Companies that have complete control over their business processes are able to realise the full potential of their organisation’s productivity. Focusing on making continual improvements to these processes will enable you to achieve significant productivity gains and competitive advantages in the marketplace.
However many New Zealand organisations are behind the 8 ball with their business processes, as illustrated by the following excerpt from a recent NZ Herald article that reviewed New Zealand’s ranking as part of leading business school, IMD’s annual World Competitiveness Yearbook.
“New Zealand’s productivity is ranked woefully low in the latest international competitiveness report. It is 24th out of 29 economies with populations under 20 million included in the survey” NZ Herald 14/05/2003
Before we go any further, let’s first take a look at what a business process is. A business process is a series of tasks completed, by people, to achieve a specified purpose. Click for an example of how hiring a new staff member is a process that may be documented.
An emerging term, increasingly popular in the business world, is Business Process Excellence (BPE) – which in a nutshell refers to the documentation, review, optimisation and automation of business processes with the express aim to improve the productivity of your organisation.
So how do you go about ensuring your business processes are excellent? Our experience shows you are required to do three things:
- Document your existing business processes
- Continually review and optimise your existing business processes
- Automate “mission critical” processes that are not supported by software
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We’ll now look at each in turn:
1. Document your existing business processes
Firstly, endeavour to gain a full understanding of your existing business through the documentation of your business processes. This documentation should include detail on what is involved in the process, how the process is completed and what systems are used to support the process.
A number of businesses may have documented some processes for their ISO9000 qualification - but this documentation is often high level and doesn’t cover all business processes in the company.
We often come across companies who haven’t documented “loose” processes such as the activities of sales reps, new product development and staff leave requests, for example. There is often significant scope for improvement in these activities due to their ad hoc, and often uncontrolled, nature. The impact of these activities on downstream processes can be significant if they are not effectively managed.
2. Continual review and optimisation
Secondly, you should regularly review your business processes and look for opportunities to optimise their operations.
In our experience, developing a culture that empowers and encourages staff to give feedback and raise any issues is an effective way of optimising your business processes. Also consider the support of an experienced advisor, which is often invaluable when looking to optimise business processes.
You should be looking to identify inefficient and ineffective business processes as well as any gaps, which gaps may represent additional tasks to be completed or internal control deficiencies, for example.
Consider the process to be completed when a new customer relationship is established. We’ve seen a number of companies who simply set up the new client on their debtors system so that invoices can be produced. A robust process would include credit checking, obtaining a signed trading agreement with the new customer, and registration of the trading agreement on the Personal Property Security Register. Failure to institutionalise these additional tasks results in a significantly higher risk of bad debts and limited legal options to recover the debt efficiently.
We’ve seen one instance of a company that, when setting up a new customer relationship, used three different forms involving three processing staff members at various stages, and required sign off by two managers. Previously the process took an average of three hours! By redesigning their process, the company in question now uses one form, involves one staff member and is authorised by one manager – the entire process taking a total of 15 minutes!
The key to optimising business processes is in striving for continual improvement through regular reviews and creating a culture where all staff aim to contribute to the improvement.
3. Automation of key business processes
Thirdly, for “mission critical” business processes, ensure your documented business processes are followed.
Technology advancement now makes the automation of key business processes possible. Automating your business processes will allow you to manage and control processes that aren’t supported by other software applications. Research conducted by Gartner Consulting in the United States indicates that only 30% of a company’s processes are supported by a software tool. Software has recently been developed to help companies automate their business management processes. While this technology is very new, in our view there are significant benefits to companies who adopt this technology for selected processes.
While Business Process Management software tools can help institutionalise the improved business processes, clever companies will seek to make continual improvements as part of their culture.
BPE reviews can be used for a variety of purposes including organisation reviews, software reviews, business improvement reviews and to assist with the selection of new accounting software.
For more information on how to realise the benefits that BPE can provide please contact:
Sharon Cresswell, Partner, Private Client Services.
