By Janet Baker
Why should I perform a Business Process Analysis?
Business Process Analysis (BPA) is the discipline of examining overall business processes, with a focus on the functions performed by people rather than the systems. The goal of performing a BPA is to understand the current process and how it can be changed.
BPA is a critical function within any business that wishes to improve efficiency, reduce risk or introduce/change computer systems. A BPA:
- ensures an appreciation of how the processes currently work, without which improvements will not be successful, and
- allows revisions to be reviewed, understood and agreed to before they are implemented.
Each process within a business transforms inputs (such as information, materials, labour, energy and equipment) into outputs (such as physical product or a service), and should add value along the way. Processes may include planning, procurement, manufacturing, distribution, order tracking, accounting, promotion, sales, delivery and customer service.
A BPA exercise defines the current processes, so they can be analyzed to determine what changes can and should be made. A later phase will adjust the processes to create a revised flow. These revisions may be:
- improvements to make the process more efficient
- improvements to reduce any risks to the business
- adjustments required based on a new or revised computer system's functionality
- changes the business wishes to make to better compete in the market.
Ever wonder what those process diagrams actually mean?
A Process Flow Diagram (PFD) has symbols to represent activities or tasks, decisions and storage, with arrows showing the sequence in which they are used. Annotations on the PFD indicate the duration of each task and any prerequisites that are required before it can start, together with the reason for them.
These diagrams are developed by the Business Analysts, based on input from existing documentation and interviews with all individuals involved, i.e.: the staff who perform the tasks, their managers, and the recipients of the output. This ensures that all the components of the process are properly captured.
The resulting PFDs are reviewed by the all the business clients to ensure that they accurately represent what truly occurs in today's world. This is an iterative activity, as each cycle defines the process more accurately.
Once the current process is understood, it can be adjusted to achieve the business' goals. The revised process will also be represented as a PFD, so similarities and differences from the original can be reviewed and understood.
Let's make my business more efficient
Improving the efficiency of a process may be required by management to reduce costs, or to increase quality, speed or flexibility. When a BPA is initiated, the reasons for the current costs, speed, etc are not always fully understood, which is why the definition of the current process is invaluable.
For example, a process may be taking much longer than hoped for, which may be due to a single task within the process, known as the bottle-neck task. This bottle-neck task can cause the processes and tasks before and after it to become idle while waiting for it to complete. If this one task can be improved, the whole process becomes better without the need to adjust any of the other activities. Conversely, if the other activities are improved, but the bottle-neck one is not, the overall process will be no better. Some ways to handle a bottle-neck can be determined by analyzing the reasons for the bottle-neck:
- Does the task have to be performed by this resource? If not, add resources to increase the capacity. Although this would cost more for the one task, the overall process is improved.
- Is the task truly required? If it is a non-value add task remove it. E.g.: obtaining a second level of management approval for all occasions rather than either spot-checking or only passing more complex ones to the manager.
- Does the task have to be performed to this level of detail? If not, reduce the work required.
Increasing the efficiency of a process may occur in a variety of ways, e.g.
- Streamlining the tasks
- Optimizing the resources used
- Reducing work-in-progress inventory
- Redesign the product for better manufacturability
- Outsource some activities
Creating the PFD shows exactly where the process should be changed to gain the most.
One factor to consider before making any improvements is the cost-benefit: i.e.: will the suggested improvement save more money than it will cost.
I want to know where my risks are
Of course there is no such thing as completely risk free, but businesses often have to consider both regulatory compliance and financial risk. If a process does not meet the regulations, or is open to abuse, the risk and so repercussions to the business may be significant.
Regulations are typically legally binding and set by some level of government. If a business does not abide by the regulations and is "caught", then as well as having to correct the process at that point and facing the regulatory penalties, there may be significant bad press for the business, which may severely damage their reputation and income. Therefore, it is essential that any regulatory deficiencies are correctly in a timely manner. Analysis of the processes defined in the PFDs allows any potential pitfalls to be discerned and corrected.
Even though they are not legally binding, guidelines set by the industry are similar to regulations as the potential for bad publicity is equal. Again, comparison of the processes to the guidelines, and subsequent process revisions ensure adherence to the guideline.
Financial Risk is somewhat different in that a BPA to review it is internally driven. However, especially in today's climate, any risk to a business' processes that may expose them to financial loss is a significant concern. This could be a true financial loss, such as poor debt collection, or a loss in kind, such as poor stock control processes which result in theft of items.
When looking at improving processes to reduce risk, a different approach is often taken, as the focus is more on what has to be done rather than how it is done. E.g.: the efficiency of the current tasks becomes of much less concern, and the cost benefit is often irrelevant, especially in the case of regulations.
Can't the software just be customized to match our existing processes?
Often purchased software can be customized to match a business' existing processes. However, before doing that, there are some things to consider:
- What are the current processes? Without creating current PFDs this will not be known.
- Are the current processes the best way of performing the business? If not, adjusting them to match the package may be appropriate, as packages are often designed to match an industry standard.
- If the package is customized, any upgrades to the system (and you know there will be some) will be more expensive and take longer to achieve, as typically the upgrade will need to be re-customized.
The PFD helps answer these questions.
Conclusion
In today's world, Business Process Analysis is a critical function for businesses as they strive to be more efficient and less open to risk. The proliferation of packaged computer systems also places a greater emphasis on the need to understand the related processes.
About the Author
Janet Baker is a Business Analyst with over 20 years experience during which she has worked at several large corporations on a wide variety of initiatives. Business Process Analysis has always been an integral part of the projects she has worked on, and her skills in this and other areas have greatly contributed to the projects' successes.