Abusiness process is a collection of linked tasks which find

heir end in the delivery of a service or product to a client. A

Business process has also been defined as a set of activities and
Esks that, once completed, will accomplish an organizational
 2
VVV Vipul'sM IT in Accountancy - Il(BABH
goal. The process must involve clearly defined inputs and a singlc
output. These inputs are made up of all of the factors whic
contribute (either directly or indirectly) to the added value of
service or product. These factors can be categorized intt
management processes, operational processes and supporting
business processes.
Business process management (BPM) is a systematic approacs
t¡ improving those processes. If an organization is unable te
perform certain business processes internally due to cost o
resources, the company might utilize business
proces
outsourcing (BPO). Many organizations contract specific busines
tasks, such as payroll, human resources (FIR) or
third-party service provider. accounting,to
To measure success of abusiness process, organizations track
successful completion of different steps within the
benchmarks, or reaching the end point of the process, ie.r
business process is not helping an process. When aa
within timeline or with the
of strategies to resources organization
at reach a goae
hand, there are a numbet
execute for
mapping often undertaken as an improvements.
process
is Business proces
exercise during businesic
re-engineering
maybe unsuccessful and process transformation to improve
business
focus business process process.
on
Organizations
performance or execution. visibility to identify issues might alse
in proces3
Depending on the
business processes are organization,
often industry and nature oof workF
mentioned above: broken up into different
Operational categori
primary processesprocesses (or
deal with primary
 a workflow can beintegrated with other processes or IT tools, but
athe automation is designed specifically for that one activity.
d THEPROCESS LIFECYCLE:
f As mentioned above, business process management is a
discipline consisting of 5 phases: design, modeling, execution,
l monitoring, and optimization. (DMEMO) Let us explore each
phase further.
Design:
Process Design encompasses both the identification of existing
processes and the design of "to-be" processes. Areas of focus
E include representation of the process flow, the actors within it,
alerts &notifications, escalations, Standard Operating Procedures,
a Service Level Agreements, and task hand-over mechanisms.
Good design reduces the number of problems over the lifetime
g of the process. Whether or not existing processes are considered,
t the aim of this step is to ensure that a correct and efficient
ntheoretical design is prepared.
e
The proposed improvement could be in human-to-human,
human-to-system, and system-to-systemn workflows, and might
i target regulatory, market, or competitive challenges faced by the
P businesses.
11
 V

