different types of business process model

Business Process Modeling Techniques with Examples

Updated on: 5 January 2023

In one of our previous articles about BPM we briefly touched upon various business process modeling techniques. And as promised here’s a more detailed look at various BPM techniques and how to make use of them effectively.

Business process modeling is mainly used to map a workflow so you can understand, analyse and make positive changes to that workflow or process. Usage of diagram helps you to visualize this process and make better decisions.

Use the below table to quickly navigate to different techniques.

• Business process modeling notation (BPMN)
• UML diagrams
• Flowchart technique
• Data flow diagrams
• Role activity diagrams
• Role interaction diagrams
• Gantt charts
• Integrated definition for function modeling
• Colored petri-nets
• Object oriented methods
• Workflow technique
• Simulation model

Lest start with the latest techniques.

1. Business Process Modeling Notation (BPMN)

Simply put BPMN is a graphical representation of your business process using standard objects. If you want to get more technical It can also be defined as a set of graphical objects and rules defining available connections between the objects.

BPMN consists of the following basic building blocks;

• Flow objects: events (circles), activities (rectangles with rounded corners), and gateways (diamonds)
• Connecting objects: mainly comprising arrows, these indicate sequence flow (filled arrows), message flow (dashed arrows), and associations
• Swim lanes: pools (graphic container) and lanes (sub-partition of the pool)
• Artifacts: data objects, groups, and annotations

A business process modeled using BPMN

Creately has a separate library with the latest BPMN 2.0 object included in the library. Plus you get intelligent grouping elements, professionally designed BPMN templates and much more. Check out how Creately makes it easier to model using BPMN .

The biggest advantage of BPMN is that it’s a standard with well-defined syntax. So many business analysts are familiar with it which makes collaboration much easier. Also, most modeling tools support BPMN which makes it much easier to share and edit if even using different software. All these together makes BPMN the most popular business process modeling technique at the moment. Click here to start creating any complex BPMN diagram .

A process modeled using BPMN that has swimlanes

Find more BPMN Examples to use for free to draw business process modeling notation diagrams.

2. UML Diagrams

UML is a modeling language mainly used for specification, visualization, development and documenting of software systems. But business professionals have adapted it as a powerful business process modeling technique.

With 14 different UML diagram types , it offers a flexible and powerful way to visualize almost any business process. They are typically used for modeling the detailed logic of a business process. In many ways, UML diagrams are the object-oriented equivalent of flow charts.

As mentioned above one of its main advantages is its flexibility. But with 14 different diagram types, some might find it difficult to understand the diagrams. Add to that the same process can be modeled using different UML diagrams. So probably not the most popular choice among analysts.

It’s flexibility makes UML a popular business process modeling technique

Our UML software supports drawing of all UML diagram types. We have templates, separate libraries for various UML diagrams and knowledge article to guide you through the process. Click here to start drawing UML with Creately >>

Business process modeling goes back a long time and BPMN and UML evolved from some techniques used a while back. However, some of these earlier techniques are still been used in business process modeling. Listed below are some of those techniques that are still used today.

3. Flowchart Technique

Flowcharts are probably the most popular diagram type in the world. Because it has few standard symbols it can be easily understood by many. Simplicity makes it powerful and an effective tool.In fact, BPMN can be considered as an advanced version of the basic flowchart technique. Also, most drawing software support creation of flowcharts  it is used by a much wider audience as well.

Flowchart uses a sequential flow of actions and does not support a breakdown of the activities. The Flow Chart model is possibly the first process notation. It has frequently been used over many years although there is no exact date for its origin.

A simple flowchart with processes, decision blocks etc.

You can use our flowchart software to easily come up with a professional flowchart.

4. Data Flow Diagrams – Yourdon’s Technique

Data flow diagrams (DFD) show the flow of data or information from one place to another . DFDs describe the processes showing how these processes link together through data stores and how the processes relate to the users and the outside world.

They are used to record the processes analysed as a part of the design documentation. A DFD can be seen as a method of organizing data from its raw state. DFDs are the backbone of structured analysis that was developed in the early sixties by Yourdon.

