Business Process Terms & Definitions: Top 7 Concepts You Should Know

Written by Jonathan Richter

Whether you’re a company of one or one thousand, your business process is essential for your success. Business processes occur at all levels of your organization, and are important for management, employees, and customers alike. These processes might be formalized, implied, or casual, but they are processes all the same!

But why is understanding your business process important? What are the main benefits of understanding business process concepts? According to authors and process gurus Weske and Kirchmer, having an effective business process can facilitate a more agile and streamlined workflow. As a result, you’ll likely see an increase in customer and employee satisfaction. Ultimately, that helps your reputation and sales!

So we know that having a business process is important. However, when you try to research how you can go about improving your business process, you’ll quickly find a deluge of similar terms and concepts. For instance, what the heck is the difference between “business process mapping” and “business process modeling”?!

Personally, I found all these terms to be confusing and hard to differentiate. To help make these terms and definitions easier to reference and remember, I’ve compiled a list of the top 7 “business process” concepts to know.

Top 7 Business Process Terms and Concepts to Know (in alphabetical order):

  1. (BPA )Business Process Automation
  2. (BPI) Business Process Integration
  3. (BPM) Business Process Management
  4. Business Process Mapping
  5. Business Process Modeling
  6. (BPO) Business Process Outsourcing
  7. (BPR) Business Process Re-engineering

1. Business Process Automation (BPA)

People love getting more accomplished with less manual effort. Since the earliest records of human history, you can identify ways in which people found “hacks” or ways to get things done faster, cheaper, or with less effort.

From ancient tools like weighted fish nets in South Korea dating back to 27,000 BCE, to the infamous Amazon warehouse robots today, people have created innovative technologies to automate their workflows and increase productivity.

person throwing fish net while standing on boat
Photo by Quang Nguyen Vinh on Pexels.com

Therefore, the term Business Process Automation (BPA) is a useful concept. Business process automation refers to leveraging technology to automate a business process that would otherwise happen manually. Other closely related terms include “digital transformation” or simply “business automation”.

Definition of Business Process Automation (BPA) by Winnona Partners
“Business Process Automation” – definition by Winnona Partners

However, business automation doesn’t necessarily require some physical component like a weighted fishnet or robot. Today, companies of all types are leveraging software capabilities to automate their business processes. Our firm is at the forefront of developing and implementing BPA software for small businesses. As a result, we’ve witnessed the increase in productivity and profitability first-hand!

So whether you’re a law firm that wants to streamline your billing process with automated invoicing, or a large organization hoping to simplify the data entry tasks for employees, now is the perfect time to explore BPA software development!

Want to learn more? Check out our related article: Why is Business Process Automation Software (BPA) Trending in 2021

2. Business Process Integration (BPI)

Business Process Integration (BPI) occurs when multiple organizations across multiple verticals seek to improve their operations and reach their desired enterprise goals by automating their business processes. The purpose of BPI is to allow systems and services to unite parts of their business processes, and/or secure data sharing between numerous applications.

Definition of Business Process Integration (BPI)
“Business Process Integration” – definition by Winnona Partners

Business Process Integration (BPI) vs Business Process Management (BPM) Integration

When it comes to integration terminology in this context, there’s actually two closely-related terms to differentiate: Business Process Integration and Business Process Management Integration.

They key difference to remember is that BPI refers to the collaborative process between multiple organizations, not just a single entity. The latter is what’s known as Business Process Management (BPM) integration, referring to a feature that allows a software system to merge data across other systems within the same business entity.

two women standing beside brown board on wall
Photo by fauxels on Pexels.com

So what’s a feasible example of BPI? For instance, let’s say a Starbucks customer orders a specialty coffee bean online for delivery. From there, the Starbucks system integrates with the coffee bean distributor or roaster’s system, and possibly the packaging company’s system to fulfill and deliver the order.

The interconnectivity of multiple systems working together to make a successful transaction or meet a consumer need demonstrates how effective BPI can be!

3. Business Process Management (BPM)

Business Process Management (BPM) is a discipline in which people use various methods to research, analyze, model, optimize, design and automate business processes. BPM methods can vary in complexity and approach, and often have a technological component. In some cases, companies will hire a Business Process Manager to handle such specialized analysis.

