In this post, we will cover the 'How?', 'What?', and 'Why?' of business process management with the help of definitions, examples, challenges, and solutions.
What comes to your mind when you think of a business? Some common answers I have come across are profits, employees, sales, desks, and for some reason - a food truck! I think it has something to do with how one imagines their own business to turn out like.
But the answer I was looking for was processes. If you look at it collectively, a business is a set of processes that are focused on producing an outcome that delivers value to your customers in exchange for income.
And if a business works on improving these processes, it directly impacts the income, which is the ultimate goal of every business. This is where business process management comes into play.
Business process management is an elaborate term used to sum up all the activities that contribute to the improvement of business processes. It is an opportunity for businesses to increase the efficiency and effectiveness of business processes.
I know what you are thinking - does all this business jargon have any practical application? Questions start shooting up in your mind:
What exactly does business process management entail?
How does business process management work?
Should I even consider implementing business process management?
How is it going to affect my business and revenue?
In this post, we will answer all these questions and make sure you understand everything about business processes and their improvement. But before we do that, let us understand the technical definition of business process management.
Table of Content
- What is Business process management?
- What Are Business Processes?
- Cornerstones of Business Process Management?
- 4 Key Benefits of Business Process Management
- Should you practice business process management?
- Misconceptions about Business Process Management
- Bringing It All Together
What is Business Process Management?
Business process management is defined as a discipline in operations management in which people use various methods to discover, model, analyze, measure, improve, optimize, and automate business processes.
Any combination of methods used to manage a company's business processes is Business Process Management (BPM). It can be a single activity or a combination of multiple activities that are implemented with one common goal in mind - to improve business processes.
Processes are an integral part of your business and effectively managing them is an important catalyst in streamlining your business operations. Streamlined operations ultimately lead to improved business performance.
All of this comes to mean one thing - BPM directly impacts your business performance. In fact, a study by Gartner observed that implementing Business Process Management (BPM) increases the success rate of your projects by 70%.
Business process management is like a business tool that performs a constant evaluation of your business processes and takes actions to improve them. It applies to every function in your business - from marketing and sales to accounts and human resources.
What Are Business Processes?
Now that we have established the basics of Business Process Management, let us also understand what business processes are.
A business process is defined as a flow of business activities that are connected toward the achievement of a business outcome. A process is an established workflow that has proven to be successful in the past to achieve the desired outcome. This is why it is repetitive in most cases.
Let us take an example of the GPS system in your car. A GPS system calculates the journey between your starting point and desired destination. It accounts for time, distance, and any distractions you may come into contact with along the way.
A process is just like a GPS system, it lays out a journey from where we are today, to where we want to go tomorrow, or taking a prospect from being interested in your product to becoming a customer.
Business processes are like best practices that must be followed to get the best outcomes. And when you go beyond the established processes, there are high chances of your business paying heavily for this mistake.
One such example is a major downtime experienced by Microsoft Azure, a top competitor in the cloud services market against Amazon Web Services and Google Cloud Services. In 2014, 425 million customers of Microsoft Azure experienced downtime of 10.5 hours when an engineer made a small assumption outside of the regular established process.
Lesson learned - processes are not to be played with, or be ready to pay for it dearly!
Business processes are oftentimes confused with projects and procedures. Here's how they are different:
Processes vs. Projects
A project is focused on creating something new or implementing a change, whereas a process is focused on creating value by repeatedly performing a task. Simply put, projects are activities that you have never performed in your business before, whereas processes are activities that you do repeatedly.
For example, making your daily cup of coffee is a process. You like to add the same ingredients in the same amount and make it every day. There are almost no chances of the taste going wrong, but if it does, I know how that bugs you!
But trying to make an Instagram trending coffee recipe from Korea isn't something you do every day. You are experimenting with new ingredients and methods, which make it a project. It is new, exciting, and you don't really know how it is going to pan out.
Processes Vs. Procedures
A process is a flow of business activities that are connected toward the achievement of a business outcome, whereas a procedure is a prescribed way of undertaking a process or part of a process. While a process is a set of defined actions, a procedure is a set of instructions that are detailed in nature.