A DFD diagram used in modeling done by Data Flow Diagram Tool

5. Role Activity Diagrams – RAD

Roles are abstract notations of behavior describing a desired behavior within the organization. They are often organizational functions. They also include software systems, customers and suppliers. RADs provide a different perspective of the process and are particularly useful in supporting communication . They are intuitive to read, easy to understand and presents a detailed view of the process and permitting activities in parallel .

Role activity diagram used in business process modeling created by our Activity Diagram Tool

6. Role Interaction Diagrams – RID

Activities are connected to roles in a type of matrix. Activities are shown vertically on the left axis and the roles are shown horizontally at the top. Text and symbols are used together in order to represent the process.

Although slightly more complex than flow diagrams, RIDs are fairly intuitive to understand and easy to read but they tend to be messy, with many arrows pointing left and right and are therefore quite hard to build.

Inputs to and outputs from the activities are not modeled.  Therefore, important information is lost. RIDs are not as flexible as flowcharts, for example. They have quite rigid notation. But compared with other modeling techniques, RIDs are nevertheless flexible. They can be drawn using an Activity Diagram Tool

Role interaction diagrams offer flexibility but somewhat harder to draw

7. Gantt Charts

Gantt charts relate a list of activities to a time scale. Although it can be used to represent a process graphically it’s strength lies in the ability to monitor the current situation, project timeline, and resource allocation. Although things like dependencies can be highlighted in it the modeling part is severely lacking. Probably the reason why it isn’t popular anymore. If you’re using to monitor timelines then you’ll be pleased to know Creately supports drawing Gantt charts .

A Gantt chart is a matrix that lists on the vertical axis all the tasks or activities to be performed in a process. Each row contains a single activity identification, which usually consists of a number and a name. The horizontal axis is headed by columns indicating estimated activity duration, skill level needed to perform the activity, and the name of the person assigned to the activity, followed by one column for each period in the project’s duration. Each period may be expressed in hours, days, weeks, months, and other time units. In some cases, it may be necessary to label the period columns as period 1, period 2, and so on.

Gantt charts are used for time lines in processes

8. Integrated Definition for Function Modeling  (IDEF)

IDEF is a family of methods that support a paradigm capable of addressing the modeling needs of an enterprise and its business areas (IDEF, 2003). The IDEF family is used according to different applications. The most important parts are: IDEF0, IDEF1, IDEF1X, IDEF2, IDEF3, IDEF4 and IDEF5. However, for business process modeling, the most useful versions are IDEF0 and IDEF3.

The IDEF model

9. Colored Petri Nets ( CPN )

Colored Petri nets are a graphical oriented language for design, specification, simulation and verification of systems. It is particularly well suited for systems that consist of a number of processes, which communicate and synchronize .

Colored nets are extended Petri nets in which symbols are differentiated by ‘COLORS’. A CPN model consists of a set of modules which each contain a network of places, transitions and arcs. The graphical representation makes it easy to see the basic structure of a complex CPN model, i.e. to understand how the individual processes interact with each other. CP-nets have a formal, mathematical representation with a well-defined syntax and semantics. This representation is the foundation for the definition of the different behavioral properties and the analysis methods.

A diagram modeled using Colored Petri-Net

10. Object Oriented Methods

This method is based on three concepts: objects that represent a real-world entity. An object has a state, i.e. one of the possible conditions in which the object may exist represented by the values of the properties (attributes). State changes are reflected by the behavior, i.e. how an object acts and reacts determined by the set of operations the object can perform on itself, and also knowing its interface, functions and methods. A set of similar objects is called class. For example, the attributes for the class animal are having four legs and a tail. Its behaviors are sleeping and eating. Then possible instances or objects of the class animal are cat, elephant, and horse.

Finally, messages are requests for the receiver objects to carry out the indicated method or behavior and return the result of that action to the sender objects. States change through behavior when the object receives a message. There are many different techniques based on OO. Unified Modelling Language (UML) is considered the standard OO modeling language. Coad and Yourdon’s method precedes UML.

