There are differences and similarities between both business processes and business decisions. However, they are fundamentally different in nature. Let's get straight to understanding the business process vs business decisions.
A business process defines a set of steps (tasks, activities, etc.) in a specific other that they aim to accomplish an organizational goal. The steps in a business process can be automated or manual; in other words, these steps can be performed by a system (or other processes) or a human.
Business processes coordinate tasks' performance based on how they transition from one to another. It also uses execution gateways to branch in and out from a specific step of execution based on certain criteria.
Let’s have a look at the diagram below:
The above model represents an example of a loan origination process in a lending company. In a sense, a business process is an orchestrator in an organization that ensures people and systems perform the right tasks or activities at the right time to achieve a business goal.
Business processes generally have a long-life cycle in which they show how an organization works. To model business processes in an organization, the process professionals look at the organization's value chain, explore how they are related to the core of the business processes, and how these business processes connect functional areas and departments in creating products or services.
Another characteristic of business processes is that they do not tend to change a lot. Simply because it is costly to change business processes every day. Once a process is established and tends to work, there will be a process review in a specific timeframe (e.g. quarterly, yearly, etc.) for a process. The processes’ outcomes are monitored constantly to ensure they meet the required KPI.
For instance, in the “quote-to-bind” for an insurance organization, there are many different business processes involved in the value chain. Once they are established, there will be some adjustments along the way, but not a significant process re-engineering effort every month, not even every six months for that matter.
Participants and Actors
In any business process, there is likely more than one person involved. The process distributes a work (case, document, etc.) to individuals to perform some tasks on it: review, approval, comment, etc. These actors in the process will be involved at the right time when they are needed, and the work will be queued in their inbox (e.g., portal, email …) so they can review the work and perform relevant actions. Once they complete the work, they will mark it as completed, and the business process proceeds.
Inputs and Outcomes
Last but not least, business processes do not have many inputs and outputs. For sure, there are a handful of inputs and create some outcomes based on the goal of a specific process. But it is very uncommon (or even a bad practice) if business processes have hundreds of different inputs and produce hundreds of different outcomes – not even on the scale of dozens.
On the other hand, business decisions are different in all the above qualities. They have different stakeholders, life-cycle, operationalization and data requirements, KPI, objectives, and missions. Therefore, in terms of modeling it is more effective to use modeling technique specifically for business decisions rather than using process modeling (e.g. BPMN) for business decicions.
Inputs and Outcomes
In the business decisions world vs business process world, it is not uncommon that some business decisions have more than dozens and even hundreds of inputs to model many possible situations. Unless business processes have few inputs and one goal (outcome) to achieve.
A business decision may resolve to more than one answer to a specific question; unlike business processes, the result of a business decision might be providing all the possible outcomes, which in some cases are even competing goals.
Business decisions require at least to satisfy the full decision cycle which four stages of observe, orient, decide and act (based on the OODA loop) to ensure they are scalable, self-sufficient, and coherent.
Business decisions have hierarchical relations, and the relationship generally is based on dependencies of them, unlike business processes where the relation between steps are transitions that define the order of execution.
Business decisions (particularly operational and tactical) tend to change frequently based on many internal and external factors such as policies, regulation, market dynamics, competitive landscape, and so on. Unlike business processes that changing them is quite expensive and requires too much effort and coordination compared to applying changes to business decisions.
Business decisions can significantly improve organizational agility by empowering organization to adapt to frequent changes effectively and efficiently.
Participants and Actors
Although a business decision can be multi-step, it is less likely to have human participants perform some actions unless they are long-running business decisions.
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Decision-Making Business Process
These types of business decisions are very interesting as they are somewhat between the business decisions and business processes.
These business decisions can be long-running and cannot complete unless it receives all the required information at some point. Like a business process, the execution of the long-running decision spans days, weeks, and months.
In complex business decisions, the outcomes may be inconclusive, and there are competing goals, or in some scenarios, there are exceptions, these types of business decisions can involve domain experts (humans in the loop) to override or prioritize the decision outcomes.
These types of business decisions may look like a process, but if you look at them closely, there is no need for coordination between people or cross-function and department referral. In fact, they are trying to answer a business decision such as whether or not a bank or finance company can lend a certain amount to a business or an individual.
Business process vs business decisions is a complex debate but it is very critical to have a clear distinction and their roles for organizations. We are not trying to dismiss the importance of business processes in organizations, but trying to establish the differences of business processes and business decisions in nature, as we have seen many process professionals think of them as the same.
Most importantly because of these differences in their nature e.g. characteristics, and ownership business decisions have the very root in the organization's value, and its agility. So, they should become the purpose of business processes and everything the organizations do. Organizations that focus on business decisions are called decision-centric organizations which have better opportunities for efficiencies and innovations. As a result of this shift of mindset, they perform stronger in comparison to the one focusing solely on structures and processes.
Last updated July 12th, 2022 at 03:37 pm, Published July 7th, 2022 at 03:37 pm