For instance, onboarding a new employee in your organization is a process. It is focused on introducing the company to the new person and familiarize them with company policies, culture, and teams.
Whereas onboarding documentation is a procedure. It has a detailed set of instructions related to documents, signatures, and agreements.
Cornerstones of Business Process Management
Business process management is a form of a business discipline that encompasses methods directed toward increasing the efficiency of business processes. While there are various methods and approaches to this right, the following four methods are recommended as the best ways to start practicing business process management for beginners:
1. Business Process Discovery - Business process discovery is a set of techniques used to view, analyze, and adjust the underlying structure and processes that are a part of the day-to-day business operations.
Like a treasure hunt, this involves uncovering process components – people, protocols, departments. The goal? Transforming repetitive actions into meaningful events, enhancing understanding, and documenting the process's present state.
Discovering processes embody various methods to collect all the components of a business process that include people, departments, protocols, procedures, and technologies. The purpose of exercising business discovery is to:
Group repetitive actions within the organization to form meaningful events
Clarify an existing process to make it known, understood and shared with everyone involved
Define and document the current state of the process
The best way to get started with process discovery is to build a set of standard process discovery questions related to process exceptions, competing priorities, and consistency.
2. Business Process Documentation - Process documentation is defined as a detailed guideline of how to execute a particular process. It is an essential method that describes every activity needed to complete the execution of a process.
Imagine crafting an IKEA masterpiece – meticulous instructions guiding each step. Documenting processes in detail streamlines tasks, educates executors, and identifies gaps.
Documenting processes help businesses keep things in order such as process maps, checklists, tutorials, document templates, Standard Operating Procedures (SOP's), and more. The ultimate motto of documenting a business process is to:
Organize all the steps in the process
Educate the person(s) responsible to execute the process
Standardize each task to get the required output
Improve the process by identifying gaps in the process document
Process documentation helps business teams avoid the frustration of dropping the ball by creating a reference document for every step in the process. It is like an IKEA assembly manual - it has every single detail documented to make sure you build that piece of furniture accurately.
Process documents act as training guidelines for new team members and accelerates their learning curve to speed up productivity. They also reduce operational ambiguity and enable business transparency. A survey on BPM trends recorded that 96% of companies have invested in some kind of process documentation. However, in most cases the documentation is not strategically layout causing efficiencies.
Process documentation is an extensive exercise with a lot more to consider, use our guide to business process documentation to learn everything you need to get started.
3. Business Process Mapping - Process mapping is defined as the activity of creating a workflow diagram of a process to gain a clear understanding of the process and how it overlaps with other processes. It outlines every activity, person, and business entity involved in the business process.
Visualize processes as interconnected webs. Mapping offers clarity, revealing inefficiencies and overlaps, like a journey roadmap pinpointing favorite spots.
Process maps provide a visual representation of a process that helps you uncover how you are currently operating and gives you the visuals needed to locate hidden inefficiencies and improvement opportunities. Process maps help business:
Understand the process through visual workflows
Communicate the process guidelines effectively
Identify leaks and gaps
Visually represent overlaps between processes
Locate and remove unnecessary redundancies
Process maps are similar to the location maps we use to plan our journey to the lakehouse on the weekend. We can visually identify the best route to reach our destination, with icons and symbols used to pinpoint our favorite restaurants and stores on the way.
There is a lot more to process maps - here's our detailed guide to business process mapping.
4. Business Process Improvement - Process improvement is the exercise of identifying gaps in your business processes and taking measures to improve the performance of your business by filling these gaps. It is a proactive task that helps businesses optimize the quality of their products and services by improving business processes.
57% of companies that implemented process improvement strategies observed improved employee performance. A pursuit of excellence, identifying gaps, and enhancing performance. This isn't just for faltering processes; it elevates successful ones to new pinnacles.
Process improvement is not just a remedy to process failure, but also a proactive measure to improve a successfully established process to get even better results. Common improvement strategies include communication improvement, business process handoffs, and educating respective teams on process documentation.