design and introdu

Modeling: theoretical materialscoe
takes the rent or
Modeling
variables (e.g., changes inoperate under differ
combinationsof the process might
how
which determine
circumstances).
Execution: processes is to develop
ways to automate steps of th
One of the the required
an application that executes
applications rarely executea
purchase these
practice, Anothe
process; however, inprocess accurately or completely. huma
the steps of theuse a combination of software and
approach is to approach is more complex, making th
intervention;however, this
documentation process difficult.
problems, software has been develope
As a response to these process (as developed in the proces
that enables the full business computer language which ca
design activity) to be defined in a
executed by the computer. The system will either us
be directly business operation
services in connected applications to perform when a step is t
(eg. calculatinga repayment plan for a loan) or,
complex to automate, will ask for human input. Compared
either of the previous approaches, directly executing a proces
definition can be more straightforward and therefore easier
improve.
Business rules have been used by systems to provie
definitions for governing behaviour, and a business rule engt
can be used to drive processexecution and resolution.
Monitoring
The Monitor Phase is where process performance is measure
Monitoring encompasses the tracking of individual processes,
fhat information on their state can be easily seen, and statistics
the performance of one or more processes can be
example o the tracking is being able to determine provided
the state of
customer order (eg. ordered arrived, awaiting delivery. invoi
paid) so that problems in its operation can be identified aly
Corrected.
 Business Process Management 9
In
addition, this information can be used to work with
Customers and suppliers to improve their connected processes.
Examples of the statistics are the generation of measures on how
nt quickly a customer order is processed or how
many orders were
Drocessed in the last month. These measures tend to fit into three
categories:cycle time, defect rate and productivity.
The degree of monitoring depends on what
information the
business wants to evaluate and analyze and how business
to be monitored, in real-time, near real-time or
wants it
ad-hoc. Here,
business activity monitoring (BAM) extends and expands the
monitoring tools in generally provided by BPM System (BPMS).
Process mining is a collection of methods and tools related to
process monitoring. The aim of process mining is to analyze event
ogs extracted through process monitoring and to compare them
with an apriori process model. Process mining allows process
analysts to detect discrepancies between the actual process
Se execution and the a priori model as well as to analyze bottlenecks.
ns Optimization:
Process optimization includes retrievingprocess performance
to information from modeling or monitoring phase; identifying the
esspotential or actual bottlenecks and the potential opportunities for
to cOst savings or other improvements; and then, applying those
enhancements in the design of the process. Overall, this creates
de Breater business value.
ine The Cycle Continues:
 Tracking and receiving shipments
o Stocking shelves
Note that most business processes subsume other business
Drocesses. One of the toughest challenges is knowing what
nrocess to focus on and with what degree of granularity to zoom
in on the process. Never lose site of the problem youare trying to
Solve-and use that as your filter.
hADVANTAGES OF BPM:
Agility:
Organizations are constantly faced with the need for change.
Changes may become necessary as a result of new regulations,
market demands or the emergence of new ways of working.
One key feature of BPM is that it facilitates the design of
processes that are flexible. With BPM, you get the flexibility of
making changes to processes with minimal costs. Processes can
easily be customized to suit the
orgarization. requirements of your
(2 Productivity:
BPM can facilitate the automation of a lot of
within regular workflows. Process improvemernts repetitive elements
like removal of
bottlenecks, introduction of parallel processing, and elimination of
redundant steps can easily be achieved with BPM. This
mprovement will allow emnployees to spend more time on other
 Vipul'sTM IT in Accountancy - Il (BA
12
would have bee
activities since the main support functions reduce
handled.This translates into increased productivity and V
waste.

(3) Efficiency and Reduced Risks:

for concentration o
The visibility of business processes allows opportunitC
inefficiencies. Because BPM gives organizations the
resource
save their
to work more efficiently, they are able to executed an
BPM also results in the creation of better-designed, fraud. (
monitored processes which can help reduce the risk of
(4) Compliance and Transparency:
Organizations need to be compliant with industry regulation
BPM ensures that organizations can implement regulator
requirements quickly, thereby preventing delays in compliang a
and any associated fines. When you adopt BPM, you integraa
compliance into the process life cycle. This also implies tha
organizational processes will become transparent and visible (1
employees.
a
(5) Employee Satisfaction:
BPM eliminates a lot of red tape in organizations and allow
employees to focus 100% on their work since process automatio P
cuts down on a lot of repetitive work and makes informatic-
access easier. This in turn makes for increased productivity and
happier workforce.
(6) Customer Focus:
With leaner processes and increased productivity, employe
are better able to focus on the customer. There will be an increas n
capacity to respornd more quickly to proposals, build solutio tr
faster and customize more quickly. BPM also brings people a
technology togetherin a way that increases customer satisfactior
With BPM, employees are able to focus on activities th ef
deliver the right resultsfor customers and stakeholders.
() Consistency, Repeatability &Transferability:
With BPMS, each task is executed the way it was planned adi
designed. Identical problems are addressed the same way ana
there is no need to reinvent the wheel, even if roles do chane
 Business Process Management 13

