Business Process

A business process or business method is a collection of related, structured activities or tasks that produce a specific service or product (serve a particular goal) for a particular customer or customers. It often can be visualized with a flowchart as a sequence of activities with interleaving decision points or with a Process atri! as a sequence of activities with relevance rules based on the data in the process. "verview# $here are three t%pes of business processes# &. anagement processes, the processes that govern the operation of a s%stem. $%pical management processes include 'corporate governance' and 'strategic management'.

(. "perational processes, processes that constitute the core business and create the primar% value stream. $%pical operational processes are purchasing, manufacturing, advertising and marketing, and sales.
3. )upporting

processes,

which

support

the

core

processes.

*!amples

include accounting, recruitment, call center, technical support. A business process begins with a mission ob+ective and ends with achievement of the business ob+ective. Process,oriented organizations break down the barriers of structural departments and tr% to avoid functional silos. 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. $he anal%sis of business processes t%picall% includes the mapping of processes and sub, processes down to activit% level. /usiness Processes are designed to add value for the customer and should not include unnecessar% activities. $he outcome of a well designed business process is increased effectiveness (value for the customer) and increased efficienc% (less costs for the compan%). /usiness Processes can be modeled through a large number of methods and techniques. 0or instance, the /usiness Process odeling 1otation is a /usiness

Process odeling technique that can be used for drawing business processes in a workflow. Adam Smith "ne of the most significant people in &2th centur% to describe processes was Adam )mith in his famous (&334) e!ample of a pinfactor%. Inspired b% an article in 5iderot6s *nc%clop7die, )mith described the production of a pin in the following wa%# 8"ne 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 ... 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 b% distinct hands, though in others the same man will sometime perform two or three of them.8 )mith also first recognized how the output could be increased through the use of labor division. Previousl%, in a societ% where production was dominated b% handcrafted goods, one man would perform all the activities required during the production process, while )mith described how the work was divided into a set of simple tasks, which would be performed b% specialized workers. $he result of labor division in )mith9s e!ample resulted in productivit% increasing b% (:,;;; percent (sic), i.e. that the same number of workers made (:; times as man% pins as the% had been producing before the introduction of labor division. It is worth noting that )mith did not advocate labor division at an% price and per se. $he appropriate level of task division was defined through e!perimental design of the production process. In contrast to )mith6s view which was limited to the same functional domain and comprised activities that are in direct sequence in the manufacturing process, toda%6s process concept includes cross,functionalit% as an important characteristic. 0ollowing his ideas the division of labor was adopted widel%, while the integration of tasks into a functional, or cross,functional, process was not considered as an alternative option until much later. History: In the earl% &<<;s, =) corporations, and subsequentl% companies all over the world, started to adopt the concept of reengineering in an attempt to re,achieve the competitiveness that the% had lost during the previous decade. A ke% characteristic

of /usiness Process >eengineering (/P>) is the focus on business processes. 5avenport (&<<?) defines a (business) process as# 8a 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 focus9s emphasis on what. A process is thus a specific ordering of work activities across time and space, with a beginning and an end, and clearl% defined inputs and outputs# a structure for action. ... $aking a process approach implies adopting the customer9s point of view. Processes are the structure b% which an organization does what is necessar% to produce value for its customers.8 $his definition contains certain characteristics a process must possess. $hese characteristics are achieved b% a focus on the business logic of the process (how work is done), instead of taking a product perspective (what is done). 0ollowing 5avenport6s definition of a process we can conclude that a process must have clearl% 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. @ammer A Bhamp%9s (&<<?) definition can be considered as a subset of 5avenport9s. $he% define a process as# 8a collection of activities that takes one or more kinds of input and creates an output that is of value to the customer.8 As we can note, @ammer A Bhamp% have a more transformation oriented perception, and put less emphasis on the structural component C process boundaries and the order of activities in time and space. >ummler A /rache (&<<D) use a definition that clearl% encompasses a focus on the organization9s e!ternal customers, when stating that 8a business process is a series of steps designed to produce a product or service. ost processes (...) are cross,functional, spanning the Ewhite space9 between the bo!es on the organization chart. )ome processes result in a product or service that is received b% an organization6s e!ternal customer. Fe call these primar% processes. "ther processes produce products that are invisible to the e!ternal customer but essential to the effective management of the business. Fe call these support processes.8

$he above definition distinguishes two t%pes of processes, primar% and support processes, depending on whether a process is directl% involved in the creation of customer value, or concerned with the organization9s internal activities. In this sense, >ummler and /rache6s definition follows Porter6s value chain model, which also builds on a division of primar% and secondar% activities. According to >ummler and /rache, a t%pical characteristic of a successful process,based organization is the absence of secondar% activities in the primar% value flow that is created in the customer oriented primar% processes. $he 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. 0inall%, let us consider the process definition of Gohansson et al. (&<<?). -D. $he% define a process as# 8a set of linked activities that take an input and transform it to create an output. Ideall%, 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.8 $his definition also emphasizes the constitution of links between activities and the transformation that takes place within the process. Gohansson et al. also include the upstream part of the value chain as a possible recipient of the process output. )ummarizing the four definitions above, we can compile the following list of characteristics for a business process# &. Definability # It must have clearl% defined boundaries, input and output. (. Order # It must consist of activities that are ordered according to their position in time and space. ?. Customer # $here must be a recipient of the process6 outcome, a customer. :. Value-adding # $he transformation taking place within the process must add value to the recipient, either upstream or downstream. D. Embeddedness # A process can not e!ist in itself, it must be embedded in an organizational structure.

4. Cross-functionality # A process regularl% can, but not necessaril% must, span several functions. 0requentl%, a process owner, i.e. a person being responsible for the performance and continuous improvement of the process, is also considered as a prerequisite...

Importance: /usiness processes comprise a set of sequential sub,processes or tasks, with alternative paths depending on certain conditions as applicable, performed to achieve a given ob+ective or produce given outputs. *ach process has one or more needed inputs. $he inputs and outputs ma% be received from, or sent to other business processes, other organizational units, or internal or e!ternal stakeholders. /usiness processes are designed to be operated b% one or more business functional units, and emphasize the importance of the Hprocess chain8 rather than the individual units. In general, the various tasks of a business process can be performed in one of two wa%s manuall% and b% means of business data processing s%stems such as *>P s%stems. $%picall%, some process tasks will be manual, while some will be computer,based, and these tasks ma% be sequenced in man% wa%s. In other words, the data and information that are being handled through the process ma% pass through manual or computer tasks in an% given order.

Source: http://en.wi ipedia.org/wi i/!usiness"process