ARTICLE TABLE OF CONTENTS
This is about business process modelling vs. business process improvement vs. business process re-engineering vs. business process engineering.
You’ll learn what each is and what the differences between them are.
So if you want to complete your 101 of business processes, then this article is for you.
Let’s get right into it!
Business Process Modelling vs. Business Process Improvement vs. Business Process Re-engineering vs. Business Process Engineering
Businesses do not always operate efficiently, that could be the reason behind the reduced operational performance.
It becomes critical to improve, re-evaluate, and re-work the processes to ensure that the organization drives competitive advantage in the marketplace.
Terms like BPM vs. BPI vs. BPR vs. BPE are common and may be used interchangeably or differ in terms of what they mean in an organization.
You’ll be surprised to know that these terms are different as some changes may fall under BPR or BPI and not on others like BPE.
Read on to learn more about these terms, what they mean, and their differences:
What Exactly is BPM or Business Process Modeling?
BPM (Business Process Modeling) involves representing a company’s workflows or processes in a graphical way. That includes the use of a data-flow diagram, flowcharts, and more.
With BPM, the company maps out the state of processes as they are now and comes upon with a model of the future state after making improvements.
These are the As-is state and To-be state.
Sometimes you may hear the terms business process mapping used interchangeably with business process modeling.
These two can be similar as they are used to represent processes graphically as a way of identifying possible weaknesses or improvement areas.
However, business process mapping deals with low and high-level mapping. The process is general and doesn’t involve a lot of detail.
Business process modeling is specific to low-level process maps and concentrates on process improvement.
It’s essential to note that business process modeling is crucial, but without implementation, it won’t help as it is.
That’s why BPM is used in collaboration with other concepts like business process re-engineering, business process improvement, and business process management.
Shown below is the worldwide market revenue of BPM (Business Process Management) from 2016 to 2021. It is forecasted that by the year 2021, the BPM market revenue will reach around 14 billion U.S. dollars:
How is Business Process Modeling Carried Out?
It’s crucial to understand that there isn’t a one-size-fits-all solution for BPM. Nonetheless, there are steps you need to follow if you’re looking to achieve something.
Model the existing process
You need to use a business process modeling technique to state the process you’re working with on software or paper.
Determine Weakness and Possible Areas of Improvement
At this point, you need to check how your current process is functioning, identify its inefficiencies, and find out if it’s helping you meet your operational goals.
Check to see if there are steps that are wasteful and need changes.
Come Up With the Design To Be Process
The final step is to design the new and improved process based on your findings in the second step.
Once you have the new process, it’s time to implement it. Putting it into practice is as essential as the modeling process.
Why Should You Incorporate Business Process Modelling?
Although BPM helps you understand how your business operates and how the processes work, it also has other benefits like:
Having a big organization means dealing with different teams.. if these teams are not doing the same processes, that reduces efficiency.
Using BPM ensures that everyone is in sync, which leads to standardization.
Business process modeling is meant to improve how processes are carried out.
Using BPM allows you to find various ways to improve your processes, something that leads to higher productivity, efficiency, output, and profits.
Evolve in the Face of Technological Change
An organization that uses BP analysis end up with a culture of change and innovation.
BPM allows you to change your business operation, something that promotes evolution.
Having everyone in your organization understand how the processes work will lead to one mindset, which promotes productivity and accountability.
What’s more, you’ll be able to beat the competition once everyone is on board.
What’s Needed to Develop a Process Modeling Design?
Business process modeling requires creators to use documents and data to generate a flow of activities in a company. That’s done from inception until the goal of the process is achieved.
You need some items to develop a process modeling design. These include:
- Notation: These are rules and symbols to represent the information
- Meta-model: This is the model of the information
- Method: That is the steps/techniques used to survey and model the information
- Tools: This involves documenting the information on a computer
Techniques of Business Process Modeling
While there are over 12 techniques to do business process modeling, there are three common ones which include:
Data Flow Diagrams
Data flow diagrams show the flow of data from one place to the other.
You’ll learn about how these processes relate to the people who use them and to each other.
Process flowcharts are the most common BP modeling technique used in organizations.
It maps out the processes in a step-by-step manner.
Unlike other techniques, process flowcharts are easy to understand when you look at them for the first time.
You can create flowcharts using workflow management software, flowchart software, or pen and paper.
Business Process Model and Notation
BPMN (Business Process Model and Notation) was created by the Business Process Management Initiative.
