Analyzing Current Business Processes
We continue this week on our series on business process improvement. For sake of emphasis, IFRS 3 – Business combinations defines a business for the purpose of acquisitions as encompassing entities with inputs and processes applied to those inputs with the ability to create outputs. The presumption by IFRS 3 is that an entity irrespective of its asset size; without process, would not constitute a business and is more likely than not to preclude any element of goodwill in the event of an acquisition. The result of these is that entities with processes are expected to command higher prices as opposed to entities with no value adding processes. In the instance of the former, an acquirer is likely to consider such an acquisition as an acquisition of a business; while the latter would be considered simply as an acquisition of a group of assets, resulting in much lower values ascribed to such entities.
When analyzing current business processes, the project manager and his team are looking closely at the current process that is to be changed or modified in some way as part of the project. This phase includes gathering information from a variety of stakeholders via a variety of methods, evaluating current documentation on the process, and understanding how the business has changed since the process was initially developed and implemented, as well as future business needs.
Mapping out the process as it currently works is essential to understanding where gaps exist and where improvements can be made in the process. When a process is mapped out, it is clear what steps are involved in getting the process completed, as well as responsibility for each part of the process.
Mapping out the process enables the BPI project team to understand the process from the perspective of those using the process as well as those impacted by the process. Once the as-is process is documented, it should be validated with those individuals utilizing the process to ensure that nothing was missed or misrepresented.
Methods to Gather Data
Observation entails watching the stakeholder perform the particular process that is part of the BPI project. Through observation, the BPI project team can see exactly how the process is performed and can document how it is being performed. The challenge with observation is that if stakeholders don’t normally follow the process as they should, they will likely follow it exactly when they are being observed.
One-on-one interviews enable the BPI project team, in most cases, to get more detailed, honest feedback on the business process being evaluated. Interviews should be structured with specific questions asked about the process in order to ensure that there is consistency from interview to interview.
Focus groups enable a group of stakeholders, ideally from throughout the organization, to share their perspectives about a business process. Questions are asked in a group setting and participants share their challenges and successes about the business process with the facilitator and others and are free to talk to with each other.
Division and department meetings are most effective when the BPI project impacts only a particular division or department. The BPI project team will use division/department meetings to gather from the group of shareholders what’s working and what’s not, regarding the process to be changed. Similar to focus group sessions, division and department meetings must be well facilitated to ensure that the conversation is managed, everyone is contributing, and the BPI project team is getting the information needed to move forward with the project.
Surveys can be used in two ways. The first is as a supplement to focus groups or division/department meetings with stakeholders about the current process. Secondly, surveys provide a way to capture information about current processes when the BPI project team is unable to meet in person with stakeholders, or there is difficulty in scheduling a meeting to gather data about a process.
If surveys are being used to reach out to stake-holders where one-on-one meetings are not possible, the same questions should be used in the surveys as was used in the interviews, for consistency.
Information should be sort out and reviewed from existing documentation such as policies and procedures about the current process, as well as the templates that are used to do the work related to the process being examined.
Mapping of Current Process
When mapping out the current process, it is absolutely essential to include as many of the right stakeholders as possible. Right means stakeholders who are involved in using that process as well as stakeholders who oversee the process. In mapping out the process, the BPI project team needs to be sure the following is considered:
- All inputs to the process
- Business rules or guides pertaining to decision making within the process
- Enablers to the process
- Outputs of the process
Root Cause Analysis
Root cause analysis looks for the origin of a particular problem. It looks beyond the symptoms of the problem to determine exactly why the problem occurred in the first place. When looking at the root cause of a problem, the BPI project team answers the following three questions:
- What happened?
- Why did it happen?
- How can it be prevented from happening again?
When looking at why a problem occurred, there are three main categories that the cause may fall under:
Physical – for example, defects may be high in production of a product because the machinery keeps breaking down or raw materials are defective
People – for example, defects may be high in production of a product because the machinery is not being maintained or the person responsible for securing raw materials is insufficiently trained to evaluate the quality of those materials
Organizational – for example, there is no regular procedure or time allocated for maintaining the machinery or the process for evaluating the quality of raw materials is lacking.
Business Process Modelling
To develop the modelling of the process, the BPI project team will utilize the information obtained from stakeholder sessions and from observation of the process in use. A review is also done to ascertain how the process is supposed to be utilized compared to how it is actually utilized.
The BPI project team will discover the problems with the process, suggestions for improvements, as well as opportunities to make changes by asking stakeholders specific questions during the information gathering sessions as well as during the process mapping workshop.
To develop the model, the BPI project team should include a process analyst and a process modeler on the team who can utilize the information gathered from stakeholders to ensure a well-documented model of the process.