11. Workflow Technique

  Workflow is a flow of tasks between computer applications or people in an organization. Two or more members of a workgroup to reach a common goal can define a workflow as well as any task performed in series or in parallel. The work flow is more than a technique to model a process. It is a method to analyze and improve a process, including its modeling.

The workflow development process uses work flow models to capture the relevant information of the processes. This process comprises four stages: Information Gathering, Business Process Modelling, Work flow Modelling, Implementation and Verification & Execution. You can get started easily using our workflow diagram templates.

Work flow concept

12. Simulation

Simulation model comes in handy when you want to study a complex real-world system. You want to learn more about the system to make an informed decision but the complexity of the system prevents you from doing that directly.

Therefore you proceed indirectly by creating and studying another entity (the simulation model), which is sufficiently similar to the real-world system. Simulation can have many forms (for example, discrete-event simulation, continuous simulation, system dynamics, Monte-Carlo simulation, qualitative simulation, etc.).

Final Thoughts on Business Process Modeling Techniques

Most of the legacy systems are outdated or used sparingly. However, it must be noted that some of them are used far more effectively in other industries and for different purposes.

For example, Gantt charts are not very effective as a business process modeling technique but they are extremely useful to monitor timelines in complex projects. Similarly, flowcharts  are great to quickly describe uncomplicated processes. One might argue BPM helped popularize those techniques.

Hope now you have a good understanding of the BPM techniques. We’ll be discussing the importance of the BPM methodology  through our next article.

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More Related Articles

how do Use a process flow technique to explain each of the CERTs working model.

Very helpful, would anyone know how to get Business process modeling notation (BPMN) certification, And if there is an online study/ certification option

how to make role activity diagram using any software for business processes.

Thanks for the article. What kind of modelling methodologies are used for Smart Process Automation (SPA) and Robotic Process Automation (RPA)?

Where are the references? Most the above mentioned information was written from “Aguilar-Saven, R.S., 2004. Business process modelling: Review and framework. International Journal of production economics, 90(2), pp.129-149.”

it is good material, it has improved my understanding of BPM

Thanks for the examples. I wonder if that UML diagram is usually true for companies? What if there’s a need for CSR? What if there are defects on the product? I understand that it’s a basic sample, it’s almost an accurate model but I quickly remembered my Mass Comm lessons before I changed my course.

I am a CS B.E student and i am looking for mathematical model for bussines process mapping web application.Will u please help….

Thanks. Good article. Supported me to improve my knowledge om BPMT

I’m CS student,

And I found that creately is very helpful in developing UML Diagram.

please a need help in designing an ER schema

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Business process modeling gives organizations a simple way to understand and optimize workflows by creating data-driven visual representations of key business processes.

Most enterprises have a pretty good idea of the various business processes powering their daily operations. However, when they need to ensure that those processes consistently drive optimal outcomes, “a pretty good idea” isn’t enough.

If an organization wants research and development (R&D) investments to produce sufficient returns, IT issues resolved with minimal downtime or a highly accurate lead qualification workflow, it needs to understand these processes on an objective and comprehensive level. Even the business users directly involved in these processes may lack total transparency into exactly what happens at every step of the way.

Business analysts can gain end-to-end views of the business process lifecycle through business process modeling , a business process management (BPM) technique that creates data-driven visualizations of workflows. These process models help organizations document workflows, surface key metrics, pinpoint potential problems and intelligently automate processes.

What is business process modeling?

A business process model is a graphical representation of a business process or workflow and its related sub-processes. Process modeling generates comprehensive, quantitative activity diagrams and flowcharts containing critical insights into the functioning of a given process, including the following:

• Events and activities that occur within a workflow
• Who owns or initiates those events and activities
• Decision points and the different paths workflows can take based on their outcomes
• Devices involved in the process
• Timelines of the overall process and each step in the process
• Success and failure rates of the process

Key aspects of business process modeling

• Process models are not made manually. Rather, they are produced by data-mining algorithms that use the data contained within event logs to construct models of the workflows as they exist.
• Because process models are based on quantitative data, they offer genuinely objective views of workflows as they exist in practice, including key data, metrics or events that may have otherwise gone unnoticed. For example, by creating a model of its new account creation process, a software company might discover that a significant number of customers are abandoning the sign-up process because it takes too long. A model could even help the company pinpoint the exact stage at which these drop-offs occur.
• Arrows represent sequence flows
• Diamonds represent decision points or gateways
• Ovals represent beginnings and endpoints of processes
• Rectangles represent specific activities within a workflow
• Swimlanes are used to identify who owns which components of a process
• Business process models shouldn’t be confused with process maps , another common type of business process diagram. Process maps are based on employee reports, are created manually and provide higher-level views of workflows. Process models are data-driven deep dives that present more objective views of workflows.