It’s an open industry standard for business process modeling, which means that the objects used are defined by the methodology and not the person doing the mapping.
Although BPMN and flowcharts can work in a similar way, the former uses the parts within the graph as stipulated by BPMN methodology, and not your likes.
Examples of Business Process Modeling
A good example of BPM is an outsourcing company that wants to change the layout of their website.
The company needs to determine how the process works at the moment.
That involves knowing how the client uses the site, where most clicks come from, the actions a client takes once they get to a specific area, the bounce rates, and more.
The next step is to create a flowchart with the gathered information.
This chart needs to have all the steps and actions to help with the analysis.
With this, the company can determine where things go slow or wrong, and what needs to be done. Implementation is critical in business process modeling.
The company has to implement the recommendations to see if there will be a change.
What is Business Process Improvement?
BPI (Business process improvement) is an exercise in which leaders use different methods to analyze their procedures.
That helps them determine areas they can improve in regards to efficiency, accuracy, or effectiveness.
Later they can redesign the processes to notice the changes.
BPI seeks to identify the skills or operations that require improvement to promote smooth operation, effective workflow, and business growth.
How Does BPI Work?
BPI’s main goal is to focus on the business requirements that the processes support. The end goal is to refine the processes to deliver optimal results.
The process starts by determining the existing processes within an organization.
Enterprise leaders will then analyze these processes to figure out which areas need improvement.
The analysis also helps them understand what changes could add value to the organization.
The next step involves the leaders reorganizing and redesigning those processes.
Sometimes there’s a need to reassign the people whose job description fits under the processes.
The leaders may also invest in technology to improve the potential weak areas.
Challenges are common in BPI activities.
Sometimes there may be a failure to communicate plans across the organization, work teams may be resistant to change, and avoiding scheduled improvements that are not in line with the business goals.
Implementing these methodologies can help organizations overcome these obstacles. The common BPI methodologies include:
- Lean management
- Six sigma
- Agile management
- Total quality management
Lean management seeks to optimize the process as much as possible. With the lean management methodology, you define what value awaits the end customer.
Lean management is actually one of the different process improvement practices implemented in the global supply chain. Around 55 percent of organizations stated that lean management is a practice that they have implemented as of 2017.
You also map out the process and identify the steps that aren’t leading to any value.
There’s a need to eliminate or modify the steps that don’t provide value.
Repeat the steps for other business processes until the organization is efficient.
Six Sigma measures inconsistencies or defects in a process.
The methodology focuses on perfecting the end product.
Experts refer to a Six Sigma Process as a process that doesn’t produce more than three defects out of a million output.
DMAIC is a core tool under the Six Sigma and consists of five parts that include:
- Define: Look for an opportunity for improvement
- Measure: Determine the metrics you’ll use to benchmark new processes
- Analyse: Check for any inconsistencies or defects in the process
- Improve: Remove the aforementioned problems
- Control: Monitor the new process to ensure there aren’t new problems
Total Quality Management
TQM or Total Quality Management was introduced in the 1950s.
It wasn’t until the 80s when the methodology became popular, TQM seeks to deliver value to the end customer like the Lean methodology,
However, unlike Lean that focuses on individual processes, TQM focuses on the organization as a whole.
The goal is to have every department in the organization optimized with the customer in mind.
What’s more, Total Quality Management focuses on the alignment of the whole organization.
That means it involves all employees from the top to the lowest level and not only senior management.
Example of Business Process Improvement
3M is one popular corporation that was introduced to Six Sigma.
Jim McNerney in 2001 introduced this BPI methodology in an effort to streamline operations.
Their findings showed that the company’s focus to drive productivity was interfering with its innovative efforts.
Although Jim managed to streamline the company’s operation using this methodology, the engineers thought this technique was challenging to implement.
However, in 2005, the corporation through a new CEO, George Buckley restimulated 3M’s innovative efforts, something that led to efficiency-improvement and cost-cutting.
Any element that was considered non-beneficial was dropped, while custom and specific elements were retained.
In 2017, the company was ranked 97th in the Fortune 500 list and made $31.7 billion in sales.
What is Business Process Re-engineering?
BPR (Business Process Re-Engineering) involves recreating a core business process. The goal is to reduce costs and improve product quality and output.
The act consists of analyzing existing company workflows, looking for inefficient or subpar processes, and coming up with ways to change them or get rid of them.
