Strategic business managers understand the importance of always having a finger on the pulse of their company. Without such informed insights, it is very difficult to make effective decisions regarding optimizing existing opportunities and scoping out new directions. Effective managers recognize the value of Business Process Mapping (BPM) to give them the information they need to strategically lead their companies.
Business Process Mapping is a tool that is used to provide a company with a clear picture of how it does what is does. BPM is applicable no matter what type of company or its focus product or service. Every company is comprised of business processes. These processes address every area and function that exist within an organization. A business process is defined as a series of activities that occur to deliver a specific business value or goal. While this sounds simple enough, the act of actually mapping out these processes requires a skilled and systematic approach; if the results are to have any real management value.
Understanding how you do what you do is a key component of strategic management. Too often as an organization grows, delineation occurs between departments and these business areas begin functioning as completely separate business entities. Often a by-product of this occurrence is that growth and development occur in a silo fashion. Departmental team members are very knowledgeable about their own business areas but have only a limited understanding of the processes that occur in others and how these processes relate to and impact on theirs.
BPM actually maps out all of the business processes and clearly identifies the activities that are required to carry out these processes and the resources required to complete these activities, thereby providing a detailed and accurate as-is organization-wide snapshot of all the business processes that occur within a company. It is very often the first time that management is able to obtain a crisp awareness of the processes that occur in all areas of the organization. This holistic view facilitates the identification of gaps and overlaps that exist within these processes, both within and between departments.
This information can then be used to optimize and streamline existing business processes; which should always be the first step in any growth initiative. Before introducing the added volume and strains of growth, a company should ensure that it does a complete tune up to ensure that the existing infrastructure can support these increased demands.
Another benefit of BPM, is the knowledge that is obtained by detailing business processes component by component. The crisp identification of activities and resources can also be used for strategic financial management. BPM creates a framework that supports the implementation of Activity-Based Costing (ABC). By utilizing the strategic management tool of ABC, it is possible to attribute exact costs to each activity and required resource. These costs can then be rolled up to the related business processes to ascertain the total costs of providing these business processes. This information can be used in a variety of ways such as, budget setting, quoting and efficiencies targeting.
By knowing the components of how you do what you do, it is possible to begin practicing meaningful performance measurement. Strategic managers are now able to define and create clear, consistent and measurable performance metrics for each resource, activity and business processes. With clearly defined performance metrics defined and communicated to stakeholders within the organization, these metrics can be tracked to ensure that each component is functioning at desired criteria levels. This information can be used in a variety of managerial functions from efficiency tracking and reporting to employee performance reviews. The practice of measuring organizational functions provides meaningful feedback to stakeholders to assist in determining required adjustments and how these can be conducted in a timely manner.
BPM can also assist in the strategic assessment of information systems. The ability to view and organization component by component allows management to determine which information is required by which resource, activity and process, as well as the directional flows of that information to facilitate and manage business processes. By mapping out this information, management can conduct meaningful information systems assessments of legacy systems, and strategically identify the functionally requirements of future systems.
While Business Process Mapping may seem like an obvious approach, it is surprising how many companies do not have a true and detailed understanding of how they do what they do. It is the strategic manager who fully understands that breaking things down to their most basic components is the best way to see the whole picture.
Copyright - Kelly Melanson, Certified Management Accountant |