Every business is able to deliver its goods or services to its customers because of its business processes. There are many types of business processes to optimise, but the first step in being able to is to answer, “What is a business process?”
Here, we will outline what business processes are, share their importance, and help to better understand the different types through definitions and examples. We’ll also touch on how automation tools can help you overcome inefficiencies that often plague business processes. You’ll better understand how automation can help streamline processes, increase transparency, improve compliance, and more.
1. What is a Business Process?
2. Why is Business Process Important?
3. What are the Benefits of Business Process
4. What are the Steps in the Business Process Lifecycle?
5. What is an Example of a Business Process?
6. What are the Types of Business Process?
7. Business Process vs. Business Procedure and Business Function
8. What are the Essential Attributes and Components of a Business Process
9. What are Terms Related to a Business Process?
10. What are the Benefits of Business Process Software?
11. Wrap Up
What is a Business Process?
In the most simplest of terms, a business process is a set of steps taken to achieve an outcome. The outcome could be to deliver a product, assemble a product, bring on new employees, pay invoices, or anything else of this sort.
For a business process to be completed, it’s common for many people to be involved. The process can be broken down into each task, and each task is generally assigned to its respective stakeholder. Each step or resource needed for completion is considered an input. The end result is the output.
The concept of a business process can be dated back to Adam Smith, in the same year that America signed the Declaration of Independence (1776). Since then, this concept has evolved to be the focus of many who study operations, management, and business.
With the aid of technological solutions like automation, business processes no longer have to be performed manually. Automation has allowed for a reduction in errors, an increase in speed, and an easier way to manage and measure business processes.
Why is Business Process Important?
Although it may at first seem cumbersome to delineate and organize business processes, it ends up being in the best interest of everyone involved (from business owners to customers and those in between).
Business processes help to ensure that resources are being allocated as efficiently as possible. Business processes also streamline activities.
What are the Benefits of Business Process
Any activity that requires inputs in sequential steps to obtain an output is a process. Life is filled with processes, but within business, measurement and management of such activities will certainly impact the bottom line.
Beyond the bottom line, both customer and employee satisfaction are affected by business processes and how they are carried out.
Benefits of business processes are wide-ranging and include:
- Resource management: Time and resources are allocated according to needs and goals, thereby minimising waste
- Optimised performance: Employees are assigned to tasks based on their maximum value, helping them to achieve their full potential and utmost level of satisfaction
- Accountability: Everyone is aware of their responsibilities and inputs/outputs are measurable
What are the Steps in the Business Process Lifecycle?
No matter where you stand in your business’ lifecycle, you can implement the following steps to create a business process. By doing so, you’ll be empowering your team with a roadmap, your managers with oversight, and your customers with a clear understanding of what they can expect from your business.
Here are the 7 steps to follow:
- Goal-setting: Define and outline the process’ purpose. Answer questions like: How can I measure success? Why does this process matter for our overall business goals?
- Process mapping: Map out the process. You can do so by hand or using software to develop a flowchart. This is like a blueprint that details each task along the way.
- Assignment: Who is involved? Allocate your team members according to their abilities and/or design the system in an automation solution if you can minimize manual effort.
- Testing: Before rolling out the process department-wide or across the organization, test it out on a small scale to ensure you achieve your desired results.
- Implementing: Once you’ve made sure the process is designed successfully, then you can implement the process in its live environment. Be sure that everyone involved has what they need to complete their steps. If you’ve chosen an automation solution to run the process, you’ll have to provide user access to those who may have to provide approvals for the process to reach completion.
- Reviewing: Monitor the results of the process to ensure that it’s optimised. It’s also a good idea to store process history should you need it for reference. With an automation software, this is already part of the solution because the process is defined and stored in the system. All process run history is immutable.
- Repeating: Given that the process delivers the intended results, you can repeat the process ad infinitum. Automation solutions can carry out processes without the need for human intervention, thanks to robotic process automation and artificial intelligence.
What is an Example of a Business Process?
To best understand, “What is a business process,” it’s helpful to have a concrete example. Out of the countless business processes to choose from, let’s take a look at one that has immense financial implications for a business–invoice processing. Businesses receive invoices from vendors, be it suppliers, service providers, and the like. It’s in everyone’s best interest to pay invoices on time to maintain good relationships and maintain proper financial records.
Invoice processing often looks like this:
- Verify an invoice for accuracy
- Automatically or manually code the invoice into the general ledger (automation solutions help to reduce human error greatly at this step)
- Invoice needs approval before payment is sent
Experts have estimated that paper-based invoice processing costs anywhere from $12-$30 to process, which includes the human labor involved. Automation solutions can expedite invoice processing with accuracy and reduce this expense.
