The Difference Between Business Process Optimization and Business Process Engineering
In business, the idea of improving things is, in some ways, a pretty simple one. But then you have this new terminology, with acronyms like BPO (business process optimization) and BPR (business process reengineering).
Wading through that alphabet soup, things can get confusing. What are these two terms, and how do they differ? What do they do for businesses?
Essentially, both business process optimization and business process reengineering are types of business process improvement. With both strategies, planners and leaders analyze business operations, and figure out ways they can be changed to enhance the overall organization. But there are subtle differences, too, between BPO and BPR. And these differences are useful to highlight for teams brainstorming how to approach change.
Why Improve Business Processes?
Time and time again, companies actually see that putting in the work on improving business processes pays off big as time goes on.
One of the biggest benefits is maximizing profitability. As just one example, a study done in 2019 found that marketers, on average, waste 21 cents of every media dollar due to problems involving poor data quality, where improving these processes would improve outcomes. Efficiencies aimed at issues like these make businesses, on the whole, more capable, and more profitable.
To put it another way, business processes often involve waste. That might be because of something that nobody thought of when they designed the original process, or because of changes in the industrial or business world since the process was started. For instance, maybe there’s an interdepartmental process that can be done at half the cost by either merging two roles, or providing better communications between them. These types of “collaborative” business process cases are one of those things that might drive planners to consider BPO and BPR.
More sustainable practices are also another reason that companies invest in these types of business improvements.
For example, let’s say that the business has a cumbersome data entry process that is driving up their cloud migration end costs and slowing the process down. If the business can find a way to optimize the migration by identifying the slowest processes and then improving them, all of those bottom line benefits will come raining down.
Then there’s the business reputation that’s involved. In one sense, companies can be advertising what they have learned in their process optimization efforts, and what they have done about it, to show thought leadership. In another sense, improving business processes can benefit the customer experience, too. A business can promote their BPO achievements to increase customer loyalty and retention targeting and enhancing their customer practices like support and service. A business can also use their BPO success to help sell customers on their efficiency, sustainability, or even by saving a customer money, depending on the solution involved.
When the customer sees that the business is working on continual improvement, that’s a feather in that company’s cap.
What is Business Process Optimization?
Business process optimization is more like a fine-tuning of existing processes to make them more effective and more efficient. Experts talk about ‘quick wins’ – the ability to make small changes and make something incrementally better. For example, changing the calibration of a piece of equipment to work more efficiently would usually fall into the category of business process optimization.
What is Business Process Engineering?
Business process reengineering is, in most cases, a bit bigger of a lift. It involves envisioning new pathways to success – using goals and objectives to think outside the box and pursue those stated goals in new ways.
In other words, business process reengineering involves transforming how work gets done on a comprehensive level.
How to Improve Business Processes
No matter which one of these two you’re approaching, you can benefit from a set of guidelines for business process improvement.
The first one is identifying inefficiencies or opportunities for optimization, and setting goals accordingly.
Mapping and analyzing processes gives people tools they need for BPO or BPR.
Implementation is where the rubber meets the road – rolling out new changes and seeing if they do what they are supposed to do.
Business Process Optimization Techniques
To perform BPO effectively, let’s start with a few common methods.
Utilize user behavior analytics software – these sorts of strategies can help to identify what’s going on in the business process that could be changed or tweaked in some way.
Draft new ideas – firms can also build new insights based on this business intelligence exploration. After you’ve aggregated all of the data that you need, there is that brainstorming process of how to use it to your advantage.
Allocate resources strategically – many types of BPO involve changing the resources that you use for a process in order to achieve a different outcome.
Business Process Reengineering Techniques
Collect workforce metrics – take a look at what people are doing, and how they are doing it on a global and granular scale. Think about its connection to the rest of your business operations.
Re-design core processes – this might mean reorganizing the workforce, or reallocating resources based on what you found when you looked into the workforce metrics. This is where layoffs may pop up its head!
Refocus/retool goals and operations – business process reengineering often involves finding out what your current goals are, not just sticking with something that was decided a while ago. This proactive work supports better BPR and improvement ‘in real time’
Looking at things a different way – BPR relies on having the flexibility to shift how you approach a business process – to see it from all angles, in aid of making important process-changing decisions.
Choosing Business Process Optimization or Re-engineering
To figure out which one of these ideas best applies to a set of business processes, think about the scope of the project and what it aims to do. Are you trying to redevelop those core processes, or just work around the margins for efficiency?
Again, the goal setting work is going to help with figuring out the difference in approach.
Tools for Improving Business Processes
Behavior analytics software can be the basis for moving forward with this kind of business intelligence.
Essentially, the behavior analytics software brings some very granular insights that help businesses to accomplish more, by targeting desired states and best outcomes. A rigorous look at activity metrics and other factors brings new vision to decision makers who can promote better policies.
Your business architecture shouldn’t be a black box. Neither should your customer activity or how you do your business processes. All of those things should be laid out in nuanced detail, to allow you to look at how they could be done better.
That’s a bit about how business process optimization and business process reengineering work using the power of new behavior analytics software from Teramind. These types of resources allow people to mine valuable data from user sessions, events and architectures, to make that data work for the business in a positive and proactive way.