Learn more by reading “Process Mining vs. Process Modeling vs. Process Mapping: What’s the Difference?”

How business process models are made

To fully understand business process modeling techniques, one must first understand the relevant business process modeling tools — event logs and process mining .

Most enterprise IT systems maintain event logs . These event logs are digital records that automatically track state changes and activities (i.e., “events”) within the system. Anything that happens within a system can be an event. The following are some common event examples:

• A user logs in
• A user updates a record
• A user submits a form
• Information is transferred between systems

Event logs track both the occurrence of events and information surrounding these events, like the device performing an activity and how long the activity takes. Event logs act as the inputs during the production of process models.

Process mining is the application of a data-mining algorithm to all of this event log data. The algorithm identifies trends in the data and uses the results of its analysis to generate a visual representation of the process flow within the system. This visual representation is the process model . Depending on the process targeted for modeling, process-mining algorithms can be applied to a single system, multiple systems or entire technological ecosystems and departments.

Business process modeling use cases

Process models offer unprecedented levels of transparency into company workflows, making them a key business process management tool. While process models can be leveraged in any scenario that requires analyzing business processes, these are some of the most common use cases:

Gaining 360-degree insight into processes

A single process model can contain a wealth of workflow data, allowing team members to analyze a workflow from multiple perspectives. Business analysts often use business process modeling to zero in on the following workflow components in particular:

• Control flow: “Control flow” refers to the order in which steps and commands are executed within a process. A process model depicts a flowchart of a given process so that a team can clearly see what steps are taken and when. This perspective also helps the team identify any dependencies between steps.
• Organization: A process model can capture who is involved in a process — including people, teams, systems and devices — and how they interact with each other. This perspective illuminates the connections between people and systems that form the organizational social network. In this way, a process model offers insight into how various components of a business function together.
• Time: A process model can record how long a process takes, overall, and how long each step takes, allowing the team to identify delays, slowdowns and bottlenecks within the workflow.
• Case: A process model can offer a general view of how a given workflow typically plays out, or it can reflect a particular case – or instance – of a workflow. Teams often use this case perspective to analyze anomalous process outcomes. For example, if a specific instance of a workflow results in lower-than-average outcome quality, teams can isolate exactly what went wrong.

Optimizing and standardizing processes

Process models accurately reflect existing workflow inefficiencies, making it easier to identify opportunities for process optimization. Once workflows have been optimized, businesses can use process modeling to standardize workflows across the entire enterprise. The model acts as a template for how processes should play out, ensuring that every team and employee approaches the same process in the same way. This leads to more predictable workflows and outcomes overall.

Assessing new processes

Process models can take the guesswork out of implementing and evaluating new business processes. By creating a model of a new process, business users can get a real-time look at how that workflow is performing, allowing them to make adjustments as necessary to achieve process optimization.

Analyzing resource usage

Process models can help companies track whether money and resource investments produce suitable returns. For example, by creating a model of the standard sales process, an organization can see how sales representatives are utilizing the tools and systems at their disposal. It may turn out that a certain tool is used much less frequently than anticipated, in which case, the organization can choose to disinvest from the tool and spend that money on a solution the sales team actually uses.

Communicating processes

Process models transform complex processes into concrete images, making it easier to disseminate and discuss processes throughout the organization. For example, if one department has a particularly efficient process for troubleshooting technical problems, the business can create a model of this process to guide implementation on an organization-wide scale. 