Exceptional situations and responses can also be clearly defined

with BPM to ensure they are handled
(8), Sustainability:
appropriately.
Business Processes are continually improved to adapt to
changing organizational conditions so that they can deliver the
expected results.This adaptation can be achieved with BPM while
maintaining control or managerial oversight.
(9) Measurability:
All processes can be measured end-to-end and compared to
expected results. This helps to manage people and processes
BPM when implemented with technology,
provides reporting
and analytical tools for making executive decisions.
you can streamline processes and quantify how With BPM,
these processes
are helping your organization optimize its workflows.
(10) Technology Integration:
BPMS bridges the commnunication gap between business
and IT, thanks to the use of standards like BPMN. With users
focus is not on "applications" but on "processes", along BPM, the
with the
applications that support them.
PRINCIPLES OF BPM:
Context-Awareness:
You cannot even treat your four kids in the
same way. But
many BPM projects and consultants apply the same cookbook
approach to all organizational processes, which results in
numerous project failures. Going beyond this narrow approach,
the principle of context-awareness points out that
BPM requires
Consideration of the given organizational setting.
BPM must account for the diverse nature of
the business is well- structured and business,whether
focused on operational
eftectiveness or unstructured, creative, and knowledge-intensive.
herefore,a one-size-fits-all approach to BPM is not
BPM should be adapted to fit the organization appropriate.
and to
Cifferentiate the process management according to the process'
nature (e.g., its degree of automation, standardization, and
s
Epetitiveness). In addition, temporal factors like the
18 VVV Accountancy - I| (BAF
Vipul';TM |T in
Three Key Process Metrics:
busnesS process is a collection of related. structured activities
Or taskS that produce a specific service or product (serve
particular goal) for a particular customer or customers. Ay
comparny has tens, hundreds and even thousands of processes
both simple and elaborate.
To make our examples more understandable, instead
o
complex process schemnes we will refer to an abstract model
which represents a process as a sequence of several
activities
However, everything you are about to read can be applied
processes of any complexity (main, supporting, etc.). to
 Business Process Management V"VV" 19

Abstract Model

Operation 1 Operation 2 Operation 3 Operation4

Can be applied onany level

Main Process

Rorter

Outlhe 1 Outline 2

Busfness Procass1 Buslnes Process 2 Business Procese3

wwwlwwwww.ow.www

There is an object in any business process,which moves with it

from the start to the end. That is a flow unit. To
name a few
examples, a café visitor, credit card request, call-center request
flow units.
To get the initial information on how a process
have to measure the three key metrics:
works, you
Flow rate is the number of flow units, going through the
business process per unit time, e.g served customers per
hour or produced parts per minute.
Flow time is the amount of time a flow unit spends in a
business process from beginning to end. E.g., the time a
visitor spends in a café, or the time to handle one request
to issue a credit card.
Inventory is the number of flow units that are currerntly
handled by a business process. E.g., the number of visitors
in a café at 12 o»clock.
 (BAF)
Vipul'sM IT in Accountancy - I| B
20
the metrics in different companies:
Here are some examples of State
Milk Collage
Car Bank Agency
Production
Production Citizen
Student
Flow unit Car Credit Card Bottle of milk request e
request Resolved
Number of Sales per month Number of
(1) Flow rate Sales per graduates requests pe
year cards month
issued per
day 0.5 month
3days5years
(2) Flow time 50 days 10days
Cars in Available Bottle of milk in Students in Requests
(3) Process
cards a store a dormitory being
inventorystock handled

Business Process Bottleneck:

th
The only parameter you need to measure in order to find
bottleneck of any process is the handling time.
Manually measuring different process metrics would take a lo
of time. While you can record the handling time or just ask you
employees about it.
For example: lin
In our hypothetical process, the handling time for eaco
operation is 10, 23, 15 and 10 minutes. Let us assume that on
employee performs each of the operations.
2

veavavwwwvswv

With the data we possess, it is

each operation. As you can see, possible to estimate capacity st
operation is 10 minutes; therefore, the
the
handling time of the fii
capacity is 6 flow units p
hour. While the capacity of the
per hour. Using this second operation is only 2.6 un
capacity in flow units perprinciple, you can calculate the proce
day, week, month and so on.
The operation with the
business process. It defines lowest
the capacity is the bottleneck of t
Whatever is the capacity of thecapacity of the1, entire proce
bottleneck will slow down the flow. operations 3 and 4, U
 Business processes are often depicted visually with a flowchart
shòwing a sequence of tasks with certain benchmarks or decision
points. Business process mapping or modeling illustrates F
pictorially, through graphs and charts, how certain processes flow|
into others, Before we proceed with this, 1let's first understand
Workflow and Flowchart
WORKFLOW:
Workflow is the series of activities that are necessary t
complete a task.
Each step in a workflow has a specific step before it and
specific step after it, with the exception of the first step. In aline
wOrkflow, the first step is usually nitated by an outside event
the workflow has a loop structure, however, the first sten
step.
initiated by the completion of the last
 Ausiness Process Mapping or Modeling 31