What are the Types of Business Process?
Business processes come in different shapes and sizes, depending on their intended purposes. When approaching, designing, and optimizing processes, it can be of use to approach them within their categories.
Operational processes (core business processes) are those that bring direct value to customers and the company itself. They are the processes that directly create revenue. Examples include: product manufacturing, order to cash process, and delivering products to customers.
Core business processes are rarely completed in isolation. Supporting processes help to ensure that operational processes are carried out as planned. These types of processes are those that take place in departments like: accounting, call centers, sales, human resources, marketing, and technical support.
Amongst the layers of supporting and operational processes, management processes exist to make sure that rules and procedures are being upheld. These processes monitor, measure, and report. They include things like: budgeting and governance.
Business Process vs. Business Procedure and Business Function
Business process management is filled with some terms and concepts that sound similar but are nuanced. To help clarify, let’s define a business procedure and business function to distinguish them from a business process.
- Business Function: Business functions are operations to achieve organizational end goals. They are carried out by people and typically determined by structure. They fall in line with the departments of your business. For example, functions may be: sales, accounting, or marketing.
- Business Procedure: A business procedure is the prescribed way for a task to be carried out on behalf of an employee. They answer the question as to “how” something should be done.
What are the Essential Attributes and Components of a Business Process
For a business process to be designed ideally, there are four essential components. These are:
- Repeatable: The process can be carried out as many times as desired without having to change inputs or outputs.
- Finite: There are a clear number of steps, with a defined beginning and end to the process.
- Flexible: The certainty in business is that things are uncertain and change is constant. As such, business processes should be adaptable and malleable to be adjusted and improved on an as needed basis.
- Value-driven: Each step of the process is included with intention. If there’s a step with no value-add, then it shouldn’t exist as part of the process.
What are Terms Related to a Business Process?
Automation solutions and automation software help to streamline and optimise business processes. In this endeavour, there will be other related key terms worth noting and addressing. Let’s take a quick look:
- Business process management: Business process management refers to the ongoing and systematic approach to constantly improve business processes. It is performed with the utilisation of software solutions, both on-premise and in the cloud.
- Business process improvement: Business process improvement aims to develop more efficient business processes through dramatic measures as opposed to incremental, small steps. It involves process mapping and the use of IT expertise (or automation solutions) that are aligned with business goals to carry out.
- Business process reengineering: After conducting analysis on current business processes, business process reengineering may be initiated to completely rehaul processes. It’s a top-down approach for organisation-wide change aimed at optimisation.
- Business process analysis: Business process analysis identifies solutions to solve business problems. It involves policy development, organisational change, process improvement, and strategic planning.
- Business process flow: Business process flow is a visual representation of a business process. It tends to be drawn as a flowchart or form in which each stage outlines necessary steps.
- Business process monitoring: To gain oversight and better control of a process’ activity, business process monitoring is the active tracking of a process.
What are the Benefits of Business Process Software?
Business process software and process automation tools are purposefully designed to be goal-oriented and data-driven solutions. There are an array of benefits that business process software delivers to an organisation of any size.
Consider these stand-out upsides of implementing business process automation:
- Streamlining: Automation solutions reduce redundancies, eliminate bottlenecks, and remove key person dependencies so that processes can flow smoothly and in a timely manner to deliver results.
- Decreased costs: With transparency and oversight of processes, wasted resources (money, time, energy, etc.) can be accurately allocated. This helps businesses cut unnecessary costs and save more.
- Increased collaboration: With software, processes are clearly drawn out and accessible to those involved. This allows for both internal and external stakeholders to retain visibility into the current status of a process and take action if necessary.
- Enhanced agility: With automation, a process can not only be actively monitored, but it can also be adjusted in real-time if the situation calls for it. This type of agility allows for organisation to continue to deliver to its customers without having to slow down or shut down to make adjustments to a process.
- Maximised efficiency: Dashboards and real-time analytics provide the insight your team needs to know if processes are running as best as they can.
- Improved compliance: Automation solutions document every action they take, making it easy to pull audit reports and adhere to regulations.
Organisations around the world are filled with their own set of business processes. Business processes are what allow inputs to be transformed into outputs that deliver value to customers and generate revenue.
Now that you know how to answer, “what is a business process?”, your next step is to dive deeper into how automation solutions can be used to optimise business processes.