The benefits of business process modeling

Business process modeling arms an enterprise with objective business intelligence that supports more informed decisions for resource allocation, process improvement and overall business strategy. With a clear view of processes, enterprise teams can ensure that workflows always drive the desired results. As a result, operating costs are lower, revenue is higher and business outcomes are stronger.

Specifically, business process modeling allows companies to do the following:

• Access and utilize quantitative process data: Without a process model, teams are limited to discussing and analyzing workflows in qualitative and subjective terms. As a result, teams may not accurately understand their workflows; they may make business decisions based on misunderstandings, assumptions and/or incomplete knowledge. With process modeling, teams have access to quantitative workflow data, including success rates and error rates, allowing for a more rigorous analysis of business processes.
• Streamline and accelerate process automation: Before a process can be automated, an organization needs a clear understanding of how that process plays out in reality, including the business logic underpinning each decision point. A process model illuminates both the way a workflow unfolds and the relationships between events, actors, tools and systems within and between processes. This viewpoint helps a team document the process itself and the business rules that guide its execution. This information makes it easier to effectively automate workflows the first time.
• Keep operation costs down: Process models provide organizations with an easy way to identify opportunities to optimize existing processes. This makes it easier for the company to ensure that processes consistently produce the desired outcomes. As a result, business processes require less investment to maintain and generate positive outcomes at a lower cost.

Business process modeling and IBM

Process modeling forms a cornerstone of any automation effort or business process management initiative. Without comprehensive views of existing processes and their undergirding business logic, enterprises cannot effectively optimize and automate workflows at scale.

Take the next step:

IBM Blueworks Live is a cloud-based business process modeling software designed to help organizations discover business processes and document them in a collaborative fashion across multiple stakeholder groups. Teams can work together through an intuitive and accessible web interface to document and analyze processes. No download required.

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Business process modeling notation (BPMN): Everything you need to know

Businesses are complicated. Even entrepreneurs and micro-business owners have to wear several hats to stay on top of everything they need to get done in a day.

Without an effective way to organize business processes, things can get forgotten or duplicated, or become overly complicated.

For entrepreneurs, staying organized may involve a simple to-do list or task management system. But, as businesses grow, processes become more complex as they cross departmental boundaries and authority owners.

Business process modeling allows companies to visualize these processes so that they can take steps to streamline them.

Let’s look at exactly what business process modeling is, what benefits it creates, and how using business process modeling notation (BPMN) diagrams can help you get clear on your business processes.

Try Miro’s BPMN Template

What is business process modeling.

Business process modeling is a method of identifying, modeling, designing, and implementing business processes. Its scope is broader than task management and focuses on a complete end-to-end process.

You might be wondering what the purpose of business process modeling is compared to other forms of process management. Let’s look at the distinction.

Business process modeling focuses on the design of new processes. It differs from business process mapping, which is focused on optimizing current business processes.

Both business process modeling and business process mapping fall under the umbrella of business process management .

Business Process Modeling Notation (BPMN) has become the go-to way of visualizing business process workflows. It’s an intuitive tool, and stakeholders across the business should be able to understand it easily.

What is a BPMN diagram?

A BPMN diagram is a business process diagram that specifically uses the BPMN modeling language. Other modeling languages — such as the Unified Modeling Language (UML) — also use business process diagrams to depict processes visually.

Why use business process modeling?

There are several benefits to using business process modeling when creating new organizational workflows.

Business process modeling:

• Offers businesses a method to define and understand their organizational processes visually using business process diagrams. This can make it easier to identify functional boundaries and see how new processes connect with existing processes.
• Provides an industry-standard notation that should feel familiar to both internal and external stakeholders. It’s simple to learn yet powerful enough to capture complex processes fully. This means getting everyone on the same page should be quicker, as a lengthy onboarding process isn’t required.
• Bridges the communication gap that frequently occurs between business process design and implementation. It can be challenging to describe a business process in words effectively, and business process diagrams prevent things from getting lost in translation.
• Allows businesses to maintain a record of how a process is mapped out. This means, should the business environment change in the future, it’s easy to identify any potential impact on the process and make changes quickly to optimize it.

