Business Process Improvement
If you are undergoing any sort of Business Process improvement initiative
then there are a number of Terms and Definitions
that you need to understand.
That is exactly what I will be discussing here in this article.
I will be making you aware of few “Concepts You Should Know”
when you embark into Business Process improvement arena.
My name is P. K. Saxena.
I am the CTO of Sofcon Systems India Pvt. Ltd.
Sofcon Systems India is having 27+ years of experience in the field of Automation Solutions.
And now they have started helping their clients in their migration path to Industry 4.0.
Further my guide for this article is Eric Kimberling.
He is the CEO of Third Stage Consulting company which is an independent consulting firm.
That helps clients throughout the world reach the third stage of Digital Transformation success.
Digital Transformation is Business Process improvement.
Without effective Business Process improvement your Digital Transformation is not likely to succeed
or deliver business value that you expect.
But what exactly is Business Process improvement?
What are some of the key concepts and definitions that we need to know?
I will elaborate in this article the top 10 terms and definitions
that you need to know as part of any sort of Digital Transformation
and Business Process improvement initiative.
# 1: As-is Processes
The first fundamental term to understand as part of a Business Process improvement initiative is “As-is Business Processes”.
These are also oftentimes referred to as “Current State Business Processes”.
What is your “Current State Business Processes”?
What is that you do today?
Who does what?
How the information flows across the organization?
What all those steps are within any given business process?
You may ask yourself why it is important for us to focus on Current State Processes.
The reason is first of all you need to understand where you are today
and to understand where you are going in the future.
At the same time you do not want to get so caught up in the details of the way you do things today.
Also you do not want to get caught up in analysis paralysis
so that you never get to the actual Business Process improvements.
So the key here is to find that right balance of understanding the current state
but not getting into so much detail that we are over analyzing the way things are today.
# 2: 2-B Processes
Another term that is important to understand which is very similar
but different to the first one is the “2-B or Future State Business Processes”.
This is where we take the Current State
and we build on the Current State
and improve the Current State to arrive at what our Future State is.
The way we do this is as follows:
We analyse where the breakdowns are happening and where the inefficiencies are.
Then we check the manual processes, the data silos, the organizational hand off issues that might exist in the Current State.
And then we really start to attack those problems to create a Future State Business Process flow
that really gives us a vision of how we want the organization to operate in the future.
So Future State Business Processes or 2-B Business Processes are really sort of like a blueprint
to how you are going to deploy process changes
as well as potential technologies and
or organizational improvements to help enable
that Future State Business Process flow.
# 3: End-to-End Processes
When we are looking at our Current State
and our Future State Business Processes then it is important
that we do so from the context of the End-to-End Business Processes.
In other words we do not want to look at Business Processes within accounts payable,
within inventory management and within sales and customer service,
however we want to look at the End-to-End Process flow
so that we understand all those different touch points
and hand offs
and understand where the breakdowns might happen along the way.
Eventually we desire to dive down into more detail into each of these silos
and different parts of the organization
but to start to give ourselves a framework to work from, we need to make sure
we have that End-to-End Process defined.
Basically we want to really look at the big picture view of the entire organization.
This ensures that we have optimized our Business Process improvement
and we have a complete big picture view of
how our Future State Business Processes are going to look.
# 4: Process Reengineering
Another term that is very important to understand is Process Re-engineering very similar to process improvement
but it is a common term that is used throughout the industry as well.
Process Re-engineering really focuses on rethinking of how we do our Business Processes.
What are the ways that we can improve efficiency?
What are the ways that we can improve effectiveness?
Also what are the ways that we can remove bottlenecks?
What are the ways that we can make people’s jobs easier.
What are the ways that we can automate via the use of technologies
and restructure the organization.
For this reason whatever improvements might help the organization that essentially is Business Process Re-engineering.
There is a few different sources of Process Re-engineering that we can insert into our analysis of what should be re-engineered first.
Probably most easily understood by most organizations is just looking at–
What is not working today?
What are the things that are broken?
Where are the breakdowns?
And where are the inefficiencies that we can attack through Business Process Re-engineering?
You can also look at technologies.
What kind of technologies can we bring to the table?
Or we bring some outside best practices to ensure
that we are streamlining those processes
and automating some of the processes that might be inefficient?
Then finally you can benchmark and look to your peers.
As well as look to other organizations within your industry
and even outside your industry to understand what is it?
That other organizations do to improve their processes
or to be more effective in their processes.
And that is where consulting firms like Third Stage
that work with a lot of different companies throughout the world can help provide value during your Business Process Re-engineering effort.
# 5: Bottlenecks
You may have found me use the term Bottleneck while going through this article.
And so I want to explain what is that?
Because that is an important term as it relates to Process improvement.
For instance a Bottleneck is essentially a point in a process
that the process slows down.
Or the process gets stuck
because
either you do not have enough capacity to address the process
or you do not have the automation in place
or there is just general process breakdowns
and confusion is happening at that step in the process.
So a common example of a Process Bottleneck might be a manufacturing shop floor where they have one machine
that is critical to every production order out on the shop floor.
And you might have multiple machines or multiple points in the shop floor
that are feeding into this one step in the process.
And there is not enough capacity there
so that ends up becoming a Bottleneck.
And it slows down production because you only have one machine that does that one step in the process.
It is not just physical machines either more often than not the Bottlenecks are related to humans too.
It is because you do not have enough humans
or the humans do not have enough tools at their disposal.
They are not efficient enough to be able to improve the throughput
and to really break through those Bottlenecks.
