A business process is an activity or set of activities that can accomplish a specific organizational goal. Business processes should have purposeful goals, be as specific as possible and have consistent outcomes.Content Continues Below
Business process management (BPM) is a systematic approach to improving those processes and it helps achieve business goals. If an organization is unable to perform certain business processes internally due to costs or resources, the company might utilize business process outsourcing (BPO). Many organizations contract specific business tasks, such as payroll, human resources (HR) or accounting, to a third-party service provider.
To measure the success of a business process, organizations track the successful completion of different steps within the process -- i.e., benchmarks -- or reaching the endpoint of the process. When a business process is not helping an organization reach a goal within a timeline or with the resources at hand, there are a number of strategies you can use for improvements. Organizations might focus on business process visibility to identify issues in process performance or execution.
Business process mapping provides organizations with a visual representation of how the different processes function and gives organizations better visibility into how the business works. It can also help boost the operational effectiveness of a business.
History and evolution
The works of economist Adam Smith, academic and author Thomas Davenport, engineer Frederick Taylor and management guru Peter Drucker have had a major influence on how organizations define and handle business processes.
Smith, the author of The Wealth of Nations, first recognized how the use of labor division -- dividing work into a set of tasks performed by experts -- could lead to an increase in productivity.
Taylor's innovations in industrial engineering resulted in organizational productivity improvements. He is credited with transforming the workplace with his ideas on organizing work, task fragmentation and job measurement.
Drucker -- described as the father of modern management -- focused on the simplification and decentralization of processes and introduced the concept of outsourcing.
Davenport defined the business process as a set of logically related tasks performed to achieve a defined business outcome. According to Davenport, processes make up the structure that helps organizations complete the tasks required to produce value for its customers.
Business process vs. business procedure and business function
While a business process is a series of related tasks that result in the desired output, a business procedure is a clearly stipulated way of undertaking a business process. A business procedure details teams and the people responsible for each part of the process, as well as the specifications applicable to each of these parts.
A business function is an organizational unit of a business with a specific set of responsibilities and activities that it executes to help the business carry out its overall objectives and processes.
Business processes categories
Depending on the organization, industry and nature of work, business processes are often broken up into different categories. These categories include:
- Operational processes -- or primary processes: Operational or primary processes deal with the core business and value chain. These processes deliver value to the customer by helping to produce a product or service. Operational processes represent essential business activities that accomplish business objectives, e.g., generating revenue. Some examples of this include taking customer orders and managing bank accounts.
- Supporting processes -- or secondary processes: Supporting processes back core processes and functions within an organization. Examples of supporting or management processes include accounting, HR management and workplace safety. One key differentiator between operational and support processes is that support processes do not provide value to customers directly.
- Management processes: Management processes measure, monitor and control the activities related to business procedures and systems. Examples of management processes include internal communications, governance, strategic planning, budgeting, and infrastructure or capacity management. Like supporting processes, management processes do not provide value directly to the customers.
Business process management
Business process management is a strategy that organizations employ to oversee their business processes to ensure they are operating smoothly. It can help with process improvement by aiding management review and can control organizational processes to ensure they are efficient and effective. Organizations use BPM software to monitor and control automated and non-automated business processes and to help improve their management processes.
Business process management activities include steps like business process modeling, execution, monitoring and optimization.
Business process monitoring
Business process monitoring is the method of employing analytics to monitor the performance of a process. Process monitoring is used to detect elements like process cycle time, errors and cost.
Organizations use functional monitoring to assess the functional performance of a process. Technical monitoring helps measure the technical efficiency of an application by supervising and logging aspects such as response times and downtimes.
Business process visibility
Business process visibility provides enterprises with a full view of each of their processes, boosts operational responsiveness and expedites decision-making. It helps management teams determine whether their processes are aligned with key business objectives and goals, and whether the accompanying procedures that help make a process successful are operating accurately.
Business process monitoring can also help improve business process visibility by helping to identify possible problems.
Business process modeling or mapping
Business processes are often depicted visually with a flow chart showing a sequence of tasks with certain benchmarks or decision points. Business process mapping or modeling illustrates pictorially, through graphs and charts, how certain processes flow into others.
There are a few different ways to think about business process mapping and workflow.
- Sequential business process: Sequential business processes are outlined on a document with clear start and endpoints. When following this process map, an organization performs a series of actions in order to complete a task within the constraints of a predetermined timeline.
- Status-driven business process: A status-driven business process doesn't have strict start and endpoints. These processes can finish at any stage depending on workflow changes, the nature of production or the office culture. Also, it is typical for status-driven processes to recur or cycle on the same step in the process.
- Parallel business process: When activities in a business process are executed in parallel, they are carried out simultaneously. In this type of business process execution, the activities on all the branches must be completed before the next step in the business process can commence.