Pros and cons of using BPMN diagrams

Like most tools, using BPMN diagrams has both advantages and disadvantages. We’ve highlighted the key benefits of business process modeling above, and these feed into the two main advantages of using the diagrams. There are also a few disadvantages to walk through.

Pros of using BPMN diagrams:

• BPMN diagrams are a simple concept, but the BPMN modeling language allows for over 100 different graphical elements. The comprehensive amount of notations make the diagrams flexible, with the ability to map even the most complex business process.
• BPMN is standardized by the ISO (International Standards Organization), which means it’s transferable between businesses and industries. This makes it easy for BPMN diagrams to be well-understood by most stakeholders.

And, through having a common language, collaboration between teams becomes more straightforward and effective.

Cons of using BPMN diagrams:

• The comprehensive nature can initially make it difficult to grasp the BPMN modeling language fully. This means if you have team members new to BPMN diagrams, there can be quite a steep learning curve, which can cost you time.
• Despite the modeling language standards clearly defining how people should use the BPMN diagram elements, different BPMN vendors may implement the execution of these diagrams differently.

This can lead to poor interoperability between BPMN tools, and modelers may be restricted to certain vendors or products depending on how they interpret the execution of BPMN diagrams.

Core features of BPMN diagrams

Now you’re clear on the benefits that BPMN diagrams can bring to your business, it’s worth taking a look at the key features of BPMN diagrams and how to go about building one.

There are four main elements that make up a BPMN diagram:

1. Pools and swim lanes

Pools are the largest component of a BPMN diagram. They represent the entirety of a business process from the perspective of one group of participants (e.g., a department or a single role, like an assistant manager).

Like an actual swimming pool, pools can be broken down into swimlanes, which can run vertically or horizontally across the diagram. These swimlanes represent specific groups or individuals that are completing tasks within the larger pool.

Every BPMN diagram must contain at least one pool and one swimlane.

Let’s use a business process mapping example to bring this to life. Consider you’re a store signing a customer up for a store credit card. Your pool contains the actions you take to complete that process, which might include:

• Recording the loan application information
• Checking the application information (via credit assessment)
• Completing a loan assessment
• Informing the customer of the outcome
• Making the loan available to the customer’s account

The store assistant has only two actions in their swimlane, which is to take loan application information from the customer, and to send that information off to be processed.

As there’s just one participant in this process, it’s a simple BPMN diagram example. However, the actions taken by the store assistant trigger other processes, which would be shown in subsequent swimlanes.

Indicated by the outgoing and incoming arrows, there are other departments that have a significant impact on the successful completion of this process.

Here’s a more complete BPMN diagram that shows how the store assistant swimlane interacts with two other swimlanes — the credit department and finance.

The touchpoints between the processes are shown by incoming and outgoing arrows, representing the flow of information or activity.

Before you get started building BPMN diagrams, you may want to gather key stakeholders and complete a simple mind mapping exercise to pool the information you have about a particular process.

Mind mapping is a way to organize information that helps you visualize connections between ideas. This may help you identify the different participants in a process and where there are touchpoints with other processes that you need to consider.

2. Flow elements

Flow elements are the geometric shapes you can see in the above business process model example. They include rectangles, circles, and diamonds. These flow elements represent specific events and activities that occur within the process.

Rectangular shapes are usually used to indicate activities within the process. Activities can be two main types — sub-processes and tasks.

As people use BPMN diagrams to describe a process in simple terms that a range of stakeholders can easily understand, it’s important they aren’t too complex. Using sub-processes helps to retain simplicity.

Sub-processes are a collection of tasks that need to be completed for the process to be successful but that you don’t want to focus on while mapping this particular process.

For example, a simple sub-process in our above example could be how the store assistant collects the customer’s loan application information.

Perhaps there are several options, including filling out a form on the website, completing a hard-copy application in store, or entering information electronically onto a tablet at Customer Services.

Those are all possible options but, to keep the process easy to visualize you don’t want to actually focus on that level of detail in this particular diagram.

A task is a basic building block of the process that cannot be broken down into a lower level of detail.

Circles usually represent events . Events are something that takes place that can impact the process, and they can be internal or external.