Flowcharts and process maps are useful tools for visualizing

he number and order of steps in a workflow. Flowcharts use
simple geometric symbols and arrows to define if/then
rolaionships. Process maps look
leo include support information,somewhat similar, but they may
documenting the resources that
in a
each step business process requires.
Workflow can be automated with software tools that use
business rules to decide when one step has been completed
successfully and the next step can begin. Some workflow
management software (WMS) programs can also coordinate
dependent relationships between individual steps, a concept
known as workflow orchestration. Workflow documentation and
business process modeling are important aspects of business
process management (BPM).
FLOWCHARTS:
A flowchart is a formalized graphic
representation of a logic
sequence, work or manufacturing process, organization chart, or
similar formalized structure. The purpose of a flow chart is to
provide people with a common language or reference point when
dealing with a project orprocess.
Flowcharts use simple geometricsymbols and arrows to define
relationships. In programming, for instance, the beginning or end
ar of a program is represented by an oval. JA process is represented
by a rectangle, a decision is represented by a diamond and an I/
te process is represented by a parallelogram. The Internet is
represented by a cloud.
n There a few different ways to think about business process
mapping and workflow:
Sequential business process: Sequential business processes are
outlined on adocument with clear start and end points. When
folactions
lowingin this process map, an organization performs the series of
order to complete the task within the constraints of a
e predetermined timeline.
. Status-driven business process: Astatus-driven business
Process doesn't
have strict start and end points. These processes
Sl at any stage depending on workflow changes, nature or
 Seek t ore-eng
process
Many organizations use business e process.
analysis of business processes as theywithin the P
s

UNDERSTANDING
process orimprove specific steps SYMBOLS:
FLOWCHART
entire for visually representi
floworc
the
Flowcharts are the ideal diagrams needtoshow within yo
business processes. For example, if you departments
various
custom-order process throughflowchart. paper Pand
a Thissymbols
Organization, you can use
representation of basic flowchart
structureof a
well-develoP
visual communicating the on-li
Proposed use in correlation in developing
flowchior
web site, as well as their are some of the basic
Below
instructional projects.
ro
symbols. the flowchart.
or step in
Process: Represents a process

Indicates a pont wnere the outcome of a decisie

Decision: outcomes, but of,e
dictates the next step. There can be muidple
just two -yes and no.
there are
AE Business Process Mapping or Modeling 35
it Decision represents the choice made by the user
an mutually exclusive options, e.g., a from
Ple lesson plans.
student choose among different

Decide

condition1
condition 2 condition 3

Process
Process Process
ess
Terminal points: (Indicates the starting and ending points of
process)
aic
the

Data Shape: Indicates that information is

process from outside, or leaving the process. coming into the
ing
of

S
ei

in Delay shape: Represents a waiting

mat done. In Process Mapping, delays are period where no activity is
often important as they may
result in adding to the cost of the product or simply delaying its
production.

iothe Input/action symbol: Represents auser response that directs

course flow from that point onwards, i.e., an online test or
ftequestionnaire form.
 Accountancy-I8
(BA
36 Vipul'sM|Tin

Ort-page reference: Use a setof hyperlinks betweet ePg

of a flowchart or and a separa
between a sub-procesS
tlowchart page that shows the steps in that sub-process.

