Analytical techniques to understand the way organisations work have been around in something like their modern form since the early 20th century, though the roots of this breaking down of business tasks can be traced back to Adam Smith’s “division of labour” in the late 18th century. From the early organisation charts and flow diagrams these analyses have developed – largely thanks to the software industry – into a more sophisticated technique known as Business Process Modelling. This is aimed at ensuring that IT projects properly meet the needs of the company.
So What is a Business Model?
The term business model is generally used to describe a framework that represents the central aspects of a business. This can include its strategies, structure, trading practices, operational procedures and more.
Typically there are three main areas, management processes that govern the overall running of the business. Operational processes that cover the actual money making operation, things like manufacturing, distribution and sales. Finally there are supporting processes that cover the back office functions like human resources and accounting.
These are broken down into sub-processes and further down to individual tasks which define the way a job is carried out. These tasks contribute to a workflow, this is used to show the way a sequence of operations leads to a final result.
In looking at an organisation there are other factors beyond the day-to-day operation that need to be taken into account. These might include a look at how projects are managed or a SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis to determine how the business is positioned in the market.
Analysis of business processes uses a number of tools. These can be traditional paper-based options like process flow charts. There are also standardised forms of notation used to document operations in a consistent way. Increasingly though process modelling uses software tools. There are now a number of development languages aimed specifically at business process modelling and they allow the same techniques to be applied across all parts of an organisation.
Which technique you use really depends on the organisation you’re looking at. There’s no one size fits all approach and what is right for one business may not work for another. Due to their very scale larger organisations will require more detailed analysis than smaller ones. This may even be expanded to take in suppliers, contractors and other factors essential to the smooth operation of the company.
What’s it All For?
A business process model should always be seen as a tool rather than an end in its own right. Its ultimate aim is to improve the way that an organisation works. By spotting inefficiencies that waste time and effort it can help to streamline operations resulting in better service for the customer and improved profitability for the company.
In the long run this can lead to better competitiveness, increased sales, and improved welfare and loyalty of staff. Companies work at their best when systems support the way the people do their jobs rather than force them into a particular way of doing things. The goal of reviewing your business processes should be to create an organisation that’s happier as well as more profitable.
By analysing the existing operation it’s possible to spot where changes can be made in order to make improvements. Once you’ve done this, however, there’s no excuse to sit back and think that it’s all done. Business is a dynamic world and ideally all of your processes should be under continual review, allowing you to make adjustments as new products or changes to machinery bring opportunities for improvement.
Stuart Edge writes regularly on management topics and believes that Business Process Modelling can help any company to be more successful.