So when you are going through a Business Process improvement initiative,
then it is really important that you look at Bottlenecks.
Also you understand what they are?
And you really try to address and mitigate those Bottlenecks.
# 6: Performance Measures
Another important term to understand as part of your Business Process improvement initiative is the whole concept of Performance Measures
or Key Performance Indicators.
Indeed these essentially are metrics
or measures
or numbers
that quantify how your processes are working
either in terms of efficiency
or effectiveness.
Typically every process has a different kind of measure
that it typically looks at it.
It could be revenue based.
Or it could be quality-based.
Or it could be effectiveness-based or efficiency-based.
A lot of different metrics you can use
and I intend to write a separate article on this topic.
That will describe about some of the common KPIs
or Performance Measures.
That you want to consider as part of your Digital Transformation.
But for the purposes of this article, it is important to recognize that as part of a Business Process improvement,
you want to understand what the actual measures are that you are measuring today
and understand what you want your target measures to be in the future
so that your Business Process improvements ultimately deliver real business value to your organization.
# 7: Six Sigma
Another common term in process improvement,
which is a lot like the last one,
which is performance measures is Six Sigma.
Six Sigma is a very quantitative
and quality focused view of Business Processes.
Generally it is a way to instill continuous improvement and to instill a constant almost obsessive focus on improving the results of your Business Processes.
Six Sigma became very popular in the 80s and 90s through big conglomerate companies like Motorola and General Electric.
As a result they really incorporated Six Sigma into their day-to-day management operations
and it continues to be an important term
and method used in Business Process improvement.
I also intend to write a separate article on Six Sigma that will dive in more detail on this topic
and I encourage you to check out for that article on Sofcon System’s web site.
But for the purpose of this discussion it is important to understand
that Six Sigma is the statistical based quantitative rigorous methodology to Business Process improvement that a lot of organizations use.
# 8: Process Mining
Business Process mining software is a common tool used in effective Business Process improvement.
It is a relatively new type of technology
that has not been around for a long time
but it is highly effective.
Moreover it is a way to really go into your current systems via the use of technology
to really understand what is actually happening in terms of your current business processes.
So in other words the Process Mining software can really crawl into different technologies
which you are using in your organization to understand
and quantify how long processes are actually taking.
What the different variations step by step are in a process and where the breakdowns of Bottlenecks are.
It is a great way to augment your qualitative understanding of your day-to-day operations with quantitative data from your actual systems
that demonstrate what is actually happening day to day with your Business Processes.
As a result Business Process Mining is a type of tool
and technology
and a term that you really should understand
as you initiate any sort of Business Process improvement.
# 9: Gap Analysis
Another common analytical tool used during Business Process improvement is a term called Gap Analysis.
Basically a Gap Analysis has a couple different meanings
or use cases in the context of Business Process improvement.
The first Gap Analysis is typically between your Current State
and your Future State Business Processes.
This is really cataloging
and identifying where all the improvements and where all the changes in your processes are going to happen.
Further the reason why this is so important is
because it helps you articulate,
prioritize and communicate
what those changes to the Business Processes are.
The second type of Gap Analysis that is very common is a more technology
or software Gap Analysis.
So looking at your Future State Business Processes
and what you think you need from your operations
and comparing it to potential software options and doing a Gap Analysis of where those gaps are.
You can evaluate your technology options regardless of which way you might use Gap Analysis.
Likewise it is an important part of analyzing your Business Processes
so you can make the most of your process improvements.
# 10: Change Impacts
Last but not the least is Change Impact.
It is a term that you should understand as it relates to Business Process improvement.
Change Impact is somewhat like a Gap Analysis but it is a little bit different.
It is more focused on your organization.
What the impact of process changes are to individuals and work groups and departments and locations within your organization.
So this is where we really get into the granularity of the differences between your as-is Current State
and your 2-B Future State and really dissect and understand who is impacted by those changes?
What roles and responsibilities are going to change?
And what parts of people’s jobs are going to be automated?
What are you going to do with those people’s jobs once they have been automated?
That sort of definition of the gaps between where you are today and where you are headed in the future is extremely important especially from an Organizational Change Management perspective.
This enables you and gives you the inputs to create an Organizational Change strategy and plan that is the most effective
and most aligned with your overall transformation goals and objectives.
So these 10 terms are the things you need to know as you embark on a Business Process improvement initiative.
Take Aways
Above all I also encourage you to check out some of the various videos which are available on Eric’s YouTube channel.
In short these videos cover the topic of Business Process improvement.
Eric’s YouTube channel has several videos that dive into more details
as well as they deal with lot of these different subjects
that I have covered in this article.
And I also encourage you to download Third Stage Consulting firm’s Annual Digital Transformation report
which covers best practices related to the people, process
and technology aspects of any sort of transformation.
At the same time it also provides you some independent reviews
and rankings of different technologies
that might help you through your transformation.
So I encourage you to check that out.
I have included a link below
as well as links to other materials that I think will help you through your transformation.
I hope you found this information useful.
By Digital Prabhat
Resources: 2021 Digital Transformation Report:
http://resource.thirdstage-consulting.com
Top 10 ERP Systems Ranking:
https://www.thirdstage-consulting.com
Top 10 ERP Systems For Small Businesses:
https://www.thirdstage-consulting.com
Top 10 CRM Systems:
https://www.thirdstage-consulting.com
Guide to Organizational Change Management:
http://resource.thirdstage-consulting.com
20 Lessons From 1,000 ERP Implementations:
https://resource.thirdstage-consulting.com
