Guide to Business Process Optimization (BPO)
In order for a business to run at its best and achieve its goals, it’s necessary to create business processes that organize, streamline, and connect tasks and workflows across departments and operations.
This requires an investment of time and resources in order to design processes that promote successful collaboration and communication. However, once a process has been created, there’s another practice that is essential to keeping business processes running smoothly: business process optimization.
But before jumping into what business process optimization is, it’s important to understand what defines a business process. A business process is:
- A structured series of tasks or steps and workflows that convert an input into an output.
- Classified as one of the main types of business processes: core, support, or long-tail.
- Essential to organizing activity that enables business operations and reach goals.
With the foundations established, here’s what you need to know about business process optimization, how to leverage business process optimization tools, and the steps you need to take to start optimizing your own business processes.
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What is business process optimization?
Business process optimization (BPO) is the practice of optimizing existing processes to make them more efficient, which in turn leads to more productive and cost-effective processes. Put another way, BPO is a practice that improves processes to make better use of existing resources.
Business process improvement vs. business process optimization
Business process optimization may sometimes be referred to as business process improvement, but there are slight differences between these two practices. Below are the key differences and similarities:
|Business process optimization||Business process improvement|
|– Practice of finding new ways to make processes more efficient and improve throughputs and outputs|
– Creates more logical and cost-effective processes
|– Practice of finding new ways to make processes faster and more accurate|
– Creates more consistent processes
|– Ongoing exercise; essential to business process management||– Ongoing exercise; essential to business process management|
|– Typically involves leveraging existing resources or consolidating various tools with a single, more cost-effective tool to streamline operations and increase savings||– Typically involves adding new software or tools to improve the reliability of processes and a company’s existing stack|
|– Optimizations can be applied to process improvements to achieve desired results||– Improvements can be applied if optimizations are not producing desired results|
Business process optimization examples
To illustrate how business process optimization can be applied to your organization, here are two examples.
Finance: Accounts payable process
- Role: Pay supplier invoices by their specified deadlines to avoid fees.
- Challenge: Approvals are taking too long due to the absence of a structured process. Payments are delayed because requests are getting lost in cluttered inboxes.
- Optimization: Make a single person responsible for approving invoices and streamline the intake process; connect existing software with process to improve communication and accuracy. Alternatively, create an automation that routes payments to the appropriate person.
- Result: Approvals are submitted and processed from a single platform, status updates no longer require time spent scrolling through inboxes, payments are being processed quickly and ahead of schedule; information is consistent and accurate
HR: Employee onboarding process
- Role: Alert IT of new employee equipment needs once new hire has signed and returned offer letter.
- Challenge: HR team is managing a high volume of new hires, which creates a backlog of requests that need to be manually created and submitted to IT.
- Optimization: Automation is added to streamline communication between departments and notify IT teams via email or messaging app when signed offer letters are received.
- Result: HR department eliminates repetitive rework and redundancies, saving time and reducing the possibility of errors; IT department is automatically alerted of new hires, their start dates, equipment required, and when equipment needs to be shipped or set up.
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Why business process optimization is important
Business process optimization is important because it improves process efficiency by:
- Eliminating bottlenecks or redundancies that are affecting process outputs.
- Improving collaboration and connections between core, strategic, and management processes.
- Streamlining activities to improve process efficiency and productivity and increase time, resources, and financial savings.
- Reducing risk by avoiding errors and rework
BPO makes it easier for teams to identify how to best utilize existing resources, keep costs down, standardize workflows and processes, create consistent results, keep up with competitors, and improve productivity and quality of outputs — all points that lead back to more efficient business operations.
How to optimize business processes in 5 steps
Use this business process optimization framework to get started:
Step 1: Identify and analyze the process that needs to be optimized
Start by identifying which process needs to be optimized and why. These processes will usually share qualities like:
- Data or collaboration silos
- Problems with handoffs
- Clogged throughputs that delays outputs.
- Rework or redundancies.
- Errors due to manual data processing or inputs.
- Any issues with collaboration or communication that can be easily solved by retooling existing resources.
Once you’ve identified the as-is process(es) that need to be optimized, it’s time to determine the to-be results.
Remember: The goal of business process optimization is to improve the efficiency and operational excellence of existing processes. This means understanding what’s missing from your process(es) and implementing changes that will make them work better, rather than trying to reinvent them.
Step 2: Set KPIs
In order to understand whether the optimizations you’ve identified are creating the results you want, it’s important to establish key performance indicators. This helps keep track of optimizations, measure whether they’ve improved the efficiency of your process(es), and create data-driven recommendations for any additional optimizations or improvements.
Step 3: Rework processes and existing resources
This is where the work really begins. With issues/gaps and optimizations now identified, it’s time to implement them. Here is what that may look like:
|Productivity||– Streamline approvals or requests to speed up outputs |
– Digitize manual tasks or activities
– Pull process data to inform strategic decisions that affect productivity
– Dissolve silos
|Communication and collaboration||– Automate updates and notifications between stakeholders and process owners|
– Standardize tasks that lack structure and visibility
|Bottlenecks||– Eliminate redundancies that clog workflows|
Step 4: Monitor and measure optimizations
Once optimizations have been made, it’s time to monitor and measure them based on the KPIs established in Step 2. If communication and collaboration improve, bottlenecks decrease, and output increases, then the optimizations have worked. But if the optimizations are falling short, then it’s time to review and get to the root of the issue.
Step 5: Repeat as needed
As you optimize your business processes, make it a common practice to repeat and rework as needed and where needed. As business processes evolve, the optimizations that once worked may no longer apply.
How low-code automation optimizes your business processes
Because optimizations leverage existing resources, it’s important to understand the resources at your disposal, whether that means people, technology, or data.
For many businesses, low-code automation is the key to better processes. That’s because low-code makes it easier for teams to build, modify, automate, and scale their processes. Low-code automation supports optimization efforts and process management efforts by giving business teams a set of easy-to-use tools, while keeping IT teams in control.