p---- Arrow
---
Circle

Outgoing
C)
V Incoming

Document: Represents a step that results in a

document.
How to Draw a Flowchart?
Most of us do not know how to deal
are with
novice users, but with the passage of
gain expertise.( A
SVstematic
A good
flow chart timefloand
w charex ts
you online by transferring files between
accounting flo Systen
to take help of an
always suggest you accounting
your a
assist youin preparingthe outlinesfor analyze
Accounting Cycle Steps: Bookkeepers journa
with a business event. with a
This cycle starts journal
record it in the general then posted to
the transaction and journal are
the
entry. The debits and credits from
unadjusted trial balance ca
where an
the general ledger analyze the balances
prepared.
After accountants and managenent make end of perio
balance, they can then expense accruals
the unadjusted trial and
expense
adjustments like depreciation to the trial balanc
journal entries are posted
These adjusted balance.
turning it into an adjusted trial adjustrments are made and th
Now that all the end of the year accounts, financia
matches the subsidiary
adjusted trial balanceprepared. After financial staternents ar
statements can be public, the company can close i
the
published and released to entries are made and posted to th
books for the period. Closing
balance.
post closing trial accounting period, occasional
At the start of the next to cancel out the accrual entri
reversing journalentries aremade the reversing entries a
After
made in the previous period. starts all over again with t
posted, the accounting cycle
transaction.
occurrence of a new business
Business Process Mapping or Modeling 45

Here are the 9 main steps in the traditional accounting cycle:

Jdentify business events, analyze these transactions, and
record them as journalentries.
Post journal entries to applicable T-accounts or ledger
accounts.

Prepare an unadjusted trial balance from the general ledger.

Analyze the trial balance and make end of period
entries. adjusting
Post adjusting journal entries and prepare the adjusted trial
balance.
Use the adjusted trial balance to prepare financial
statements.
Close all temporary income statement accounts with closing
entries.

Prepare the post-closing trial balance for the next accounting

period.
Prepare reversing entries to cancel temporary adjusting
entries if applicable.
Record Journal
Entries

Prepare Financial Post Entries to

Statements Ledger Accounts

Record Closing Prepare Unadjusted

Entries Trial Balance

Prepare Post
Closing Trial Adjusting Journal
Balance Entries

Record Reversing Prepare Ajusted

Entries Trial Balance

Accounting Cycle
 will definitely be satisfied, and Total
CUstomers
ultimately be achieved.
Six Sigma
TOM of dedicate
An infrastructure
Afunctional specialty within the change agents. Focuses on Cross
orgarization. streams rathe
functional value delivery
than functional division of labor.
Focuses on strategic goals
ard
Focuses on quality. and othe
applies them to cost, schedule
key business metrics.
Motivated by quality idealism. Driven by tangible benefit for
major stockholder group (custome
shareholders,and employees).
Ensures that the investme
Loosely monitors progress toward
goals. produces the expected return.
People are engaged in routine Slack resources are created to chang
duties (Planning improvement, and key business processes and t
control). organization itself.
BA Theories and Tools of BPM VVV 71