The key elements of business process improvement include:
Identifying existing gaps or opportunities to improve
Understanding the impact of broken or existing processes on the current process outcome
Researching and selecting ways to improve the gaps and opportunities
Reorganizing the process to new methods for process improvement
Process improvement is a continuous cycle of observing, identifying, reorganizing, and analyzing business processes. A study on business process management reveals that 93% of the participating organizations were engaged in multiple process improvement projects.
Learn more about improving processes with this guide to business process improvement.
4 Key Benefits of Business Process Management
Business process management is a comprehensive practice that provides many direct and indirect perks to your business. We will list down the four key benefits that will compel you to start practicing business process management right away:
1. Increases Efficiency - According to RedHat's State of the BPM Market report from 2018, 65% of businesses agree that BPM processes have helped their organizations improve efficiency, versatility, and customer satisfaction.
Business process management plays a critical role in increasing the efficiency of your business processes. From documentation and mapping to analysis and improvement, it works as a catalyst in making your processes more effective.
2. Boosts Productivity - One of the key motivators for businesses to practice business process management is to increase overall productivity. BPM is a facilitator of discovering, measuring, optimizing, and automating business processes.
As BPM unlocks automation's power, employees channel their energy into pivotal tasks. The result? Accelerated productivity across the spectrum.
3. Enables Transparency - Business processes are a complex amalgamation of functions, procedures, departments, teams, and many other elements. This complexity severely affects business accountability and ownership.
Business process management provides an opportunity to map every activity within the process with related entities. You can pinpoint the team or department that dropped the ball or identify the exact procedure that was affecting your business goal. BPM allows a business to establish complete transparency and visibility across the organization.
With BPM's magic, the veils shrouding accountability dissipate. Clarity reigns, and pinpointing areas of excellence or concern becomes effortless.
4. Improves Customer Experience - Business process management creates a ripple effect across your business that directly impacts the customer experience. Imagine a wave of improvement in your business processes that leads to increased efficiency, productivity, and employee satisfaction.
All these factors ultimately lead to building great customer experience. Business process management plays an important role in bringing people and technology together to increase customer satisfaction. Business leaders across the globe strongly agree to the fact that practicing BPM has helped them improve customer satisfaction.
Why Should You Practice Business Process Management?
With so many tasks under the business process management umbrella, you are probably wondering whether you should even consider practicing BPM. You should start practicing BPM if:
You want to operate your business better, and in the process, enable improved employee satisfaction, work-life balance, and excellent customer experience
There are inefficiencies in your processes - silos, ball dropping, lack of SOPs, lack of accountability and transparency
You are unable to meet your business objectives - lack of customer satisfaction, dissatisfactory customer reviews, stunted business growth, lower profit margins, low ROI
Your business is expanding - targeting new markets, mergers and acquisitions, funding, and you need to streamline your operations for seamless growth
According to Gartner, simply making hand-offs, timing, and responsibilities explicit can improve productivity by more than 12%, implying that even a basic application of BPM can create value within the company.
What Business Process Management is Not?
Now that we understand what business process management entails, let us also clear the fog around what it is not.
BPM is not a product - Oftentimes business process management is confused with a business process management system (BPMS). BPMS is a tool that allows businesses to practice business process management. It is a facilitator of employees and departments to streamline their processes.
Not everyone in the company is involved in BPM - If a business is practicing business process management, it does not necessarily mean that everyone within the company is part of the practice. It requires the focused time and attention of dedicated employees to practice business process management.
Applications do not do BPM - There is a common misconception that investing in BPM applications is doing BPM. BPM applications are support engines that help perform, measure, analyze, and execute business processes, but they need people to actually implement business process management.
Bringing it all together
Practicing business process management is just like starting your own business. You just don't know where to begin! But the best way is to take it one step at a time.
At Processology, we believe in running smooth operations by cleaning the clutter around processes. Chat with us about your process frustrations and let's find a solution together!
Updated in August, 2023