an affordable cloud-based workflow system to improve productivity. Their system allows time-consuming office procedures and multiple paper applications to be processed in the cloud and is compatible with smartphones and tablets.

F&M Co.’s “Office Station” (Labor, Year-end Adjustments)

F&M, an information service company for small and medium-sized companies, provides a cloud system that manages labor procedures, year-end adjustments, paid leave management, digital pay stubs, and My Number (ID number for all residents of Japan) management. Companies can use different features according to their business needs. The system is paperless and data can be input directly by the employee, greatly reducing the workload of management.

Cybozu, Inc.’s “kintone” (Business application development)

Cybozu, a software company that develops information sharing tools and groupware, provides a cloud service that allows anyone to easily build business applications. It consolidates scattered information such as Excel sheets, messy emails, and piles of paper documents into one. All data is integrated and shared on a single screen, making it possible to visualize the team’s tasks. 

Chatwork’s “Chatwork” (Communication)

Chatwork, a developer of cloud-based chat tools, provides a business chat service that improves the efficiency of business communication, such as e-mail, phone calls, meetings, and visits. It allows smooth information sharing even in work that involves members outside the company. It also boasts a high level of security, allowing it to be implemented by large Japanese companies and government offices.

Neo Career Co.’s “jinjer” (HR and attendance management)

Neo Career, a human resource company, provides a cloud service that allows centralized management of HR-related functions like attendance management, HR management, payroll, expense reimbursement, workflow, condition management, labor management, and employment contracts. Users can choose to combine different functions depending on their needs. 

V-Cube Inc.’s “V-CUBE” (Communication)

V-Cube, a developer of business communication tools, provides a video communication service that is used in all kinds of situations, including online shareholder meetings, large-scale webinars, telehealth, ICT education, and disaster recovery. It is also used to help other issues like remote work and business efficiency.

Payme, Inc.’s “Payme” (Same-day salary payment)

Payme, a fintech company, provides a same-day salary payment service. It is offered as an employee benefit, as employees can receive their salary on the same day they work. In the current era where it is difficult to secure personnel and lots of uncertainty, Payme can be used as a safety net for workers.

WowTech Inc.’s “WowTalk” (Communication)

Software company WowTech is an intuitive business chat and internal SNS tool that can be easily implemented on a large scale. WowTalk can be used on any device, including smartphones, PCs, and tablets. The company’s strengths lie in improving business efficiency, reducing costs, preventing data breaches, and controlling mishaps.

What will back office reform bring to Japanese society?

The DX wave is definitely approaching the back office.

The benefits of back-office reforms are not limited to mere improvements in operational efficiency; the use of IT tools can also strengthen the significance of back-office teams by allowing them to focus on other, more important tasks. As a first step, Japanese companies must review their current operations and proactively incorporate IT tools to teams that can benefit from them.