There are three types of events: Start Events, Intermediate Events, and End Events. Some diagrams specify the trigger that causes an event to happen.

Diamonds represent gateways . Gateways are responsible for controlling the outcome of the process by directing activity to either happen or not.

Let’s look at our example again to see how this works in practice. When the credit department completes the loan assessment, they have to decide how likely it is that the customer will be able to repay the loan.

If the risk is too high, the company rejects the application. This directs the store assistant to inform the customer that their application has been unsuccessful. This triggers a Stop Event.

3. Connecting objects

Connecting objects, unsurprisingly, connect different flow objects.

Sequence flows connect flow objects within the same pool, though they can be in different swimlanes. They are shown as a solid line with an arrowhead.

They show the order of the different activities, which should be completed in the direction the arrow is pointing.

If you want to connect flow objects between different pools, you’ll need to use a message flow . Message flows are shown as a dotted line with an arrowhead.

The final connecting object is associations . Associations show the relationships between flow objects and artifacts .

Artifacts allow business process modelers to augment the basic BPMN diagram with additional information. There are three types of artifacts.

• Annotations offer more detail about particular flow objects. For example, in our diagram above, the activity ‘Pay for Food’ could have a text annotation stating that this could be with cash or by debit or credit card.
• Groups allow modelers to organize activities, tasks, or sub-processes that are significant to the overall process into groups.
• Data objects represent data as an input or output of the process, or data that needs to be collected or stored.

Let’s look at that final one in a little more detail.

It’s important to identify the flow of data throughout the process.

As mentioned above, there are several ways that data can interact with the process, and the Business Process Modeling Notation has specific symbols to annotate these interactions.

In our example above, data might include the application information being received by the credit assessment system and the loan assessment result being received by the Finance department.

If you’re trying to get your head around your data flow and how it interacts with your business processes, why not give our Data Flow Diagram a go?

Like all our templates, it’s fully customizable, and it’s simple to add images and files to personalize your modeling and really get a sense of how data flows through your business.

Need help figuring it out? Simply give your team access and invite them to comment, ask questions, or make corrections.

How does BPMN compare to UML Activity Diagrams?

As mentioned above, there is a second common modeling notation language called UML.

It’s possible to use UML for modeling processes, but it’s much more widely used in modeling software systems. UML is described as object-focused compared to the more process-focused BPMN.

Typical users of UML would be people looking to model and build software systems like web applications. They can use the standardized notation to describe a design that can then be implemented in one of several programming languages.

BPMN is used in both business process modeling and business process mapping to design ‘As-is’ and ‘To-be’ systems. Typical users are business analysts, but it’s accessible to a range of businesspeople.

If you realize you’re more in Team UML than Team BPMN, don’t worry. We’ve got a template for UML diagrams too.

Whichever team you side with, we have you covered. Our interactive online whiteboard makes it simple to visualize your business processes.

With our Smart Diagramming feature, it’s quick and easy to create business process diagrams using advanced shape packs that align perfectly with the BPMN methodology.

Once your process is mapped out, it’s easy to get feedback from your team and other stakeholders. Simply give them direct access to your whiteboard so that they can go in and make changes, add files or images, or jot down annotations.

And, our all-in-one diagram maker means you don’t waste time switching between your diagramming and other collaboration tools. So your focus can stay where it needs to be — on creating the most efficient processes for your business.

After you finalize your diagram, it’s time to start making changes. Our project management tools can help you organize the work you need to complete, plus we have integrations with leading task management solutions like Jira and Asana.

BPMN drives efficiency in your business

As we said, businesses can be complicated. Designing and implementing new processes can be challenging, especially if they require collaboration between departments or functions.

Business process modeling and BPMN diagrams allow teams to visualize new processes before implementation to make sure they maximize efficiency.

Our online collaborative whiteboard helps stakeholders come together to design, discuss, and iterate complex processes.

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9 Best Business Process Modeling Techniques (With Examples)

While you could probably sum up what your business does in just a few sentences, you know that it’s much more complicated than that. To achieve your business’ outputs, your staff completes a series of tasks that get passed from one person or department to the next until voila! You have tangible results. When you dig down, it’s amazing just how many little things need to be done. Business process modeling techniques allow you to capture all these steps in a format that allows you to visualize just how workflows function.

