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A business process or business method is a collection of interrelated tasks, which accomplish a particular goal.

There are three types of business processes:

  1. Management processes, the processes that govern the operation of a system. Typical management processes include "Corporate Governance" and "Strategic Management". Corporate governance is the set of Processes customs Policies, laws and institutions affecting the way a Corporation is directed administered or controlled Strategic management is the art science and craft of formulating implementing and evaluating cross-functional decisions that will enable an organization to achieve its objectives
  2. Operational processes, processes that constitute the core business and create the primary value stream. The core business of an organization is an Idealized construct intended to express that organization's "main" or "essential" activity Typical operational processes are Purchasing, Manufacturing, Marketing, and Sales. Purchasing refers to a business or organization attempting to acquire goods or services to accomplish the goals of the enterprise Manufacturing (from Latin manu factura, "making by hand" is the use of tools and labor to make things for use or sale In popular usage "marketing" is the promotion of products especially Advertising and Branding However in professional usage the term has a wider meaning of
  3. Supporting processes, which support the core processes. Examples include Accounting, Recruitment, IT-support. Accountancy or accounting is the measurement statement or provision of assurance about financial information primarily used by Lenders managers, Recruitment refers to the process of sourcing screening and selecting people for a job at an Organization or firm or for a vacancy in a volunteer-based organization

A business process begins with a customer’s need and ends with a customer’s need fulfillment. Process oriented organizations break down the barriers of structural departments and try to avoid functional silos. A functional silo exists when the Business processes of a functional unit within the Division of labor of an organization focus inwardly on their functional objectives

A business process can be decomposed into several sub-processes, which have their own attributes, but also contribute to achieving the goal of the super-process. The analysis of business processes typically includes the mapping of processes and sub-processes down to activity level.

Business Processes are designed to add value for the customer and should not include unnecessary activities. The outcome of a well designed business process is increased effectiveness (value for the customer) and increased efficiency (less costs for the company).

Business Processes can be modeled through a large number of methods and techniques. For instance, the Business Process Modeling Notation is a Business Process Modeling technique that can be used for drawing business processes in a workflow. The Business Process Modeling Notation ( BPMN) is a standardized graphical notation for drawing Business processes in a Workflow. The term process model is used in different contexts For example in business process modeling the enterprise process model is often referred to as the business process model A workflow is a depiction of a sequence of operations declared as work of a person work of a simple or complex mechanism work of a group of persons work of an organization of staff

Contents

History

Adam Smith

One of the first people to describe processes was Adam Smith in his famous (1776) example of a pin factory. Adam Smith ( baptised 16 June 1723 – 17 July 1790) was a Scottish moral philosopher and a pioneer of Political economy. Inspired by an article in Diderot's Encyclopédie, Smith described the production of a pin in the following way:

”One man draws out the wire, another straights it, a third cuts it, a fourth points it, a fifth grinds it at the top for receiving the head: to make the head requires two or three distinct operations: to put it on is a particular business, to whiten the pins is another . Denis Diderot ( October 5, 1713 – July 31, 1784) was a French Philosopher and writer Encyclopédie ou dictionnaire raisonné des sciences des arts et des métiers (Encyclopedia or a systematic dictionary of the sciences arts and crafts was a general . . and the important business of making a pin is, in this manner, divided into about eighteen distinct operations, which in some manufactories are all performed by distinct hands, though in others the same man will sometime perform two or three of them. ”

Smith also first recognized how the output could be increased through the use of labor division. Division of labour or specialization is the specialization of cooperative labour in specific circumscribed tasks and roles intended to increase the Productivity Previously, in a society where production was dominated by handcrafted goods, one man would perform all the activities required during the production process, while Smith described how the work was divided into a set of simple tasks, which would be performed by specialized workers. An artisan, also called a Craftsman, is a skilled manual worker who crafts items that may be functional or strictly decorative including furniture clothing The result of labor division in Smith’s example resulted in productivity increasing by 24,000 percent (sic), i. e. that the same number of workers made 240 times as many pins as they had been producing before the introduction of labor division.

It is worth noting that Smith did not advocate labor division at any price and per se. The appropriate level of task division was defined through experimental design of the production process. In contrast to Smith's view which was limited to the same functional domain and comprised activities that are in direct sequence in the manufacturing process, today's process concept includes cross-functionality as an important characteristic. Following his ideas the division of labor was adopted widely, while the integration of tasks into functional, or cross-functional, processes was not considered as an alternative option until much later.

Further supporting theories and concepts

Frederick W. Taylor

Frederick Winslow Taylor developed the concept of scientific management. Frederick Winslow Taylor ( 20 March 1856 &ndash 21 March 1915) widely known as F The concept contains aspects on the division of labour being relevant to the theory and practice around business processes. The business process related aspects of Taylor's scientific management concept are discussed in the article on Business Process Reengineering. Business process reengineering (BPR is a Management approach aiming at improvements by means of elevating efficiency and effectiveness of the processes

The span of control

The span of control is the number of sub-ordinates a supervisor manages within a structural organization. Span-of-control is a term originating in military organization theory but now used more commonly in business management particularly human resource management An organization (or organisation &mdash see spelling differences) is a social arrangement which pursues collective goals which controls its own performance and Introducing a business process concept has a considerable impact on the structural elements of the organization and thus also on the span of control.

