What is a Business Process?
A business process is an activity or set of activities that achieves a specific organizational goal. Business processes should be purposeful, as specific as possible, and produce consistent results.
Business Process Management (BPM) is a systematic approach to improving these processes, helping organizations achieve their business goals. When cost or resource constraints prevent an organization from performing certain business processes in-house, companies may turn to business process outsourcing. Many organizations outsource certain business tasks, such as payroll, human resources (HR), and accounting, to third-party service providers.
To measure the success of a business process, organizations track (i.e., benchmark) the completion of various steps in the process or evaluate the quality of the process's endpoints. When an organization determines that a business process is not achieving the desired goals or outcomes, there are several strategies it can use to make improvements. For example, an organization may choose to focus on business process visibility to identify problems with process performance or execution.
Organizations can also carry out business process mapping to improve the efficiency of their business operations. Business process mapping provides a visual representation of how different processes work, helping organizations get a better understanding of how their business works.
Why are business processes important?
Defined business processes within an organization are important to the success of the enterprise for the following reasons:
- They help organizations identify and understand the actual work required to continue operations and achieve organizational goals.
- They break down the work into systematic, repeatable steps that workers can follow to achieve consistent results.
- Using repeatable procedures to produce consistent results enables organizations to more accurately predict resource needs, reducing the risk of over- or under-provisioning valuable resources.
- Consistency and repeatability of defined business outcomes reduces the risk that employees will implement workarounds or separate procedures that cause confusion, slow tasks, and increase error rates.
- Being able to better measure the efficiency and effectiveness of individual steps in a process enables teams to identify and mitigate inefficiencies and bottlenecks to improve performance — the basis for continuous improvement.
- Teams will be better able to identify where technologies such as Robotic Process Automation (RPA) can be used to further increase effectiveness and efficiency.
Business Processes, Procedures, and Functions
There are many concepts and corresponding terms that describe the art and science of running a business, and business process is just one of them. Business Procedures and Business Function There are two other terms that are commonly used:
Although they sound similar, they each represent different organizational ideas, as you'll see below.
Business Processis, as mentioned above, a set of related tasks that results in a desired output, an established set of repeatable activities.
Business Procedures A clearly defined way of carrying out a business process, detailing the teams and individuals responsible for each part of the process, and the specifications that apply to the execution and completion of each part.
Business Function An organizational unit within a company or organization. Each business function has its own specific responsibilities and activities that must be performed to support the business in fulfilling its mission and overall objectives.
All of these terms represent concepts necessary to run an organization, but they are not interchangeable.
Business Process Categories and Examples
Business processes can be divided into many categories, but the three most common are:
- Operational process. Also called Primary ProcessThese processes deal with the core business and value chain, providing value to customers by helping to produce products and services. Operational processes represent the critical business activities that are required to achieve a business goal, such as generating revenue. Examples of these include:
- Take customer orders
- Product payment processing
- Managing your bank accounts
- Support process. Also known as Secondary ProcessThese include the back-office processes within the business functions that keep an organization running. One key difference between operational and support processes is that support processes do not directly provide value to customers. Examples of support processes include:
- Management process. These processes measure, monitor, and control activities related to business procedures and systems. Like support processes, management processes do not directly provide value to customers. Examples of management processes include:
- Internal communication
- Governance
- Strategic planning
- Budgeting
- Infrastructure or Capacity Management
Some organizations and managers prefer to categorize their business processes by business functions and group them under the following titles:
- Accounting and Finance Business Processes
- Business Development Business Process
- Human Resources Management Process
- Marking and selling business process
- Product Delivery Business Process
Business Process Management
Once defined business processes are in place, organizations need to address business process management.
BPM is essentially the study and improvement of business processes that exist within an enterprise. Typically, you start by designing and implementing the processes, then:
- analyse
- Manage
- Monitoring
- modeling
- Redefining existing processes
These activities help organizations monitor existing processes to ensure they are running smoothly and producing the intended outcomes, and they also identify areas for improvement and help organizations implement changes to create better processes.
BPM also helps identify tasks within a process that can be automated using technologies such as RPA, or entire processes that are candidates for business process automation.
Organizations use BPM software to monitor and control automated and non-automated business processes and help improve existing processes.
The use of BPM and BPM software provides numerous benefits by mitigating risks such as:
- An error or bottleneck that can interrupt the flow of a process.
- Redundant activities in a process.
- Wasted resources.
It also helps to:
- Ensure proper workflow management.
- Minimize costs;
- Create and maintain visibility into processes.
- Improve collaboration between teams who share processes and take over business processes.
- Increase productivity;
- Achieving agility;
- Ensure compliance.
- Increase efficiency.
Business Process Monitoring
One aspect of BPM is business process monitoring. More specifically, business process monitoring is the measurement and analysis of process performance.
Organizations typically use analytics and monitoring software for this activity to track costs, key performance indicators, process cycle times, and detect errors and compliance issues.
Business process monitoring also helps in improving the visibility of business processes by identifying possible problems.
Organizations use functional monitoring to evaluate the functional performance of a process.
Technical monitoring helps measure the technical efficiency of an application by monitoring and recording aspects such as response time and downtime.
Business Process Visibility
Business process visibility gives companies a complete view of each process. This is important because organizations with greater visibility into their processes can adjust their business processes more quickly in response to changing market conditions and corporate requirements. High visibility into business processes also enables management teams to determine whether a process is still aligned with key business goals and objectives, and whether the accompanying steps that help make the process successful are still functioning correctly. This leads to more responsive operations and faster decision-making.
Business process modeling or mapping
Business processes are often represented visually with flow charts that show the sequence of required tasks and assign specific benchmarks or decision points to each one. Business process mapping or modeling uses graphs and charts to visually show how certain processes flow into other processes.
You can think of business process mapping and workflow as follows:
- Sequential business processes. The process is outlined in a document with clear start and finish points. Following this process map, an organization performs a sequence of actions to complete a task within a given timeline.
- Status-driven business processes. This process does not have a strict beginning and end. It can end at any stage depending on changes in workflow, the nature of production, or office culture. Also, in a status-driven process, it is common for the same steps in the process to be repeated or cycled.
- Concurrent business processes. When activities in a business process have parallel execution, they are executed simultaneously. This type of business process execution requires that the activities of all branches are completed before the next step in the business process can begin.
History and evolution
The works of economist Adam Smith, scholar and author Thomas Davenport, engineer Frederick Taylor, and management guru Peter Drucker have had a profound impact on the way organizations define and handle business processes.
Smith said, The Wealth of Nationswere the first to recognize that the division of labor, or the division of work into a series of tasks performed by specialists, increases productivity.
Taylor's innovations in industrial engineering led to increased productivity in organizations. He is credited with transforming the workplace with his ideas about work organization, task division, and work measurement.
Known as the father of modern management, Drucker focused on streamlining and decentralizing processes and introduced the concept of outsourcing.
Davenport defined a business process as a set of logically related tasks performed to achieve a defined business outcome. According to Davenport, processes form a structure that helps an organization complete the tasks required to create value for its customers.
Learn how organizations can use business process automation to streamline operations and contain costs.
