Low-code development can fundamentally change the back office
When the savings made through automation are higher than the cost of its development and procurement, it naturally makes financial sense to automate back office processes. As business success in no small part hinges on back office performance, it’s worth considering how its processes can be cheaply and flexibly digitised.
If the back office is fast, so is the business
Take a moment to imagine this scene: you enter a restaurant and are greeted by a waiter in a spotless, freshly ironed shirt and tie. The waiter guides you through the dishes on offer. Yet, when your meal is served what arrives is a burnt cutlet with stale potatoes accompanied by a glass of chlorinated tap water served up by the sommelier.
What does a poorly operated restaurant have to do with this subject? Well, it sums up the essence of the front office and the back office and their working relationship. The waiter in a nicely ironed shirt is the front office, they ensure that guests receive their favourite dishes and beverages in the most comfortable, unimpeded way possible and provides them with a great experience. The kitchen and its staff, from the chef to the accountant and the purchasing agent to the dishwasher, are the black-office. They procure the raw materials; keep the plates clean; ensure that everything is tasty; calculate the production costs of servings and the end-user prices to make sure the bill presented to the customer is calculated properly; they also hire new staff when necessary; and handle administration tasks and so on.
By definition, the role of the back office at any company is to support the work of the front office. They handle all administrative tasks like finance, accounting and IT. Although, it isn’t the back office that directly makes money, without its work even the best front office would be just an empty shell. The company’s coordinated operation depends on the back office, but it’s in the dark without feedback from the front office. Like in a restaurant, the back office only knows what the guests are interested in because of the waiter. Once they have all the necessary information, they should react quickly, in order to gain an advantage over their competitors.
All companies will become software producers
So, how can we react quickly? This is a subject that has been in the centre of attention for years, with digital transformation and agile companies in the limelight. These are two closely interrelated fields that can improve a company’s reaction capability. However, this can only be realised through continuous software development. For years, market analysts have been saying that digital transformation will reach everyone. Even banks, which traditionally have a high level of digitalisation, are going to be seriously challenged by fintech companies that are faster and can cover certain niche markets more effectively. Industry 4.0 plays a disruptive role in the manufacturing industries, proptech firms bring a new approach to the real estate industry, while agtech/agrotech companies come as a breath of fresh air in the field of agriculture. We have seen that the IT sector is reacting faster and faster, and this rapidness of reaction can shape market forces in the various industries in no time at all.
That is why the IDC can safely say every company will become software companies and, in a few years, the majority of these, i.e., the more successful firms, will become software-controlled digital innovation factories with daily code installation regardless of the sector they operate in. There are some spectacular signs of this change, for example Robert Bosch, the world’s largest automotive supplier, now partly considers itself to be a software firm, the software development and the conventional automotive engineering fields are starting to merge.
However, the truth of the matter is that the majority of major corporations simply lack the capacity for IT to serve the back office demands at the speed required to boost competitiveness. The employees at these firms, from finance and procurement to the operations departments require mobile and workflow applications and portal functions in a wide assortment and by yesterday. Many organizsations have attempted to apply unique methodologies and strict regulations and the reconfiguration of software architecture to manage the tension between demand and delivery, yet these mostly end up just putting limits on the needs of their employees.
Good ideas, continuously improving implementation
The appearance of low-code development platforms, partly tied to the strengthening of disruptive and digitalisation trends, has brought a fundamentally new approach. Although developmental tools, which take application development to a higher level of abstraction and only require a minimal amount of code writing already appeared over ten years ago, but the concept itself was only defined in 2014 by Forrester Research. A development environment can be considered a low-code platform if it provides the rapid delivery of business applications, minimal manual coding and introduction (setup, training, etc.) coupled with low investment requirements.
Great progress has been made, the main manufacturers of tools supporting business processes (Microsoft, Oracle, ServiceNow, Salesforce) have also joined the market, and low-code tools have also been greatly refined. As the manufacturer of one of the world’s leading low-code development tool, Mendix (represented by BlackBelt in Hungary) defines a (good) low-code platform based on a set of 9 principles: such platforms should provide model-driven development; serve as a framework for the collaboration of the concerned parties; support the entire life-cycle of corporate application development with agile work processes; have a cloud-based background that ensures the rapid installation of applications; have a certain degree of openness, i.e. ensuring its integration with practically anything; support multi-user development; provide for experimentation and innovation, yet also ensure maximum governance and control; and should establish a community, since a platform is unimaginable without community.
It’s worth paying attention to what Mendix is saying, as according to the Gartner research company’s latest (September 2020) Magic Quadrant on low-coding tools, at least a quarter of company leaders considered Mendix’s platform to be the most visionary compared to competitors such as Appian, Microsoft, Salesforce or OutSystems.
Beyond the back office towards ERP
Not only does a good low-code platform bridge the gap between business ideas and IT (development), it also does so in the opposite direction to ERP. This is precisely the direction that Mendix is heading in. In the evaluation of the platform, Gartner specifically emphasises its strategic partnership with SAP as well as the fact that it can be closely integrated with HANA along with the platform’s latest innovation, the Data Hub, which provides access to sources of corporate data (Microsoft, SAP, Siemens Teamcenter, etc.) within Mendix.
Previously, all internal company application developments went through the following channels: based on feedback from the front lines, the back office comes up with an idea that requires the development of an internal application (for example, a modified, mobile version of an existing reporting application). Then a business analyst comes up with the specifications, which they hand over to the software developers, who create the system design and divide it into sub-tasks before passing them on to the programmers who do the coding. Finally, the product is tried by testers, etc. After multiple rounds, the product is released, allowing to be integrated into the corporate system. All of this takes a couple of weeks or even months and by the time the internal application is complete, which ties down the working hours of five or six staff members, they can start working on the modifications as the business environment has changed in the meantime, along with the concept. This most often results in a case of overkill, i.e., the same method is used for smaller-scale developments, which is actually only a variation on a previously coded task. It’s often far cheaper for someone to manually produce the report in question from time to time.
Low-code platforms reverse this approach. They start from the assumption that most repeated processes more or less require the same functions, procedures and data. Therefore, if these are prepared in advance, a significant share of the tasks can be handed over to those in the back office. They can use a graphic interface to piece together the functions they need, while the platform automatically generates the application’s code based on the previous projects and cases. If something doesn’t work out, they can confidently rely on the developers and IT, who can fine-tune all the elements and take care of the integration. Mendix even employed machine learning for this purpose on its own platform in order to support the ongoing work of citizen developers.
This more rapid form of application development is particularly important for back office processes as this field traditionally involves many manual tasks, which can easily be digitalised and automated. In this regard, a low-code platform can provide a great boost for the company and the direct consequence of automated processes is the reduction of errors.
Nevertheless, it’s worth keeping in mind that these platforms can’t satisfy all demands. Complex ERP tasks demand expertise measured in cold, hard years of engineering work. Although the development process can be made more flexible on the various platforms, in such cases the customisation of a software package could be a more targeted solution. However, when an ERP or core system isn’t the only alternative, a project’s human resource requirements can be radically reduced with low-code platforms.