The concept that was introduced in the 90s by Michael Hammer found out that most businesses were using the latest technologies to automate an ineffective process.
According to Michael, companies, and organizations were better off creating something different built on new technology.
Hammer came up with seven principles to help re-engineer and streamline workflows and improve quality time management and cost. These principles are:
- Organizing around outcomes instead of tasks
- Capture information at the source once
- Link parallel activities in the workflow rather than integrating their results
- Determine all the processes in an organization and prioritize them depending on the urgency
- View geographically dispersed resources as centralized
- Have a decision point where work is performed and have control in the process
Business process re-engineering has now become an alternative to business process management that involves reusing or automating existing processes.
Note that BPR is not downsizing, restructuring, reorganizing, cost-cutting, or automation.
While you can expect these results with a well-executed business process re-engineering project, a successful BPR is identified by factors like line ownership, strategic alignment, effective change management, proven methodology, and re-engineering team composition.
Things to Consider When Implementing BPR
It’s crucial to have some things in mind when implementing business process re-engineering. These include:
- Identifying goals and purposes
- Having the company’s vision and mission in mind
- Inventing a new process if the older one no longer works
- Implementing simple and optimized processes
- Changing focus from management to customers
- Focusing on the end result
Advantages of Re-engineering
Some of the benefits of re-engineering include:
Re-engineering involves a radical replacement of an entire system.
That helps to lower the risk factors, something that leads to the user achieving his needs.
With that, you can meet your business needs.
The incremental nature of re-engineering ensures that you don’t have to deal with all the risk factors. That makes it an ideal way to beat your competitors.
It’s a Cost-Effective Option
Re-engineering involves introducing new things into an existing system, which reduces the cost unlike coming up with a new system altogether. Your employees will gain new skills during this process.
Promotes Significant Improvement
Re-engineering allows you to experience continuous improvements in your business. You can use it to enhance organizational performance.
Also worth noting is that the process reduces the cycle time. It removes any unproductive activities, which means that you won’t need management layers.
What’s more, Re-engineering promotes organizational information flows by removing errors that would have you repeat the processes.
BPR supports organizational growth by eliminating the fragmentation of your work. It establishes a clear ownership process.
Your workers will also be motivated to deliver great output.
As a business person, you have a higher chance to experience a competitive advantage when you use the re-engineering process.
Examples of Business Process Re-engineering
A popular case of business process re-engineering is the automobile manufacturing company, Ford.
The company was in a depression in the 1980s.
Ford decided to check some of its departments to check for any inefficient processes to help them reduce costs.
In their findings, the company discovered that their accounts payable department had 500 people while their partner, Mazda had five.
Although Mazda was smaller, Ford realized that this department was five times bigger than it should be.
Ford set to reduce the number of employees in the accounts payable department.
They also came up with a business process re-engineering initiative to determine why the division was overstaffed.
After the analysis, Ford found out that when the purchasing department wrote a purchase order, a copy was sent to accounts payable.
The material control would get the goods and dispatch a copy to the related document to accounts payable.
What’s more, the vendor would send a receipt for the goods to the same department.
The clerk would then match the three orders, and if they were similar, he would issue the payment.
That’s the reason why the accounts payable division had a lot of manpower.
Ford decided to recreate the process as is the case with BPR. The new system now involved purchasing, issuing an order, and inputting it into an online database.
Material control would receive the goods and cross-reference with their database to ensure it matches an order.
Material control then accepts the order on the computer if there’s a match. The new process eliminated the need to have accounts payable clerks to match the orders.
What is Business Process Engineering
BPE (Business Process Engineering) is the study of business processes to streamline and improve efficiency on cost and performance.
BPE focuses on new processes, diagnosing problems with an organization’s current methodology, and reconstructing, redesigning, and monitoring processes to ensure effectiveness.
The approach uses organizational strategies and enabling technologies to help a company achieve its strategic objectives.
How Does Business Process Engineering Work?
BPE begins with data. That means if you are looking to improve current processes, you’ll need to analyze data that you’ve accumulated over the years.
Although experts advise on starting with a blank slate, you don’t need to delete everything you’ve done over the years.
The data will show you the problem areas, and you can use this to track the source of the problem.
It’s essential to note that you don’t need the data only, but you need to interpret it correctly.
Having a company go through a business engineering process isn’t enough for success.
You also need to get everyone on board, remove any unnecessary complexities, recognize the extent of issues, and allocate ample time to follow up on results.