Business Process Management (BPM) definition
“Business Process Management (BPM)” – defined by Winnona Partners

The main goal of BPM is to identify ways in which business processes could be streamlined or automated. When done effectively, an organization may be able to discover and implement ways to expedite sales, production, or workflows.

The Business Process Lifecycle

The BPM discipline typically follows a roadmap of stages called the Business Process lifecycle. The lifecycle can serve as a useful roadmap for keeping track of what stage a business process is at. Moreover, the lifecycle provides an overview of where you’ve come from and where you’re going next.

So what are the stages of the business process lifecycle? Unfortunately, some sources outline five stages of the lifecycle and others outline six stages–typical in business jargon articles! Regardless, below is a list of the most common business process lifecycle stages I’ve encountered based from commonly sourced articles. You’ll notice I’ve included the synonyms of some stages as well:

  1. Design
  2. Modeling
  3. Execute/Implement
  4. Monitor
  5. Optimization/Modification
5 Stages of the Business Process Lifecycle: Design, model, execute, monitor, optimize
5 Stages of the Business Process Lifecycle

4. Business Process Mapping

Before you’re able to dive into optimizing and automating your process, it’s a good idea to first create a visual representation of how your organization currently works. Diligent leaders do so with Business Process Mapping!

Business Process Mapping involves outlining what a business entity does today, defining the goals and standards of a successful business process, and determining who is responsible for what at each stage.

Business Process Mapping definition
“Business Process Mapping” – Defined by Winnona Partners

In essence, mapping answers the questions surrounding who, what, and how a process happens from start to finish today. People typically figure this out by creating a visual representation such as a flowchart.

If you’re looking for a very basic free charting tool, Google Drawing (a feature of Google Drive) is a good place to start. Another popular and easy to use mapping software system that we like is Lucidchart:

Lucidchart example
Basic example of Lucidchart

So what’s the point of business process mapping? Simply put, mapping serves as an effective visual aid for leadership teams to understand the full lifecycle of a business process as it exists today.

Next, you can investigate whether or not bottlenecks exist, and explore ways to improve your process through Business Process Modeling (see below).

5. Business Process Modeling

By this point you’re probably wondering: How do people actually go about figuring out how to improve business processes? Creating visual representations of how business processes could theoretically work or be improved is known as Business Process Modeling.

Definition of Business Process Modeling
“Business Process Modeling” – Defined by Winnona Partners

Modeling is an opportunity for you to think critically and creatively about your business processes. Have you detected any bottlenecks in your process? If so, use modeling to consider ways you could reduce the number of steps needed through automation–or possibly even elimination.

You can come up with these visualizations using one of the charting methods listed above, or simply whiteboard it!

Business Process Modeling vs Mapping

As you might expect, there’s tons of confusion around these two similar terms. Both terms involve creating visual representations of business processes. So what’s the difference?

The difference between business process modeling and mapping is that mapping focuses on visualizing processes as they exist today, whereas modeling is a theoretical approach used to explore ways in which bottlenecks in the process can be improved, streamlined, automated, or even removed.

To summarize, mapping is about the here and the now; modeling is exploring what processes could be.

people discuss about graphs and rates
Photo by fauxels on Pexels.com

As you might expect, modeling is more difficult than mapping as it requires conceptual thinking about “what if” scenarios. However, spending time and effort evaluating your business process through modeling can help you find ways to improve or automate bottlenecks.

As a result, you’ll end up saving time and money, simplifying your employees’ workloads, and increasing customer satisfaction!

6. Business Process Outsourcing (BPO)

If you manage a business with many moving parts, you might consider subcontracting various third-party vendors to handle one or many of your business processes. This is what’s known as business process outsourcing (BPO), a method that helps businesses streamline processes so that they can better focus on other aspects of the business (such as customer interactions or production).

(BPO) Business Process Outsourcing
“Business Process Outsourcing (BPO)” – Defined by Winnona Partners

Importantly, “outsourcing” in this sense doesn’t necessarily mean you’re contracting an offshore workforce or product. You could also hire domestic “onshore outsourcing”, or “nearshore outsourcing” with territories of which you share a border.

However, BPO isn’t right for everyone. Regardless of the vendor location, you want to make sure you can rely on quality output and effective communication. After all, BPO is only useful if it saves you time, money and stress!

Back Office BPO vs Front Office BPO

BPO typically assists in two categories of operations: back office and front office.

Outsourcing your back office operations might include purchasing software or contracting a team to handle core parts of your internal business process. People commonly outsource back office operations such as invoicing, payment processing, accounting, human resources and IT services, among others.

Similarly, you might want to use a software system or contract workers for your front office operations. These are typically customer-facing services such as marketing, a call center, or tech support. Many organizations opt to use an enterprise CRM system for this level of customer-facing interaction.

7. Business Process Re-engineering (BPR)

Business Process Re-engineering (BPR) is a business management strategy that focuses on rethinking and redesigning the way an organization works to improve the customer experience, streamline workflows, and cut expenses. Various strategies and terms that we’ve covered in this article–such as BPM, modeling, and BPA–may be used to determine an effective re-engineering strategy.

Business Process Re-engineering (BPR) definition
“Business Process Re-engineering (BPR)” – Defined by Winnona Partners

Why does a company need to explore BPR?

Just like living organisms, businesses are constantly evolving and undergoing change. Sometimes change happens on a relatively small scale, like when someone joins or leaves an organization. Other times change occurs on a more significant scale, like when a new product gets developed or a new software system is introduced.

As an organization evolves, so too do business processes. Are you noticing an increase in customer dissatisfaction? Are production delays happening more often? These are telltale signs it might be time to rethink your process.

How does BPR work?

woman coding on computer
Photo by ThisIsEngineering on Pexels.com

Since at least the the 1990s, companies have been exploring ways they can use technology to improve their business processes. However, transforming your business isn’t easy, and shouldn’t be rushed.

First, important questions need to be asked or reconsidered. For instance:

  • Who are our customers?
  • Have their needs changed?
  • What is our mission?
  • Is our process and output in alignment with our goals?
  • How does our quality, production time, and customer satisfaction compare to others in our field?

After answering some of these high level questions, you can begin diving into the nitty-gritty details of your business operations. I recommend taking the following steps:

  • Step 1: Map your current processes, identifying who is responsible for what, and how long each process takes. Where are your bottlenecks? Where are you seeing high expenses?
  • Step 2: Use modeling to explore ways in which you can alleviate some of the bottlenecks or expenses. Can you automate some of your manual or time-intensive processes using BPA? Better yet, can you eliminate steps in the process all together?
  • Step 3: Determine feasibility of your future to-do processes. How long do you expect this revision to take to implement? How certain are you that it’s the right approach? Is the perceived value this revision will add justified?
  • Step 4: Test and implement your to-do process changes!

Conclusion

As a business owner, defining and improving your process is one of the most important things you can do. When done thoughtfully, improving your business process doesn’t just increase customer and employee satisfaction, it also saves everyone time, money, and stress.

If you find business terms and concepts to be confusing and somewhat convoluted, trust me–you’re not alone! Even though many of the terms are abbreviated with acronyms, I find this ironically makes them even harder to distinguish. There’s clearly lots of overlap between these concepts, which is a major reason I decided to write this article.

However, in taking the time to research these concepts I’ve gained a much more holistic understanding of the business process discipline. As a result, I feel more confident when discussing business development strategies from a tech perspective with clients.

To summarize: organization leaders use Business Process Management strategies to determine high-level processes. Once processes are established, mapping is done to visualize the process. Next, you can use modeling to explore hypothetical ways in which your process could be improved. Processes are commonly improved through either Automation (BPA), Integration (BPI), Outsourcing (BPO), or Re-enginneering (BPR).

Hopefully, now you also have a better idea of what each of these terms mean, and how to apply them to your business. If you have any questions, comments, or suggestions, please leave a comment below!

Do you have an interest in exploring ways custom technology can improve your business? If so, please contact Winnona Partners today to get started!

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By Jonathan Richter

Jonathan is CEO of Winnona Partners, a custom software development company based in Atlanta, GA that specializes in helping startups and small businesses thrive. He's also a classical guitarist, and has studied Chinese language, music and culture extensively.

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