How well managed Business Processes can improve your bottom line

Gartner and other leading researchers agree that business process improvement activities should focus on ensuring processes provide value to customers and other key stakeholders through all their interactions with the organisation.

 This is the first post where I discuss how efficiently managed and structured business processes can improve business outcomes and be measured by the value they provide to the consumer of the process output.  This consumer can be internal or external to the organisation, and the value can be direct or indirect. Processes that do not provide value should be removed or re-engineered.

 We’ll look how processes can be structured to track value within all levels of the organisation. Value is tracked by scorecards. These scorecards measure value against business strategy and goals.

The key message is to shift focus from individual process performance to overall business outcome, where each output must provide value to the next process that consumes it. This is a change from the traditional viewpoint of optimising business processes around single team objectives and cost efficiency (eliminate paper and reduce staff), without considering the bigger picture.

 Business Processes and Process improvement

Historically, business processes have been defined in terms such as a collection of related, structured, activities that produce a specific service or product for a particular customer or customers.

This definition has resulted in process optimisation mostly being linked to performing activities efficiently, while assuming the output remains largely the same.  This has not encouraged business processes to be seen as a strategic tool to create value for customers and other stakeholders. Every output from, and interaction within, a business processes must provide some kind of positive value to those who interact with the process. If it doesn’t, no matter how quickly or cheaply it is re-engineered to perform, the process itself is flawed.

 Processes should provide value at all levels

Value is relative. To be successful the organisation needs to identify what value means to each stakeholder in each interaction. This can be done through stakeholder research or by using industry benchmarks and KPIs available from branch organisations.

 Every customer interaction contributes to provision of value. Even activities like paying an invoice contribute to the customer's overall perception about the organisation. If the invoice payment process is cumbersome the customer will feel dissatisfied. A smooth process will, if not enhance, at least maintain any positive impression they already have of the organisation and its products or services.

 The end product or service itself may be superior to the competition, but if the customer receives poor value from its other interactions the overall value perceived may be lower than what the competition provides.

 The external customer may be the key stakeholder – if they don’t purchase the products or services produced the organisation won’t survive. But to achieve competitive advantage the entire organisation must the streamlined and efficient. All activities performed contribute in some way to improving business outcomes.

Process hierarchies are the means to achieving this. Structuring processes in a hierarchy with business goals, value streams or value chain as the top level allows for effective management of the business’ processes and tracking of value at all levels.

So processes must provide value. In the next post (link) I discuss the process hierarchy and why it is the best way to organise processes for optimal efficiency.

Read my other posts HERE