What is business process analysis?
Business process analysis refers to the process of studying data and analyzing a business in-depth, often in real-time, to find ways to make it more efficient and profitable. It scrutinizes the processes and documentation involved, as well as the parties and stakeholders, and the communication and information exchanged.
Business process analytics is a digital tool for performing business process analysis on data generated through an organization’s everyday business.
The goal of business process analysis is for organizations to achieve end-to-end visibility into complex business processes, spanning multiple systems both inside and outside of the organization. Through business process analysis, organizations can identify core processes that need improvement and optimize them accordingly.
If your business is experiencing:
- Increased customer complaints
- Delays in fulfilling orders
- Processes that are not automated or optimized
- A process that your team finds lacking and wants to replace with a new version
Then it is time to perform a business process analysis.
Business process analysis methodology
Business process analysis includes a huge range of techniques and skills:
- Evaluation of turnaround time
- Measurement of running costs
- Quality and capability of processes
- Process modeling through static or dynamic visual models
- Data collection from start to finish
- Value chain analysis
- Functional decomposition
Together, the assessment of all parts of a business can provide a holistic overview and allow thorough and targeted improvements. These are the core steps followed in business process analysis:
1. Identifying the processes that need improvement
The goal here is to zoom in on the processes that are central to realizing your business goals, finding the flaws therein, and eliminating them.
2. Establishing your core team of business process analysts
Often the best insights come from the personnel intimately connected with the process being analyzed. They work with it daily and are already familiar with the protocol, the steps, the bottlenecks, and the flaws, and may have ideas for improvement. Even if you hire outside expertise such as data scientists, they can still meet with your team and brainstorm solutions together.
3. Creating an ‘as is’ process flow chart
Piece together the various components of a business process, including the variants, to create the most accurate visual representation of current practices:
- A process initiator event is a good place to begin. For example, a crucial communication on the arrival or completion of a previous process segment.
- In a standard process flow format, responsibilities are defined by the use of lanes, i.e., areas of the diagram where the tasks of a team or position are depicted.
- Define tasks and their relationships by lane. For example, in each lane, indicate the tasks that need to be done, whether it’s continuing the previous communication, outlining the next step, or the designated individual who should perform it. Link further events.
- Mark the end of the process through a defined act, such as ‘order fulfilled’ or ‘query resolved.’
This exercise defines the process ‘as is,’ that is, the way it exists now. This helps identify flaws and bottlenecks, which are to be eliminated in further steps.
4. Modeling the ‘to be’ process
As the name suggests, ‘to be’ models are designed to reflect the new and improved processes, in alignment with the organization’s goals.Techniques
Techniques employed in business process analysis
There are some standard data analysis techniques that are used across business process analysis, including:
- Gap analysis: Finding information that is missing in a particular process.
- Value-added analysis: This elucidates whether each and every activity in the existing process is one that adds value to the process, whether it contributes to the desired outcome and whether it helps meet the organization’s goals. If there are activities or steps that do not line up, they must be removed.
- Root cause analysis: As the name suggests, it uncovers the root cause of a problem and what can be done to fix it.
- Observation: This involves observing the actions on the floor or in the field and noting how events actually unfold.
- Experience examination: Gaining valuable inputs from personnel who have first-hand floor or field experience with the process in question.
Benefits of running a business process analysis
The most common benefits of business process analysis include:
- Clear documentation of the process and deeper understanding of the steps in the process.
- Generating useful information on whether the process is delivering a desired outcome.
- Identifying the obstacles that cause a delay in process fulfillment.
- Identifying which user actions are holding up the process.
- Pinpointing where the inefficiencies originate.
- Creating better training material and programs for new employees taking up the process in question.
Business process analysis is made infinitely more robust through the use of tools such as business process automation software. This empowers organizations to use data to analyze how current processes are contributing to business goals and view recommendations for improvements.
In fact, automating these processes offers an overarching advantage in streamlining and simplifying complex, chaotic, or redundant processes. A welcome side-effect of automation is the data and insights it provides for more efficient business process analysis.
Automated processes bring in the following advantages:
- More efficient workflows that are also easier to analyze
- Higher visibility of all the steps involved in a process
- Minimized costs
- Better profit margins
- Real-time process updates and report generation
- Meticulous data collection
- Centralized data storage and easy accessibility to data sets
- Data-driven business decisions with predictive analytics
- More efficient utilization of manpower and resources
From a business process analysis perspective, the data is of particular value.
Business process analysis: A few key application areas
Companies apply business process analysis across a variety of consulting services as well as in implementing solutions. It is particularly useful for:
- Documenting implicit knowledge, or the process of putting down on paper the everyday manual, and sometimes non-documented processes. For instance, both the private and public sectors design and update process manuals using business process analysis.
- Analyzing actions, documents, and data in international trade, along with the commercial, logistics, financial procedures, and rules and regulations.
- Weeding out repetitive and unnecessarily time-consuming elements like multiple forms or redundant data capture.
