OBSERVATIONS ON BUSINESS PROCESSES

We begin with a look at business processes. A
business process
consists of
activities that handle the processing of transactions or work and produce specific
results. Business processes can be informal or casual in that they lack formal
procedures or systems, or they can be very formal and structured. At one
extreme, they can be highly structured such as automated teller machine (ATM)
transactions. At the other extreme is strategic business planning that involves
creative thought. A business process often starts casually when a company is
getting started. As time goes by, the process changes to fit the situation. It has to
evolve to take on new types of work. Eventually, the process is shaped by many
factors, some of which are as follows:
•
People who work on the process.
Each new employee who works on the
process brings his or her skills and experience (or lack thereof) to the
process. That is, an employee’s previous practices have an impact on his or
her current work.
•
Training and procedures for staff.
If there are formal materials and training
that are implemented, then each new person learns the process the same
way. If, as in many cases, it is informal and learning occurs on the job, then
each person will learn differently and work will be done with greater
variation.
•
Changes in workload and types.
If a new type of work or transaction has to
be addressed, can the process handle it? If not, then what do people do?
Often, they will create a manual exception process. As these exceptions
increase, people may try to make them more efficient by creating a shadow
system. An example occurs when business staff requests changes for an
online system from an information technology (IT) group. Suppose they are
told that it will take too long. Desperate for a solution, they hire a student
intern to program something in a spreadsheet. Voila! A new shadow system
has been created. The longer this continues, the more dependent the depart-
ment is on the shadow systems, and the less real work is performed by the
basic system. Thus, if you just replace the basic system, you miss the
shadow systems where more than one half of the work is being done.
•
Management turnover.
Each manager may want to put his or her stamp on
the process. They may do this by organizing work differently or by creating
more bureaucracy and reports. There is cumulative overhead.
•
Other departments and processes.
If one department that feeds work into
your process changes their process, you will likely have to modify yours to
accommodate this new input.
Each of these factors can have both positive and negative effects on the
process. In many cases, if work is not performed to tune or improve the process,
gradual deterioration takes place. What types of deterioration can occur? Here
are some examples:
• The process becomes so specialized that only certain people can perform
certain transactions. If a person is sick, all transactions handled by that
person wait until his or her return. Knowledge is spread across many
people, and the process loses any economies of scale.
• The process has little central process. Every piece of work is classified as
an exception type. This is a nightmare.
• There is a lack of management will. The system appears impossible to
change; however, changing organization and staff are impossible options.
Thus, the process stays the same and things get worse.
• As workload and exceptions increase, the extent of manual labor increases
and the value of the procedures and training decrease.
Organizations knowingly can allow deterioration to occur. In a large bank,
management wanted to issue a new credit card. The IT group could not respond
fast enough, so management decided to set up a manual group, contrary to the
standard process. Eventually, the card only attracted 500 customers. This was
too small of a response to be automated but too large to be eliminated. Another
manual empire was created and sustained. Staffing grew due to the deterioration
of a manual process.
Why is the deterioration allowed to continue? It happens gradually. Many
managers are not attracted to these everyday events because there is no short-
term fix and because it does not appear exciting. So the process continues.
Radical reengineering can be attempted to identify and address these processes,
but many of these projects fail. Why? A major reason was that the reengineering
did not consider the technology and how it could integrate with the business
process. Reengineering also missed the shadow processes.