Emphasizes problem solving. Emphasizes breakthrough rates of

improvement.
Focuses on standard performance, Focuses on world class performance,
See.g.ISO9000. e.g., 3.4 PPM error rate.
Quality is a permarnent, full-time Six Sigma job is temporary. Six
iob, Career path is in the quality Sigma is a stepping-stone; career path
profession. leads elsewhere.
Provides a vast set of tools and Provides a selected subset of tools
techniques with no clear framework and techniques and a clearly defined
aH for using them effectively. framework for using them to achieve
results (DMAIC).
Goals are developed by quality Goals flow down from customers
department based on quality criteria and senior leadership's strategic
le
and the assumption that what is good objectives. Goals and metrics are
T for quality
quality is good for the reviewed at the enterprise level to assure
oje organization. that local sub-optimization does not
OCcur.
ine
Developed by technical personnel. Developed by CEOs.
Focuses on long-term results. Six Sigma looks for a mix of short
it Expected payoff is notwell-defined. term and long-term results, as dictated
by business demands.
LEAN:
 orgarizationa
is an
process automation (BPA) provide trarsparerg
transformation that aims to drive efficiency,processes.
Orgarnization
repeatable
and facilitate compliance forforms-from ernployee
simple
use automation in many processes-to eliminate th
payable
boarding to complex accountspaper physical location
to route from one
need for employees processes or approvals. With todav
another for recording, work
automation software, any manual paper process can
leading to identify
automated to achieve these goals. Key elements
process for automation:
organization
The process requires consistency across the
The process is repeatable.
free from error, every
The process needs to be time
 unlike bl
of continuous Lmprovement - something a compa
is
are one-time initiatives, BPM can play a part in streamlning
atematically. Accordingly, BPA
and automating old processes.
BENEFITS OF BPA: consistently hig
Consistency: Delivering
(1) Quality and service results in happier
products and customer
quality
long-term customers. action 4
that every
Quality: Automation ensures quality, reliable
high
performed identically - resulting in
results
have automated you
Consistency: If, for example, you customers wi
follow-up process, your
customer service service from you
consisterntly experience the same level of
business
guarantee of quality and consistency coupled wit
This stan
time and efficiency savings means that you can
developing higher quality and more feature-filled produc
with little or no increase in production time and costs.
(2) Time Savings: Manual tasks take time. They have to
performed linearly by humans who are prone to errors an
Business Process Automation (BPA) 81
who are unable to consistently perform to the
standards. highest
Automation reduces the number of tasks you and your
employees would otherwise need to do manually. This frees
up your time to Work on items that add genuine value to the
business, allowing you to be more innovative and increasing
your employees' levels of motivation.
Automation also allows you to get more done in the same
amount of time, greatly increasing productivity.
3) MetricVisibility: Sustained business success is dependent on
developing and implementing a superior strategy. Retaining
your competitive advantage requires that you constantly
monitor, evaluate and modify that strategy - all of which are
dependent on access to timely and accurate business data.
Automated processes are controlled by defined workflows
which consistently operate accurately and within your
defined timeline. Automation provides the trifecta of
requirements for successful measurement.
Depending on which process you have opted to automate
(financial, billing, collections, sales and/or support), key
metrics can be recorded and reported on to provide you with
the key information you need.
49) Improved Operational Efficiency: Eficiency by definition
describes the extent to which time, effort and cost is
effectively applied for the intended task or purpose.
Process automation reduces the time it takes to achieve a
task, the effort required to undertake it and the cost of
completing it successfully.
Automation not only ensures systems run smoothly and
efficiently, but that errors are eliminated and that your best
practices are constantly leveraged.
5) Governance & Reliability: The consistency of automated
processes means
you can rely on (a) your business processes
tO operate and (b) you can offer reliable processes to your
customers, maintaining competitive advantage.
82 Vipul'sMIT inn Accountancy - Il(BA
The reliability of workflow automation ensures th
processes essential for corporate governance are
100% of the time in accordance with legislation. a executed
(6) Reduced Turnaround Times: Workflow automation allowop
companies to define and streamline their business processes a
Eliminate unnecessary tasks and realign process steps tp
optimize the flow of information throughout youo
production,service, billing and collection departments.
This adjustrment of
performance and reduces
processes
the
distills your operationap
and external customers. turnaround times for both staf pr
(7) Reduced Costs: Manual tasks, given that
one-at-a-time and at a slower rate they are performed
will cost more. than an
by utilizing fewerAutomation allows you to automated task
(8)
Increasing resources. accomplish mor
Value Per Work:
means that your
them. Meaning,
more value
employees willAutomating
they'll no longer useless processe
be able to have to deal wit
(and makes more focus on work that
(9) Higher money) for your create
position Employee
as an internSatisfaction:
Anyone business.
extremely bad for knows that& menial,that's ever heldar
how you lookmotivation robotic tasks
grunt work all day. If such no one'enjoyment
at it,
s of work. Ng
and your things going to enjoy doin
work). employees can
will be happier be
(doingautomore
mated, both you
CHALLENGES
AUTOMATION:
Intes
OF
meaninga