- Discovering opportunities for improvements such as shrinking data requirements or reducing the amount of unnecessary documentation.
Examples of applications of business process analysis
Most industries and work streams can derive major benefits from business process analysis. Here are a few key examples of its application in the finance, retail, and healthcare industries.
Finance: Trade settlement process
Gaining visibility into trade settlement processes enables businesses to manage customer experiences and answer any status questions. It also helps to avoid penalties that might be associated with missed actions or errors,reducing settlement risk via faster straight-through processing.
Business process analysis is central to trade facilitation initiatives that have to do with making changes in ‘as is’ operations and processes. It is also useful in project and solution design wherever improvements are needed to streamline the ‘to be’ processes that link concerned parties.
The ‘buy-ship-pay reference data model’ is a great example of business process analysis combined with data analytics. It identifies the key commercial, regulatory, logistic, and payment procedures in an international supply chain. It also gives an overview of the information flow between the stakeholders, notably the supplier, customer, intermediary, and authority.
This model can be used in the scoping phase, as well as the detailed ‘to be’ process modeling phase for defining local business process requirements. It also provides the foundation for developing globally aligned data exchange specifications that may be needed in the international supply trade.
Retail: Supply chain analysis
Business process analysis can help you track order fulfillment at every link of the chain. Having an eye on the real-time status of an order is useful for managing customer expectations, in case of any unavoidable delays, damage, or loss of the item in transit. It also helps take preemptive measures against any potential loss of revenue in such an event.
In brick-and-mortar retail outlets, business process analysis combined with data analytics can help narrow down the main revenue drivers. For instance, modern point-of-sale hardware and software comes with features that generate reports on important metrics. You can quantify not only customer counts, but also your major sellers, prime business hours, footfall, basket sizes, sale trends, and profit margins.
Healthcare: Large volume data management
Traditionally, healthcare used business data much less regularly and comprehensively than most other industries to improve processes, but that is changing now.
The application of business process analysis in healthcare transforms data into information that can be relayed back to end-users. The adoption of EHRs and other electronic data mechanisms makes the application of analytical tools easier to trace by providing the basic electronic data upon which to act. There are still privacy concerns in the collection of management of medical data, but overall, there is a lot of untapped potential.
Business process analysis offers opportunities such as the ability to improve the efficiency of healthcare while improving the quality of care, mining through generic data, reducing costs, and effectively responding to disasters, to name a few. Managing claims lifecycles using business process analysis is also helpful to avoid penalties and manage revenue cycles more efficiently.
The importance of processes in generating data for running business analytics
Processes are what build a business from the ground up. They are the operational means for organizations to meet their goals and aspirations.
The insights provided by business process analysis are not only critical from the perspective of customer experience but also from a high-level, regulatory, and compliance point of view.
For any business process optimization to be successful, an accurate reflection of business execution is necessary, such as how users interact across various interfaces with your brand, how applications perform, and how things happen. Data is the most valuable tool for enterprises to gain this insight.
Why modern enterprises must harness data as part of business process analysis
Business process analytics are an indispensable tool to conduct a successful process analysis. Any business that is online produces vast amounts of event data simply through day-to-day operations. Today, the amount of data generated by large business organizations is estimated to grow at a rate of 40 to 60 percent per year.
This data is stored in databases, transaction logs, social media comments, e-mails, voice logs, and so on. It is typically too unstructured, scattered, and disconnected to derive insights from at a glance. Simply storing it is not at all useful.
Now if this data were to be made cohesive across silos and easily accessible across the organization, it can be a veritable gold mine of information. It contains insights and patterns buried within processes that are not visible to the naked eye. They have the potential to allow stakeholders to innovate, ideate, and revamp how the business is run.
This is why business organizations across various industries are looking at data analysis, in particular, business process analytics, to handle and mine this data to uncover the game-changing knowledge buried within.
Advantage of running business process data analytics
With business process analytics, you can identify and localize your current operational problems, and use data to eliminate bottlenecks and optimize business processes.
Business process analytics enables you to monitor and graphically analyze your throughput as well as backlog key figures. You get a panoramic view of business process operations across all the vital systems to running your core business processes.
Business process data analytics: Key challenges
Typical challenges in harnessing data to contribute to business process analysis include:
- Hiring the right personnel to run the analytics. With the exponential growth of data, the importance of data scientists and analysts has grown, too, but there is still a relative shortage of talent.
- Merging and synchronizing voluminous data sets from multiple, diverse sources onto a single analytical platform. This is crucial because if things get missed or overlooked, the process analysis will yield incorrect findings and insights.
- There is often a communication gap in organizations. The insights from business process analytics sometimes do not make it to the people or departments that need them the most. As a result, important elements of a process may be missed out.
In a nutshell, true process improvement is built upon the foundation of an accurate understanding of the real process. Automation of processes gets you part of the way there. Incorporating business process analysis plus data analytics into your daily operations and standard processes yields valuable insights that you can use to optimize every aspect of your enterprise.
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