Why should you focus on your business processes?

Business Process Management is a big thing in large businesses. It is a hot topic and many large companies have attempted to improve their business processes. There have also been many failures and I've mentioned some of the reasons in yesterday's BLOG.

But what about small business? Is there really any value in it? I recently came across some statistics that warrant a review at the point. This was from a study of business process management and two numbers are worth mentioning:

• Most managers spend 15% of their time searching for information.
• 42% of managers use the wrong information on average once per week.

The first number says that managers are not as productive as they could be if they have information at their fingertips. The second says that they are using the wrong information to make decisions almost half the time. This has a huge impact on their performance! Before you say that this is probably in large businesses, I have recently had an experience with a small company that indicates otherwise. It may be understandable in a large company because there are so many people involved.

Why does this happen? What is the impact? What does this have to do with Business Process Management?

The business processes that I saw were simple and straightforward. It involved all of the activities in a construction company from estimate through to billing and receivables. This is a straightforward process, so you would think. The business had grown and was no longer visible from end to end by one person. Estimates were made for new jobs verbally. Job scheduling came from what individuals remembered about these estimates. Job scheduling was difficult and often crews might sit idle while salespeople looked for new jobs. When the jobs were done, paperwork for materials and labour were submitted to the office. Because payroll and payables needed action, this is where the paperwork went first. Project Managers searched for the paperwork in order to produce the invoices. Since they were busy, they didn't have time to search, so days and weeks often passed before invoices were prepared. This created a cash flow and receivables problem.

The were two major problems identified in this process. Work could not be properly planned, delaying revenues and sometimes seeing work crews idle. Invoicing was delayed. Cost kept piling up, but revenues were slowed.

By focusing on the end to end business process, we started tracking all jobs when requests originally came in. We have a written record of the size of the job, and its priority. This allowed for proper planning and identified the potential times when crews might not be busy. It allowed the sales people to get out early and find new work, before the crews were idled.

We changed the flow of paper, so that completed jobs were highlighted and the necessary cost information immediately sent to Project Managers, allowing them to complete their costings and proceed with invoicing.

The net result was better productivity of work crews, faster invoicing and better cash flow. I think any small business would like to have that.