Interim Executive Resources

Understanding Your Business Processes

Business processes are simply described as business activities which are expected to produce a specific result. Most significantly, it pertains to activities aimed at accomplishing determined organizational goals. The business process is concerned in fulfilling customer needs by the delivery of goods or services. Business processes in each company or business varies. They are largely dependent on the business approach used, corporate structure, size of the company, etc. Nevertheless, there are steps to go through with business processes which are best practices and move a company in the direction of higher performance.

As a company forms and grows, business processes are put in place to help the business meet customer needs and solve specific business issues.  Initially, these processes are not really documented or managed formally.  They are simply defined and executed by the people that work at the company – “Let’s do that this way…”  There comes a time where the business becomes large enough or complicated enough or “We’re bringing in new people that need to know how we do things around here…” and putting some definition and rigor around business processes becomes wise.

For a company that is successfully meeting customer needs and wants to build more formality around how their business works, a first step is to perform a business process inventory—what are the types of processes in execution already and how can they be organized so that a business can have intelligent discussion on how to improve their situation.  Creating a business process inventory is essential as a baseline and should consist of a minimum of a process name and an owner.  Another good piece of information to assess is “process status”, i.e. what is the maturity level of the process itself – undocumented?, written down but not followed?, well-defined and well-executed?  It is also wise to roughly organize the inventory into groups of related items, for example – customer facing activities, financial activities, sales activities, etc.

Through developing a business process inventory, the organization can link business problems and irregularities to specific areas of the inventory.  Most often, the business knows of these issues, “It’s not working very well in this area…” and these issues are many times the trigger for deciding to get more formal with business processes in the first place.

After completing a business process inventory, a good next step is to stand back from the inventory details and use good business judgment to develop an appropriate “business process architecture”.  This is basically an overall design of important functions for the business and becomes a map for business process activities.  A business process architecture can be defined for the entire company or only a portion of it and will vary due to the nature of the business.  A manufacturing business will have a different business process architecture than a restaurant or an on-line retail store.

Here are examples of process architectures that vary due to the nature of the business:

Business #1:
Product Manufacturing
Business #2:
Electronic Manufacturing Services
Business Process Architecture:
Business Planning
Demand Generation
Order Fulfillment
Product Generation
Financial Reporting
Business Process Architecture:
Customer Acquisition
Design Specification and Delivery
Prototyping and Test
Staff Skill Development
Financial Planning and Reporting

Once the business process architecture is defined, it is wise to reorganize the business process inventory into the newly defined or adopted architecture.  This allows intelligent grouping of various work activities and sets the stage for decisions to be made on the best areas for downstream process development work.

Through accomplishing a business process inventory and then organizing it into a well thought out business process architecture, essential groundwork is laid for effective process work at the detail level.  Continuous diligence towards business process management will gradually bring about real and measureable improvements in costs, quality and customer satisfaction.