The approach of (business) process orientation emphasizes process as opposed to hierarchies with special focus on outcomes, particularly customer satisfaction (McCormack and Johnson, 2001). Process orientation means focusing on business processes ranging from customer to customer instead of placing emphasis on functional structures (Reijers, 2006). A process-oriented organization applies the concept of business process management (BPM). The term process orientation is linked to various topics, e.g. organization, strategic management or quality management.
Business Process Reengineering
A myriad of books and articles refer to the idea of business process reengineering (BPR). The purpose of this website is not to comprehensively treat the idea of BPR, since BPR is a single project undertaken by a firm and not an approach of managing a firm based on its processes on an ongoing basis. Therefore this website should only roughly outline the concept of BPR.
Business Process Reengineering is defined by Hammer and Champy (1993) as “…the fundamental rethinking and the radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service and speed.”
BPR has a lot of different interpretations. Coulson-Thomas (1995) differentiates between two types of business process redesign. He calls the first type “process simplification” which refers to incremental improvement of processes. This approach can yield incremental improvements through documentation, analysis and then redesign of current processes. By contrast, the second type of process redesign is about the fundamental “process re-engineering” which involves radical change. Radical change means a fundamental transformation, e.g. implementing completely new processes or rebuilding the whole organization. Similarly, Childe et al. (1994) differentiate between incremental and radical types of BPR. In practice, both types of business process redesign are labeled as BPR (Armistead and Machin, 1998). In this website, the definition of Coulson-Thomas is followed, i.e. BPR is not considered to be an incremental change or improvement of a business process but a fundamental and radical redesign of business processes.
Classification of Processes
Processes have been classified by several authors; one possible classification is provided by Suter (2004), who states that there are four generic groups of processes:
- Value-adding processes, which are processes concerned with the daily business of an organization. Value-adding processes carry out all transformations to acquire, execute and supply a customer order (e.g. production process).
- Value-defining processes, which are processes concerned with e.g. product innovation and research and development (R&D).
- Management processes, which are processes concerned with e.g. strategy and direction setting and business planning
- Support processes, which are processes supporting value-adding, value-defining and management processes, e.g. financial, personnel or facility management
Only value-adding and value-defining processes are considered as business processes.
What is a Business Process?
Business processes aren’t new phenomena. The term process (e.g. production process) has long been common place in many sectors of the economy. Processes have been an integral part of all firms (Armistead and Rowland, 1996). There is no doubt that there are always processes in an organization, whether they are articulated or not (Karlöf and Lövingsson, 2005). For the term business process, several definitions exist:
- The most known definition of a business process comes from Hammer and Champy (1993): They define a business process as “a collection of activities that takes one or more kinds of input and creates an output that is of value to the customer.”
- The definition of Davenport and Short (1990) is also well known. They state that business processes have two important characteristics: First, they have customers who are the recipients of the process’ defined outcomes. Second, business processes normally aren’t just found inside a functional unit, but cross organizational boundaries and occur across or between functional units.
- A business process is a sequence of steps which transforms inputs into outputs: It is customer focused, i.e. is activated by market and (external or internal) customer needs, value adding, i.e. creates value which is appreciated by the customer, and has a process owner who has end-to-end responsibility for the whole process. Furthermore it has access to all necessary resources and information (Schantin, 2004).
The main characteristics of a business process: customer orientation and end-to-end responsibility, derived from Schantin (2004)
Welcome!
Several organizations choose to be process-oriented. They focus on business processes instead of emphasizing functional structures. This is a blog about process-oriented organizational design and business process management. In particular, it discusses new research focusing on the process-oriented organization.