[Above is an Asset-liability process design, courtesy Ruskin Innovations]
“No matter how hard individuals work, they cannot overcome a flawed process design, much less the burden of no design at all.” Michael Hammer, co-author of Reengineering the Corporation
Increasingly, organizations are realizing that the first step in almost any major project is to analyze and define their business processes, and then communicate those processes to those who need them. This applies whether the project involves integrating standalone IT systems; using Web Services to connect an ad hoc federation of partners and suppliers; making best use of the new Business Process Management tools; or creating process-based instructions to comply with ISO 9001:2015. You can barely read an article in a business magazine without coming across a reference to business process analysis and design, either as a pre-requisite for new projects, or as the integral element whose absence contributed to the failure of an earlier eCommerce, b2b or IT integration project. Like many business buzzwords, process-related terms have taken on an urgent resonance that can sometimes inhibit people from asking fundamental questions such as: What is a “business process”? What does “business process modeling” mean, and what is the nature and purpose of “business process analysis and design”?
What is a business process?
A business process is a set of logically related business activities that combine to deliver something of value (e.g. products, goods, services or information) to a customer.
A typical high-level business process, such as “Develop market” or “Sell to customer”, describes the means by which the organization provides value to its customers, without regard to the individual functional departments (e.g. the actuarial department) that might be involved. As a result, business processes represent an alternative – and in many ways more powerful – way of looking at an organization and what it does than the traditional departmental or functional view.
Business processes can be seen individually, as discrete steps in a business cycle, or collectively as the set of activities that create the value chain of an organization and associate that value chain with the requirements of the customer.
It is important to recognize that the “customer” of a business process can be several different things, according to the process’s position in the business cycle. For example, the customer of one process could be the next process in the cycle (in which case the output from one process is input to the next, “customer” process). Equally, the customer can be the end purchaser of a product.
Business process design typically occurs as an early, critical phase in projects, rather than as an end in itself. The goal of the overall project is to implement business change, whether that change is primarily organizational (improve the business’ operating processes), technical (implement or integrate software systems), or a combination of the two. In a process improvement project, the focus of the business process design phase is to streamline the process: to understand and measure the requirements, and to eliminate the risk of losing value through inefficient or inappropriate activities. In a technology implementation project, the focus is on understanding the processes that are being automated, and ensuring that the appropriate technology is selected, configured and implemented to support them.
In both cases, the process designs activities can range from modest (e.g. tweak existing processes and look for some quick wins) to aggressive (e.g. identify major opportunities to increase value or drive down costs through radical process improvement or outsourcing). In short, business process design is a tool that can serve many different kinds of projects.
What are the common drivers behind a business process design project?
Different process design projects will target different areas of business activity, according to organizational focus and requirements. However, most process design projects are driven by a combination of these common requirements:
• The need to increase efficiency
An inefficient business process leads to poor communication, duplication of effort, functional barriers, delays, unnecessary costs (money, materials and manpower) and, ultimately, an output that either partially or wholly fails to achieve its designated purpose.
• The need to evaluate business practice as part of an organizational development project
For example, business process design might be required in preparation for the implementation of enterprise technology such as ERP modules for supply chain management or CRM, or prior to a proposed merger, acquisition or internal restructuring project.
• The need to evaluate potential new business ventures (e.g. joint ventures or alliances) or business offerings
• The need to manage the company’s knowledge resources
Knowledge management and sharing can be difficult without clear processes to capture and contain both what is already known, and the new knowledge and skills that are acquired on a daily basis.
• The need to manage human resources
Business process design can help to identify current and future HR competence requirements, and is often an integral part of developing a human resource strategy.