You may be asking yourself why it’s necessary to do this if you aren’t trying something new. After all, your team knows what to do. But there are several very strong arguments in favor of using business process modeling techniques:

• You can spot tasks that are redundant and eliminate them.
• You can improve process efficiency by looking for areas where work gets held up because of bottlenecks in the process.
• You can ensure that efficient processes are repeated in the same way every time, even when a new staffer must perform part of the process.

Over the years, a variety of business process modeling techniques have been developed. Let’s examine your options.

1. Business Process Modeling Notation (BPMN)

BPMN consists of a series of symbols or “standard objects” to represent tasks and workflows. Of course, there’s nothing to stop you from developing your own set of symbols. However, using standardized ones makes collaboration with outside analysts easier and saves you from having to dream up a visual language of your own.

What is Tallyfy?

Tallyfy helps you document and automate tasks between co-workers and clients

Many consultants see BPMN as the “Rolls Royce” of business process modeling techniques because most other forms of business process modeling were developed for other purposes and then adapted. In fact, BPMN is the culmination of a process in which businesses sought a best practice method for business process modeling. Nevertheless, there are analysts and consultants who prefer other methods.

BPMN symbols fall into the following categories:

• Flow objects : Events are represented by circles, activities fit into rectangular boxes with rounded corners, and gateways or control points are represented with diamond shapes.
• Connecting objects : Since tasks are interconnected, we join them up to show their sequence. Solid lines indicate task transfers, and dashed ones indicate messages.

• Swim lanes : A single sub-process in your workflow could require the sharing of responsibility. Swim lanes detail how these shared responsibilities are distributed and how they interact. The sub-task is the “pool” and the “lanes” represent people or departments.

• Artifacts : If you need to add extra information that isn’t a sequence flow or message flow but that helps to explain a process, you can use artifacts. Dotted lines point to the flow object the extra information expands on. Squares outlined with dots and dashes group elements in the diagram, and text annotations are added with a square bracket.

2. UML Diagrams

UML (Unified Modeling Language) diagrams offer an alternative business process modeling technique. The modeling language was developed by software developers, but it can be adapted to business process modeling. There’s just one problem with UML Diagrams, or rather, we should say that there are no fewer than fourteen problems! There are no less than 14 UML diagram types. As you can imagine, this limits UML Diagrams’ usefulness because understanding this type of diagram is a whole lot more difficult than interpreting BPMN-based representations.

Although there’s some debate about which approach is best for business process modeling, most experts agree that BPMN is process oriented while UML is object-oriented and that this makes BPMN better for business process representation.

BPMN is really an evolution of UML, but while UML was initially intended for software developers, BPMN was specifically developed for capturing business processes. Nevertheless, it there are those who prefer it as a means of capturing business processes.

3. Flowcharts

Even if BPMN and UML are new to you, you probably know what a flowchart looks like. In fact, you may be wondering how BPMN differs from a regular flowchart . BPMN is really an evolution of the flowchart. So why not just use regular flowcharts?

The drawback of old-fashioned flowcharts is that they rely on sequential flows and don’t support parallel activities that form part of a process. Because you can’t capture as much information with this type of representation, it is best used for very simple and predictable processes that don’t require much elaboration.

Basic flowcharts were used to capture processes long before BPMN was conceived, and we can see BPMN as being an innovation that makes flowcharts much more informative and useful. This having been said, some consultants find that understanding BPMN isn’t easy for beginners and prefer to use a series of interrelated flowcharts since they don’t require as much of a learning curve.

If you’re mapping relatively straightforward business processes, the flow chart might be just the tool you need to capture your business processes quickly, simply and effectively.

4. Yourdon’s Data Flow Diagrams (DFDs)

Data flow diagrams were developed back in the seventies and their purpose is to represent data flows rather than activities.

While business process analysts give the nod to data flow diagrams, they generally agree that Yourdon’s technique is dated and has one big limitation: it focuses on information rather than action. