Business Process Assessment: Out with the Old and In with the New

If you are not already conducting a business process assessment, please read our business process assessment blog series to learn how to unleash profits by finding ways to work more efficiently. In this series we are covering the steps to starting a business process assessment to help reduce inefficiencies and increase profits.   In our previous blogs we covered; 1) how to create a business process project management committee 2)  questions to ask by department  3) how to develop a comprehensive business process assessment document to measure and assess the existing business processes  4)  how to create and define your milestone and project projections.  Have you ever worn old shoes to the point where they are hurting your feet?  The joy of wearing a new pair of shoes makes you wonder why you were walking around in those old shoes for so long.  This is much like the benefits you will discover when you complete your business process assessment and find a better way of running your business.

In this blog we will cover in more detail why it is important to compare your current IT and accounting functionality against your newly identified requirements or recommendations based on the findings of your business process assessment committee.  We will also explain how to create a matrix to compare each business process need against the capabilities of your internal personnel and accounting, human resource, CRM (customer-relationship-management) systems.

In our previous blog about setting milestones and project projections we gave the example of Ruth who is the committee leader for the Accounts Payable department.  After interviewing her AP team, she identified several business processes that took up too much time.  She is looking into possible accounts payable automation software as a solution to integrate with their ERP system.  The priorities of the AP department are to eliminate manual invoice processing, improve invoice approval process and automatically generate an electronic notification to recipient when payment is processed.   

Now let’s review how Ruth will use these next steps to 1) compare the  current IT and accounting functionality against your newly identified requirements and 2) how to create a matrix to compare each business process need against the capable functionality of your internal personnel and accounting, human resource, CRM or ERP systems.

1) Business Process Assessment: Compare current IT and accounting functionality against newly identified requirements

Ruth has mapped out a business process for the check writing and approval in the Accounts Payable (AP) department.  She has identified a few areas that take up time and expense to the AP department’s resources.  Now she is comparing the existing accounting software and how the new areas for improvement will or will not work with their existing ERP solution.  She has reported back to the committee that there are several areas that are manual within their existing solution.  She has researched AP automation software and found a few add-ons or enhancements that integrate with their existing accounting and ERP solution that will help automate their manual and inefficient processes.  Ruth will explore the 2-3 ERP enhancements and report back to the committee her findings and recommendations.  She found one solution that seems to fit the best and is scheduling out demonstrations with the ERP consultant she works with to service their entire ERP system.

2) Business Assessment Process: Develop a Matrix

Using an Excel spreadsheet is the most basic way to build a matrix to help the business process assessment committee and the ERP consultant easily identify what is the description of current business process in the AP department.  For example, the spreadsheet t will also list all of the issues with current process and also list the recommendations for improvement of the existing processes.  Tracking these business processes recommendations is an essential step since there could be a long list to track across departments.  This will allow the business process assessment committee leaders to prioritize what processes should be improved on first.  Now you can sort by priority and set-up an action plan to improve the overall efficiency and profits of the business.  Your business process assessment committee and ERP consultant will be essential in starting the improvement plan moving forward.

Within one business process, like in the example of the AP check writing and the check approval process, there may be a combination of multiple processes that are common given different scenarios.  It is important to outline the various processes that are linked with one activity like check writing, for instance.  This comparison of current functionality with the requirements to change must take place across the entire organization.  This will involve investigating the resources and capabilities of personnel, the current ERP system including accounting, human resource management and your CRM systems.   With a little teamwork and involvement across departments your business is now on its way driving toward continuous improvement and maximizing profits.

If there are inefficiencies in your business wearing away profits and tying up costs, it is best to detect them and eliminate them before more damage is done!  As ERP consultants, we have performed hundreds of business process assessments.

Contact us to learn more about our free 30 minute ERP software needs assessment.  If you would like to learn more about how and why you should get started with a business process assessment, please contact us!  As ERP consultants, we have over twenty years of experience in helping hundreds of businesses become more efficient and profitable.

Contribution by Keith Perkins - Accounting Software Shreveport