What is a business process? If you are just approaching the world of business or management, this is a question that might pop up. While the answer may seem simple at first, truly understanding what a business process is will help you get ahead and see things differently. In this post, we answer clear and simple: what is a business process?
What is a Business Process in Simple Terms?
What is a Process, Anyway?
Before we can answer “What is a Business Process?”, we should start with a simpler question: what is a process? In other words, what is a process regardless of if it is context is business or not?
A process is a set of actions that transform input into output.
This abstract definition is quite simple, particularly if we consider it in a manufacturing context. Imagine you have a plant producing soft drinks such as Coca Cola. You will have one machine that bottles the coke, that is put it in the bottles. This machine will take most likely two inputs: the coke and the bottle. The only output are bottles filled with coke.
This machine will use some resources, most likely some sensors, valves, conveyor belts and the like. It will use them in a way that is directed by some actions, actions aiming at transforming inputs (coke, empty bottles) into output (bottles of coke).
One key element is this: you can clearly see input being transformed into outputs from the outside, without needing to know what happens inside the machine. This is a key of processes because they allow for simplification. You can have someone take care about what happens inside the machine, while you look at the big picture and connect different machine together.
What is a Business Process? Here’s the Explanation
We can start with a formal definition.
A business process is a set of practices and resources to achieve business objectives.
The Wikipedia definition goes even more in depth:
A business process, business method or business function is a collection of related, structured activities or tasks by people or equipment in which a specific sequence produces a service or product (serves a particular business goal) for a particular customer or customers.
All in all, it is just like a normal process, but it is focused on business result. It is a process that exists because of business reasons. The bottling of coke can be a business process indeed, because the coke plan needs to bottle the coke if they want to sell it. But business process can go beyond manufacturing: we find them in the service industry and at a more abstract level in general.
Business process are a way of thinking that streamlines the way you do things. We can say that a business process is a set of step to accomplish a specific goal, it is a protocol to follow, which often contains many best practices. You don’t have to worry about best practices when executing the process, you just follow it and best practices will be embedded in your work.
Example of more abstract business processes typically include:
- How to respond a customer complaint
- Rules and norms for purchasing from third parties (e.g., selecting trusted vendor, requiring some payment terms etc.)
- Rules to report travel expenses to HR for reimbursement
- How to ask holidays and notify the rest of the team and of the company
- The process of hiring someone (recruiting, selection, and onboarding) or firing someone
- How you request a budget, and how it is approved
- How a project should be managed, where to store project documentation
- How to address a Public Relationship Crisis, for example a data breach or an adverse event
Of course, this list serves the only purpose to give you an idea of what a business process is. As you can see, a business process can take many forms, address different areas of the company, and produce different results. What is the common element in all of this? To answer this, and better answer “What is a Business Process?”, we can turn to its underlying characteristics.
The Characteristics of a Business Process
How do you define what is a business process and what is not? Does any document providing some instruction qualify as a business process? This is what we answer in this part of this “What is a Business Process?” explanation.
For a business process to be considered like that, it must have the following characteristics.
- It clearly contributes, either directly or indirectly, to the business outcomes of a company
- Instructions are clearly detailed, often with a step-by-step list or, even better, a flow chart
- It includes “who does what”, generally not naming names but rather roles (the process should transcend individuals)
- It is meant to be repeated in the future multiple time
- The company put it to use consistently, not occasionally
Of course, sometimes there are some rules and procedures that qualify some of the previous points, but not all. The truth is, there is no clear line to answer: “What is a Business Process?”, yet the more of the previous characteristics it will have, the more it will clearly be a process.
If you are tasked with designing a business process, then you should try to implement all the previous five characteristics. They will make your business process successful.
What are the Advantages of Having a Business Process?
Now that we answered “What is a Business Process?” we may think about why it is important, and why a company may spend a lot of money to create one. Business processes bring several benefits.
First, a business process streamlines operations, ensuring that the same thing is done always the same way. This may seem simple, but it brings enormous value. First, it brings predictability in terms of time and cost, allowing for better forecast in the future. Second, since everything is always done in the same way, you can analyze the activity and identify the part that are not working well: you can roll-out general improvements by changing one part of a process.
As another consequence of streamlining operations, it leaves less room to “guess work” and more room for execution. This helps reduce the cost of turnover (changing your workforce, as the knowledge is in the process and not in the worker). Of course, your workforce will still have to exercise critical thinking, but with business processes at hand there will be less room for errors.
Speaking of errors, a streamlined business process means also a predictable level of errors and hence a predictable level of quality, which can be measured over time.
Finally, having business processes in place allow the company to scale up by “duplicating” the same process to other facilities and allowing management to focus on the big picture rather than on the details.
All in all, there are plenty of benefits to implement business process, and if you haven’t done so already you should start creating them.
Business Process in a Nutshell
In this quick guide, we explained “What is a Business Process?” and also presented its characteristics and benefits. As you might have notice, all of this is somewhat abstract, because the real implementation is up to you, to your own industry and company.
Start to write business processes now, it is easy and brings enormous potential. To do that, I recommend first outlining the process at high-level with a flow chart, and then following up with a Word document, describing each box of the process line-by-line.
When defining a process, you should define clearly who does what. To do that, you can use a RACI matrix, and you can learn more about it here.
