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Business Process Tutorial

Let’s define Business Processes with a copy/paste from two web-searches:

From searchcio.com…

“A business process is an activity or set of activities that will accomplish a specific organizational goal.  Business process management (BPM) is a systematic approach to improving those processes.”

From Wikipedia…

“A business process comprises a “series or network of value-added activities, performed by their relevant roles or collaborators, to purposefully achieve the common business goal.”

These processes are critical to any organization: they may generate revenue and often represent a significant proportion of costs.   As a managerial approach, BPM considers processes to be strategic assets of an organization that must be understood, managed, and improved to deliver value added products and services to clients.”

 

Business Processes – Diving Deeper

Business Processes are the collection of structured and related tasks or activities that aim to produce a specific goal or outcome.   Businesses usually have many processes in execution simultaneously that have typically evolved over time towards the goal of effectively meeting customer needs.  It has been found that although some businesses can operate without formalizing their processes, becoming more rigorous in this area is a stepping stone to higher performance.

Business processes come in many forms and fashions and generally stratify into two types –

  • physical processes, which yield a physical, tangible result, and
  • information processes, which convey thought and meaning and typically yield a report.

Another way of looking at business processes is through a time-based definition –

  • planning processes for things to be done in the future,
  • execution processes for things being done at present, and
  • reporting processes for things that have already been done.

To tie these two views together, planning and reporting processes are typically information processes and yield reports for managerial review and approval.  Execution processes may have information aspects, e.g. progress reports, but execution processes are typically physical processes and drive the basic revenues of most product related businesses.

Let’s look at the time-based categorization of business processes a bit more deeply.

Planning Processes can be as simple as a staff meeting check-in for goal alignment between two groups and can be as complicated as multi-month business planning project that involves dozens of people.  A basic tenant of effective planning processes is to ensure that objectives of the business are divided into workable pieces across the structure of the organization.

Execution Processes are used to guide and monitor the progress of the plan towards objectives and facilitate understanding and resolving discrepancies between the plan and reality.  Effective use of execution processes allow a business to make adjustments to its resources, its approach and its expectations to optimize progress towards objectives.

Reporting Processes provide the business specific measureable results and communicate those results to those of interest, e.g. ownership, the management team, the employees and the public.  These reporting systems are typically based on a set of metrics that are important to the stakeholders and provide feedback to the business regarding business results.

Complex business processes can be decomposed into sub-processes. These sub-processes have their unique attributes, yet they also contribute to attaining the super-process’ goal.   Analysis of these business processes usually includes process mapping down to the activity level.  Organizations that are process-oriented break down all barriers faced by structural departments and attempt to avoid functional silos. Business processes are usually visualized using a flow chart that emphasizes the work flow or sequence of important activities.

Practical aspects of Business Processes:

It can be useful to divide business processes into groups of activities that are related and drive on basic business concerns.  For example, how does a company find customers and get them to place an order?  Once the order is received, how is it processed to fulfill that customer order?  How are the products listed in the customer order manufactured?  How are next generation products identified and developed?  How is the business performing from a financial perspective?  How is the business performing from the customer’s perspective?

These are all valid business concerns and process-based businesses will have repeatable steps they execute to address the various concerns.  As a business starts, it typically does not focus on business process management.  Small groups of people can communicate well enough to accomplish a business goal without much process overhead.  As the business grows and matures, size and pace and new people introduce complexities not faced by a start-up business and at some point it becomes worthwhile to write down the “recipes” that have made for business success to date and ensure that the recipes are followed to achieve business goals.

The first forays into business process management by a company will typically be driven from the need for management information, in particular periodic financial results.  Owners and investors will want to understand what a business has done.  They demand accurate and repeatable reports and control return on investment to drive business decision making.

The next waves of business process management will typically be driven from an operations viewpoint in that product quality and cost are very visible business concerns and directly connected to company success.  Stabilized and repeatable physical processes help manage what a business is doing and are required to achieve the periodic business goals highlighted by the financial reporting from the first wave of business processes.

Eventually, a business discovers that the planning and  successful execution of those plans lay the foundation for an ongoing healthy business and another wave of processes are installed to ensure that what a business will be doing is as managed as what a business is doing.

When a business has installed a healthy and functioning set of planning, execution, and reporting processes across the gamut of their business concerns, it achieves stability and maturity not possible without a business process management mentality. 

What is Business Process Management (BPM) about?

BPM is the top-down holistic management approach that gives emphasis on optimizing business operations for achieving business goals and maximizing the customer satisfaction.  With stress placed on constant process improvement, business process management gives companies the flexibility of quickly responding to any instance of change management in a competitive landscape.

Characteristics of Business Process Management

  • Process-centric: Business process management involves business assessment and organizing the firm around well documented and defined process as well as managing the lifecycle of the process.
  • Multidimensional: Business process management also involves defining as well as managing relationships not only across the process, but across departments as well for complicated tasks and can even define relationships and interfaces between people and IT systems.
  • Promotes continuous improvement of the process: BPM monitors the performance of the process for identifying and eliminating any inefficiency. The lifecycle of the business process pertains to process management’s cyclical phases. The moment the process has been designed and set up, these will be improved and monitored continuously.

In order to ensure that a business improves on its success and business objectives are attained, business processes should be properly designed and implemented.  If the work flow follows a distorted path, costs are driven up, things take longer to accomplish and there is increased probability of quality issues. Processes should be designed for adding value to customers and should minimize unnecessary activities.

When the business process is well designed, and the organization has a healthy amount of business process mentality, business effectiveness will increase, customer benefits are enhanced, and cost of running the business is reduced.



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Sharper Counsel LLC is an executive short term assignment company dedicated to the improvement of high potential businesses.

In short, we do BUSINESS TUNEUPS.

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