Departmentalization by process and purpose

Large organizations that are not organized as markets need to be organized in smaller units - departments - which can be defined according to different principles. Departmentalization refers to the process of grouping activities into departments

Information management concepts

Information Management and the organization design strategies being related to it, are a theoretical cornerstone of the business process concept. Information management ( IM) is the collection and management of Information from one or more sources and the distribution of that information to one or more audiences

Definition

In the early 1990s, US corporations, and subsequently companies all over the world, started to adopt the concept of reengineering in an attempt to re-achieve the competitiveness that they had lost during the previous decade. Reengineering is radical Redesign of an Organization 's Processes especially its Business processes Rather than organizing a firm into A key characteristic of Business Process Reengineering (BPR) is the focus on business processes. Business process reengineering (BPR is a Management approach aiming at improvements by means of elevating efficiency and effectiveness of the processes Davenport (1993) defines a (business) process as

”a structured, measured set of activities designed to produce a specific output for a particular customer or market. It implies a strong emphasis on how work is done within an organization, in contrast to a product focus’s emphasis on what. A process is thus a specific ordering of work activities across time and space, with a beginning and an end, and clearly defined inputs and outputs: a structure for action. . . . Taking a process approach implies adopting the customer’s point of view. Processes are the structure by which an organization does what is necessary to produce value for its customers. ”

This definition contains certain characteristics a process must possess. These characteristics are achieved by a focus on the business logic of the process (how work is done), instead of taking a product perspective (what is done). Following Davenport's definition of a process we can conclude that a process must have clearly defined boundaries, input and output, that it consists of smaller parts, activities, which are ordered in time and space, that there must be a receiver of the process outcome- a customer - and that the transformation taking place within the process must add customer value.

Hammer & Champy’s (1993) definition can be considered as a subset of Davenport’s. They define a process as

”a collection of activities that takes one or more kinds of input and creates an output that is of value to the customer. ”

As we can note, Hammer & Champy have a more transformation oriented perception, and put less emphasis on the structural component–process boundaries and the order of activities in time and space.

Rummler & Brache (1995) use a definition that clearly encompasses a focus on the organization’s external customers, when stating that

”a business process is a series of steps designed to produce a product or service. Most processes (. . . ) are cross-functional, spanning the ‘white space’ between the boxes on the organization chart. Some processes result in a product or service that is received by an organization's external customer. We call these primary processes. Other processes produce products that are invisible to the external customer but essential to the effective management of the business. We call these support processes. ”

The above definition distinguishes two types of processes, primary and support processes, depending on whether a process is directly involved in the creation of customer value, or concerned with the organization’s internal activities. In this sense, Rummler and Brache's definition follows Porter's value chain model, which also builds on a division of primary and secondary activities. The value chain, also known as value chain analysis, is a concept from business management that was first described and popularized by Michael Porter in his According to Rummler and Brache, a typical characteristic of a successful process-based organization is the absence of secondary activities in the primary value flow that is created in the customer oriented primary processes. The characteristic of processes as spanning the white space on the organization chart indicates that processes are embedded in some form of organizational structure. Also, a process can be cross-functional, i. e. it ranges over several business functions.

Finally, let us consider the process definition of Johansson et al. (1993). They define a process as

”a set of linked activities that take an input and transform it to create an output. Ideally, the transformation that occurs in the process should add value to the input and create an output that is more useful and effective to the recipient either upstream or downstream. ”

This definition also emphasizes the constitution of links between activities and the transformation that takes place within the process. Johansson et. al. also include the upstream part of the value chain as a possible recipient of the process output. Summarizing the four definitions above, we can compile the following list of characteristics for a business process.

  1. Definability: It must have clearly defined boundaries, input and output.
  2. Order: It must consist of activities that are ordered according to their position in time and space.
  3. Customer: There must be a recipient of the process' outcome, a customer.
  4. Value-adding: The transformation taking place within the process must add value to the recipient, either upstream or downstream.
  5. Embeddedness: A process can not exist in itself, it must be embedded in an organizational structure.
  6. Cross-functionality: A process regularly can, but not necessarily must, span several functions.

Frequently, a process owner, i. e. a person being responsible for the performance and continuous improvement of the process, is also considered as a prerequisite.

References

See also

External links

Business process automation, or BPA, is the process a business uses to contain costs The term process model is used in different contexts For example in business process modeling the enterprise process model is often referred to as the business process model Business Driven Development is a Methodology for developing IT solutions that directly satisfy business requirements. Business process interoperability (BPI is a state that exists when a Business process can meet a specific objective automatically utilizing essential human labor Business process reengineering (BPR is a Management approach aiming at improvements by means of elevating efficiency and effectiveness of the processes In Organizational development (OD Process improvement is a series of actions taken to identify analyze and improve existing Processes within an Organization Business Process Mapping refers to activities involved in defining exactly what a business entity does who is responsible to what standard a process should be completed and how the success In order that Business processes can be improved they must first be illustrated Business process outsourcing ( BPO) contains the transmission of processes along with the associated operational activities and responsibilities to a third party with at least Business process management ( BPM) is a method of efficiently aligning an organization with the wants and needs of clients The term Business Architecture, is used to refer to a process model or profession Business method patents are a class of Patents which disclose and claim new Methods of doing business. The OBASHI methodology provides a framework and method for capturing illustrating and modeling the relationships dependencies and dataflows between business and IT assets and resources
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