What Actually is a Business Process?
April 12th, 2017 • BPM
A business process is a series of steps performed by a group of stakeholders to achieve a concrete goal. It is the fundamental building block for several related ideas such as Business Process Management, Process Automation, etc.
While there’s a deluge of things written and said about BPM, it’s hard to find a clear answer to the question, “What exactly is a business process?”
Let’s break this down further.
What are the steps in a business process?
You first need to start with an objective. Let’s take the example of a simple purchase order process in an organization. Purchase order processing is a common business activity that most organizations deal with regularly. What are the different steps involved?
To keep it as simple as it can get, it involves a sequence of 4 individual steps:
- Requisition – Someone makes a request for a purchase.
- Purchase Order – The Purchase Order (PO) document is raised by the finance team.
- Receipt – Where the payment is received & the order is delivered.
- Invoice – Where the receipt invoice is handed over & the process gets completed.
So, each stage in the overall business process is considered a step. In other words, a step is the individual building block of a process, when placed as a sequence completes the process. Each step has its own relevant people who help complete that particular step and are referred to as stakeholders.
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Who are the stakeholders in a business process?
There are two levels of stakeholders:
- Direct stakeholders are performing the direct actions like generating invoices, receipts, and making requests.
- Indirect stakeholders are affected by the process, but perhaps not directly involved such as top management, vendors, etc.
Stakeholders are a key part of the entire business process. Stakeholders might come from different functions such as HR, Finance, Marketing, and across different verticals like manufacturing, finance, and insurance. Additionally, these stakeholders will have varying degrees of technical expertise. When choosing a business process tool, IT directors must find an option that can be used by all the stakeholders regardless of their technical proficiency.
The Importance of Business Processes
The need and the advantages of a business process are quite apparent in large organizations. A process forms the lifeline for any business and helps it streamline individual activities and make sure that resources are put to their optimum use.
Some of the key reasons to have well-defined business processes in place are:
- Identify what tasks are important to your larger business goals
- Streamline them to improve efficiency
- Streamline communication between people/functions/departments to accomplish specific tasks
- Set a hierarchy of approvals wherever relevant in order to ensure accountability and an optimum use of resources
- Keep chaos from creeping into your day-to-day operations
- Standardize a set of procedures to complete tasks that really matter to your business
What are some essential attributes of an ideal business process?
There are 4 essential attributes that constitute an ideal business process:
- Finite – A good business process has a well-defined starting point and ending point. It also has a finite number of steps.
- Repeatable – A good business process can be run an indefinite number of times.
- Creates value – It ultimately aims at translating creation of value into executable tasks and does not have any step in the process just for the sake of it. In other words, if any step in the process isn’t adding value, it should not exist.
- Flexibility – It has an in-built nature to be flexible to change and is not rigid. When there is any scope for improvement that is identified, the process allows that change to be absorbed within itself without operationally affecting its stakeholders as much.
Is a business process the same as a workflow?
Technically, a workflow is a part of a process. The workflow is just the sequence of tasks that needs to be completed. A process also includes all the data, the stakeholders, master data that exists outside the workflow, reports, integrations, and other elements.
What are some of the terms related to business process?
Business Process Automation – This is a technology-driven strategy to automate a business process in order to accomplish it with minimum cost and in a shorter time. It is extremely useful for both simple & complex business processes. Some areas where business process automation is greatly helpful are:
- Achieving greater efficiency
- Reducing human error
- Adapting to changing business needs
- Clarifying job roles and responsibilities
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Business Process Management – This is a systematic approach to make an organization’s processes more efficient and dynamic in order to meet the changing needs of business. Continuous improvement is one of the core underlying philosophies of BPM and it aims to put it at the centre of all BPM initiatives. BPM is an ongoing approach to continuously make execution of business processes better. Several cloud and on-premise software solutions are available to implement BPM.
Business Process Modeling – This is a diagrammatic/structural representation of flow of business activities in an organization or function within an organization. Its primary use is to document and baseline the current flow of activities in order to identify improvements and enhancements for speedy accomplishment of tasks. Usually, they follow a standard such as Business Process Modeling Notation (BPMN) which is a globally accepted standard which most process professionals easily identify with.
Business Process Improvement – This is a strategic planning initiative that aims at reshaping business processes based on operations, complexity levels, employee skills etc. in order to make the entire process more meaningful, efficient and contribute to overall business growth. It is a rather drastic way to rediscover more efficient ways to run a business process rather than taking small incremental steps. It usually starts with process mapping and its core aim is to align IT resources with organizational business goals.
Business Process Reengineering – This is a complete redesign of business processes after thorough analysis in order to bring drastic impact. It involves identifying the core of inefficiency, culling out tasks that don’t add any value and even implementing a top-to-bottom change in the way a process is designed in order to bring about an overall transformation.