The business process engineering approach consists of :
Knowing the Present Mode of Operation
You need to come up with an experienced team to analyze your current systems, technologies, and processes.
That means coming up with a comprehensive PMO model that shows dependencies and interrelationships between people, processes, and systems.
With this, you can counter check the proposed changes and actual implementations by using the present mode of operation as the baseline.
Deciding the Future Mode of Operation
The next step involves working with a team to come up with a future mode of operation model based on your business objectives and experience in industry best practices.
Gap Analysis and Transition Plan
There’s a need to come up with a gap analysis of required business process improvements.
Later, you can develop a transition plan for the future model of operation. At this point, you’ll understand timing, business strategy, processes and systems, and personnel.
The final step involves deploying operational process improvements. You can carry out trials to determine if you’ll achieve the desired results.
At this stage, you can figure out if you need extra operational and system improvements.
Example of Business Process Engineering
A good example would be an energy company that experiences problems with their rental supplier.
That has led to most of the transactions being emergency orders as opposed to being planned and executed properly.
Companies that rent equipment may incur costs related to the purchase of equipment that was stolen, late equipment returns, and having under-utilized equipment.
After investigation, the company found out that a lack of collaboration and communication were behind their problems.
The company designed a web-based rental equipment management system to address the issue. In a year, the energy company had over 700% Return on Investment.
BPM vs. BPI
Business process modeling and business process improvement are different.
A BPM project involves modeling, execution, monitoring, and improvement, while a BPI lifecycle involves modeling, monitoring, and improvement.
The difference between the two lies in the execution step.
BPI skips on the execution step.
That means when you come up with a BPM process, you can monitor and measure the performance directly and improve.
That’s because the business processes are already in existence and execution.
You won’t need to create an executable and integrated process model with the BPI lifecycle.
Business process improvement focuses on particular adjustments or improvements in processes.
Both BPI and BPM are critical to an organization. BPM focuses on enterprise business processes as that underpins the main business capabilities and BPI is entered around process metrics.
In management principles, you can’t improve what you’re not managing, you can’t manage what you’re not measuring, and you can’t measure what you ‘re not focusing.
BPI vs. BPR
Although both BPI and BPR focus on improving the system, they are different concepts.
You may have noticed BPI and BPR being interchanged in an organization, but the differences lie in the depth of change.
Business process re-engineering involves changing the process completely to achieve different results, which is the opposite of what business process improvement focuses on.
BPI involves tweaking an already existing process to achieve a better result.
BPR is a complex way of redesigning the process, sometimes from scratch, while BPI involves improving the AS-IS state.
That means a state where you have problems like waste and failure demands. Eliminating them gets you to your To-be state.
With BPR, you’ll need to opt for a consumer value proposition.
You need to identify waste or come up with a new way of service delivery. It’s the action plan that gets you to the To-be state.
BPR is applied to reduce impending disasters, while BPI is more of a preventive technique that is applied as a concept across the business.
However, some experts feel that whether BPI is implemented or not, you may still need BPR for a response to changes in the political and legal environment.
BPR seeks to improve organizational operations, which takes time to accomplish. However, BPI is considered running and you can use it to get quick results.
What Approach Should You Choose Between BPR and BPI
As a company, you need to decide whether a particular process requires major surgery or re-engineering or minor healing that is continuous process improvement.
You need to decide the process to choose based on the business circumstances.
To give you an example, below are the different methods implemented by law firms in the United States in order to increase their efficiency:
In 2020, around 31 percent of the respondents stated that they were implementing ongoing project management training and support while 22 percent opted for systematic re-engineering work processes.
Business Process Improvement vs Business Process Engineering
Business process engineering’s main focus is on new business processes.
That means diagnosing problems with the current methodology, redesigning, reconstructing, and monitoring processes to make sure they are functional and effective.
However, business process improvement involves redesigning an existing business operation to achieve significant improvement in production.
BPI focuses on customer and operational efficiency.
The other difference is that BPI consists of selection, analysis, design, and implementation of the improved process, but with BPE, any suggested changes are implemented, tested for their effectiveness, and those in charge have to work to improve the solutions.
Moreover, business process engineering means implementing new technologies into an organization to create effective and automated processes.
Business process improvement on the other hand seeks to reduce variation in processes to achieve the desired outcome.
That helps companies to reduce the cycle time and operational costs, improve the quality of product or service, and enhance customer service.