What Are Business Processes?
Businesses have numerous moving elements that must all work well together to be successful. To streamline this coordination, companies rely on processes. Business processes are the specific steps and procedures followed to complete a task or accomplish a goal. For example, hiring a new employee might include posting a job listing, reviewing resumes, conducting interviews, and extending an offer of employment. By clearly defining and documenting these processes, businesses can ensure that tasks are completed efficiently and effectively.
In addition, well-designed business processes can help companies improve their profitability by reducing waste and maximizing resources. Sound business processes will only become more essential as running businesses keep getting more complex.
Common Terms
Many different terms describe various aspects of business processes, and it is essential to understand these terms to manage the business effectively. Here are some common methods linked to business terms:
Business Process Modeling
It is a graphical or structural representation of the organization’s or function’s business activities flow. Its most important purpose is to document and baseline the current flow of activities to spot improvements and enhancements for quicker task completion.
Business Process Improvement
It is a management framework for long-term strategic planning. It aims to change company procedures based on operations, complexity levels, and employee abilities to make the process more meaningful, efficient, and beneficial to overall business development.
It’s a rather radical approach to rediscovering more efficient ways to conduct business processes, not taking little steps by small steps. Process mapping is where it begins, and its primary objective is to connect IT resources with business goals.
Business Process Reengineering
After thorough analysis, a complete redesign of business procedures to provide significant impact. It entails identifying the core inefficiency and purging activities that don’t give any value from processes as well as implementing a top-to-bottom change in how processes are designed to bring about an overall transformation.
Business Process Optimization
It uses analytics and business process mining technologies to eliminate bottlenecks and other significant inefficiencies from a process by transforming it.
Business Process Mapping
It is the method for recording, clarifying, and breaking down process procedures into logical phases. The mapping may be completed in either written form or using flow charts.
Business Process Analysis
It is determining which solutions to choose based on business needs and requirements. It might take the form of process improvement, policy development, organizational change, or strategic planning.
Business Process Integration
It is the ability to create a process model that specifies the sequence, hierarchy, events, execution logic, and data movement across systems within the same organization.
Business Process Simulation
Analyze the performance of your processes, check process design, identify bottlenecks, test changes, and find out how a process works in various conditions with different data using this tool.
Business Process Transformation
It refers to a complete overhaul of a set of activities necessary to achieve a particular commercial goal. It guarantees that several businesses’ employees, goals, methods, and technologies are in sync.
Business Process Flow
It is a visual illustration of the procedure you’re developing. It’s usually a form or flow chart-shaped depiction. Every business process flow consists of stages, and each step has fields (or actions) to complete.
Business Process Monitoring
Active monitoring of processes and activity allows management to gain insight into significant transactions and procedures in an organization. This aids management in determining how well the operations and company’s business objectives are aligned.
Business Process vs. Business Procedure vs. Business Function
Whether a small or large corporation, any organization comprises various processes, procedures, and functions. Each one plays a crucial role in keeping the organization running smoothly. But what’s the difference between these three terms?
Business processes are the organization’s overarching activities to produce a product or service. For example, taking raw materials and turning them into finished products is known as the production process in the manufacturing industry.
Business procedures, on the other hand, are the specific steps that need to be followed to complete a business process. There would be procedures like quality control and assembly in the production process example.
Business functions are the tasks that support a business process or procedure. In the production process example, functions might include managing inventory or scheduling workers.
In short, business processes are the big picture, procedures are the specific steps needed to complete those processes, and functions are the supporting tasks that keep everything running smoothly.
Key Reasons to Have Well-Defined Business Processes
Businesses need well-defined processes for several reasons. Here are some of the most important:
- Determine what activities are necessary to achieve your company’s business goals
- Increase efficiency and productivity
- Streamline information flow between people, functions, and departments
- Ensure that all the required authorizations have been made to allocate and use resources properly
- Keep your operations on track by avoiding disruptions to your day-to-day operations
- Create a set of standard procedures for performing activities that are truly essential to your company
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Examples of a Business Process
Various categories divide business processes, with the most frequently used three being as follows:
Operational Processes
Also known as primary operations, it handles the fundamental business and value chain and delivers value to the consumer by assisting in producing a product or service. Operational procedures are crucial company activities that contribute to company objectives, such as generating income.
The following are operational processes: client orders, payment for goods and services, and tracking of bank accounts.
Supporting Processes
Back-office processes in business functions that keep the company running are known as secondary processes. The distinction between operational and supporting procedures is that supporting procedures do not immediately add value to clients.
The following are supporting processes: human resources, accounting, and workplace safety.
Management Processes
Management processes are the activities involved in business operations and systems. Management processes do not provide value directly to customers like other supporting processes.
The following are management procedures: internal communications, governance, strategic planning, budgeting, infrastructure, or capacity management.
Meanwhile, some companies and executives prefer to categorize processes under the following headings:
- Accounting and Finance Business Processes
- Business Development Business Processes
- HR Management Business Processes
- Marketing and Sales Business Processes
- Product Delivery Business Process
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The Steps of the Business Process Lifecycle
To have an effective business process, you need to follow the steps of the business process lifecycle. This cycle consists of the following phases:
Step 1: Make a List of Your Objectives
The first step is to identify your objectives. What do you want to achieve with your business processes? Once you have placed your organizational goals, you can move on to the next step.
Step 2: Define Your Processes and Plan It Out
In this step, you will need to define the specific processes that you will use to achieve your objectives. Be sure to document each process in detail so that you can refer back to it later. You can use visualizations such as Turtle Diagrams to map out the processes required.
Step 3: Assign Stakeholders and Take Actions
After you have defined your processes, it’s time to assign stakeholders and take action. Determine who will be responsible for each task and ensure they have the resources to complete the job.
Step 4: Make Sure Everything is Working Correctly
To test it out, run the procedure on a small scale. Keep an eye on any gaps and make changes as needed.
Step 5: Put the Procedure in Place
Run the process in a real-world scenario. You can also consider automating processes for easy implementation and to also reduce manual tasks. Maintain open lines of communication and instruct all parties.
Step 6: Keep an Eye on the Outcomes
Now that you have put the process in place, monitoring the business outcomes is essential. Compare the results to your objectives and make changes as needed. Business intelligence tools can aid in simplifying this process for you.
Step 7: Repeat the Process
If the process can fulfill its objectives, you can repeat it and use it for other business processes.
Rob Paredes
