What are Processes? Must Have Guide for CFOs

All businesses operate based on their processes. However, the notion of processes tends to be one of those things that many people understand but may have a hard time defining or implementing adequately. For anyone in business who has questioned, “What are processes?” and want to understand their importance, this guide will answer all the questions - from the simple to the complex. 

We’ll denote what a process is, share examples of processes and ways in which you can create an ideal and optimal process. 

Alright, let’s get to it! 

What are Processes?

According to the dictionary, a process is defined as “a systematic series of actions directed to some end.” In any setting, a process is a set of steps that are followed to complete work. This means that a process is a series of tasks that creates an output from a compilation of inputs. 

In business, each step within the series is attributed to a person or team to complete. With each responsibility, the individual or team is to achieve a goal that will lead the process to the next step. A process serves as the fundamental building block of operations and is what allows for business process management, automation and process improvement. 

In any process, measurement is a crucial factor. From the ability to measure information/data to the measurement of output/results, you can find ways to calculate the value of a process. This helps businesses to achieve operational effectiveness. 

The Key Elements of a Process

To fully understand what processes are, they are made up of four key elements: 

• Steps/Decisions: the use of a flowchart to show the way the work moves along each step 
• Timing/Interdependence: the timing of each respective step and the necessary actions that people or software systems fulfil to move the process to the next step 
• Variability: processing times and how they differ through each process run 
• Resource Assignment: how inputs and people are allocated to create outputs 
  

The Origination of Business Process

The first definition of a business process came from economist Adam Smith. In 1776, he broke down the business process of an imaginary pin factory. He described how 18 people worked together to make one pin. 

In his method of describing this process, he found that the sheer act of breaking it down to each step and assigning tasks to specialists along the way could boost productivity by 24,000%. 

Importance of Business Processes

Any size organisation can benefit from business processes. In large organisations, mainly, they are used to standardise and streamline activity. But, the benefits of business processes don’t end there. 

Business processes also help to:

• Improve efficiency 
• Streamline departments and functions 
• Define essential tasks that are needed to achieve business goals
• Decrease chaos and maximise efficiency 
• Standardise procedures organisation-wide 
  

3 Necessary Types of Processes 

Processes can be grouped into categories based on their purpose for existing. The three main types of processes that businesses implement are:

• Management Processes: These are the processes that help an organisation plan and project the future. They can also include processes that mitigate risk. 
  

• Operational Processes: These are core business processes that help the business run day-in and day-out. For example, if you’re a retail business, then an operational process would be how you order inventory and process orders from customers. 
  

• Supporting Processes: Supporting processes help management and operational processes run. For example, these could be tech support and employee onboarding. Although supporting processes impact the bottom line directly, they are necessary for a business to be able to operate smoothly.
  

Documenting a Process 

Since many people play a role in all three types of processes, it helps a business to record its processes well. This way, anyone who works in the company can follow the rules and way business is done. 

This generally comes in the form of what’s called a standard operating procedure (SOP) document. An SOP may contain:

• A header (title/date/author and ID included)
• Step-by-step instruction list 
• The individuals and team in charge of each task 
• The resources needed to complete each task (money, equipment, time, support) 
• Reference to other related standard operating procedures 
  

It’s most common for government agencies and enterprises to create standard operating procedures. In tandem, businesses may develop flowcharts or visual representations of processes. These end up helping to find gaps and holes in processes so that process improvement can be implemented. 

What Do Processes Solve? 

To fully answer the question, “what are processes?” we will want to take a look at how processes can create solutions. Defining a process involves the documentation of the process, which leads to error prevention and improved efficiency. 

To depict, in Atul Gawande’s novel The Checklist Manifesto, he shows how much processes within a hospital improved just because of the creation of a checklist. 78% of staff surveyed after the list was created said they saw how the checklist prevented an error. 

Defining processes can, in some cases, be the difference between life and death for an organisation. While not all businesses operate under such severe conditions, they still want to optimise outputs and reduce costs by allocating resources appropriately. Processes help to achieve these goals. 

Data Automation and Processes 

In today’s world, the use of automation for processes is no longer just meant for the manufacturing sector. Businesses are relying on data automation software systems to map out their processes and run their operations as efficiently as possible. 

These tools process mapping, provide a clear framework for the finance teamwork within, providing a clear audit trail to improve compliance, reduce critical man dependency, removes bottlenecks, and enables live data analytics as it connects to all data systems. They have also been created to be affordable, easy-to-implement, manage and setup and are also accessible and intuitive to all staff. If you are still not sure what are processes or how they can help, here are some extra benefits for incorporating data automation software into your business process. It will aid in:

• Reducing key person dependencies
• Removing redundant and monotonous tasks
• Lowering costs 
• Increasing efficiency
• Mitigating risks and adhering to compliance/regulations 
• Decreasing human errors
• Connecting all data systems and modernising legacy systems 
• Improving communication organisation-wide 
• Providing real-time analytics for better decision-making 
  

7 Steps: A Business Process Lifecycle

How do you make sure that you are building a process in the best way? You can follow these steps that define the process lifecycle.  

1. Define your goals: First, describe the purpose of creating the process. Also, be sure to decide how you’ll know if it’s successful or not (define your key performance indicators or KPIs) 

2. Map your process: Make a broad blueprint of how you’ll achieve your business goals. 

3. Allocation: Identify each task along the way and be sure to allocate the necessary human resources and tools that are needed to make each step happen.

4. Test the process: On a small scale, run the process to test how it performs. If you notice any holes or issues, adjust the process to resolve them. 

5. Implement the process: Now, get the process going in the live environment of your business. Be sure you have trained all stakeholders and implemented the necessary automation tools to make the process flow smoothly. 

6. Monitor the results: Take time to review how the process went. Write and record the inputs and outputs. This way, when you need to make adjustments, you’ll have a process history to refer back to if necessary. 

7. Repeat: When your process is in good standing, replicate it over and over to continue achieving your desired results. 

Time for an Example

At some point or another, you’ll likely have to enact the process of onboarding employees for your business. The goal is for this process to run as smoothly and quickly as possible so that your new hire can be up and running. 

There are obvious costs associated with hiring a new employee, like their salary and benefits. But, you’ll also have to consider the costs associated with training and setting up software systems with a new user. Here’s a look at how you can set up the onboarding process:

• Prepare necessary paperwork 
• Record the employee’s information in a secure database
• Submit paperwork for approval to the essential person within your company (i.e. HR) 
• Prepare the new hire’s work station with furniture, desk supplies, hardware and software 
• Grant access to the tools they’ll need 
• Assign them any required reading or handbooks
• Create a benefits package
• Provide them with a job description for reference 
• Welcome them to the team 
• Assign any training material 
• Explain long-term goals and schedule check-ins 
  

How to Design an Ideal Process 

The best processes consist of these attributes:

• Finite: There are a clear beginning and end 
• Repeatable: You can run the process infinitely 
• Creates value: No step runs for no reason. Essentially, every piece of the puzzle creates value.
• Flexible: If need be, the process can quickly adapt to change without affecting stakeholders 
  

Wrapping Up 

Processes are what allows organisations to create value for both their internal and external stakeholders. They are the steps that take resources, apply actions and transform them into a product or service. To maximise efficiency within any organisation, it’s useful to implement data automation software to manage processes. In this way, your team can focus on the high-value tasks of processes, like focusing on analytics, working with customers and making decisions.  

Having a clear understanding of what processes are and being able to implement them correctly will reduce errors and maximise value. The best processes are performed in the least amount of time possible with limited wasted resources. Data automation tools also provide the data and analytics that can be used to assess processes to make them better!