How Business Process Management Works

Written By: Eric Kimberling
Date: January 19, 2022

One of the ongoing debates in the digital transformation space is how to address “as-is” vs. “to-be” business processes. When embarking on a digital transformation, some of the biggest questions we get from clients is,

  1. How do I address my current processes?
  2. How do I build my ideal future state processes?
  3. How much time do I spend on them?
  4. Do I even spend time on them?"

A lot of organizations struggle with how to approach business process management and business process improvement. What I want to guide you through today is how to address this concept of “as-is” and “to-be”, and how to embed these strategies within your digital transformation.

Let’s dive in.

The Importance of Business Process Management

Before I unpack these ideas, it's helpful to understand, first, why is business process management so important? One of the problems within the digital transformation space, is software vendors downplaying the importance of business process management. They'll say no need to worry about either “as-is” or “to-be”, because their software will tell you what your future state is going to look like.

This is not only a big mistake but a completely misleading statement. Business processes, future state processes, and business requirements should define and dictate what types of technologies are deployed.

If time is not allocated to define current and future state, there cannot be a blueprint for new technologies, process improvements, and enabling organizational change management. For all these reasons, think of business process as a management as sort of the foundation that sets up future success.

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Assessing As-Is Processes

Clients often, and understandably so, as why they need to put some much time in analyzing current state process if they’re just going to change them? Well, here's the reason why.

First, future state cannot be achieved without understanding the current state. It is about understanding the current business process, what's working well, and identifying inefficiencies or breakage.

Those process that are retainable can be built on and any breaks can help target areas that needs improvement.  No evaluation exercise means no clear process improvement and technology roadmap to achieve optimization and an ideal future state.

Now, there is no need to overanalyze the current state operations down to the transactional level of which buttons get pushed and what fields are entered. A simple, clear overview of an end-to-end business process and how the current technologies functions, processes mapping, people's roles and responsibilities, etc. – will provide valuable insight to setting the stage to achieve the future state of business process and intelligence.

Business Process Mining

One of the tools we use at Third Stage is something called business process mining. This is a fantastic method to understand the current state. Not just in terms of the qualitative conversation around what processes are working and what's not, but more of a quantitative discussion regarding the actual metrics around business processes. It really paints a visual picture of how business processes work today.

At the end of the day, business process mining is a great example of a tool that can be used to really understand the landscape of today, so future state based can be strategized using actionable data.

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Defining Potential Improvements

Within the exercise of understanding the current state, inevitably the organization is going to identify areas of potential improvement, such as bottlenecks, pain points, inefficiencies, manual entry of data, any re-work, and  quality issues. All those issues are going to come to the surface within the assessment and evaluation of the current state business processes.

Another key is to improvements is identifying process that are working well. These are key parts of the business model and aspects the operating model that should be retained. They're sort of deal breakers, in that replacing these successful processes within the operating model will cause problems. That's why the current state enables you to identify what those future state potential improvements are.

A common exercise that happens within defining future state improvements is the identification of variations in the business processes. If the organization has grown through organic growth, acquisitions, or other sorts of evolution, there are likely a variety of business processes that look very different. Part of the business process improvement exercise is designed to identify opportunities to create a common operating mode and standardized processes.

Again, this discovery process does not need to be completed for every function and all processes, but there might be certain low-hanging fruits, or areas already targeted for improvement. On the flip side, it is important to look at areas to retain a certain amount of flexibility, decentralization, and localization.

There's typically not a one-size-fits-all answer for an entire organization, it is important to identify those business process improvements that make the most sense for the desired future state.

Define The Future State

Once you've done everything I've mentioned, it is time to define the future state. The current state has been evaluated. Opportunities for improvement and standardization have been identified and successful process have been retained.

After all that is complete, it's time to define what is that future state target operating model and end-to-end process flows going to look like. That's really sort of the capstone in this entire exercise. Starting with the current state, or as-is processes, and evolving to the future state, to-be process.

This should not only look at what the business processes is going to be, but what the roles and responsibilities are going to be within the future state. Ultimately that's going to drive the organizational change management plan.

Another product of defining the future state is a solid set of requirements that will help define, evaluate, and select the best technologies is for the organization. These same requirements will also become the foundation for deploying the technology.

The upfront work on business process definition of the future state is not only going to ensure the business selects the right software, but also deploy the software in a way that enables those process improvements.

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Getting Started and Extra Tips

To get started on this whole journey of defining the “as-is” and “ to-be”, leverage the tools that might be available. First, the question often comes up of, “how do we start with our as-is state?”

It is possible, to start with a clean slate whiteboard, sit in the conference room, and talk about how the business processes, but there's other tools at your disposal that might help. For example, APQC is a non-profit organization. They're an organization that provides a technology agnostic business process framework for several industries in a few different functions.

The other thing to think about is, who are the stakeholders that are going to be involved in defining the as-is vs. to-be? It is important to make sure that the key stakeholders, such as mid-level management, as well as frontline employees are involved in these processes.

It’s not necessary to include every single person within the organization, but solidifying an effective cross-functional representation will help current and future state business processes development.

Don't want to overanalyze your business processes. It is important to define the point where the process does depend on what technology is used. In other words, at a very high-level, it is essential to end up somewhere in the middle early in the project.

If the evaluation is bumping up against the point where it really depends on what technology and how it’s deployed, stop and assess the rest of the details after the deployment of the technology takes place.

That level of detail is a huge part of the evaluation and business planning perspective, so in the end, the organization can pick the right technology, develop a clear strategy for how to deploy the technology, and then create the additional details from there.

Resources

I hope this has provided some additional context regarding your business processes within your digital transformation. I encourage you to check out the 2021 Digital Transformation Report which provides best practices for how to deploy technology, including business process work, as well as other things like how different software systems compare to one another, and what some of the best technologies are for different industries and functions.

If you have any questions regarding business process management, please don’t hesitate to reach out to me directly. I am happy to be an informal sounding board as you move through your digital transformation journey.

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Author:
Eric Kimberling
Eric is known globally as a thought leader in the ERP consulting space. He has helped hundreds of high-profile enterprises worldwide with their technology initiatives, including Nucor Steel, Fisher and Paykel Healthcare, Kodak, Coors, Boeing, and Duke Energy. He has helped manage ERP implementations and reengineer global supply chains across the world.

Third Stage Consulting

Third Stage Consulting Group is a global thought leader in business transformation, ERP software systems, operational change management, and business advisory. Let us take your organization’s digital transformation to the Third Stage.
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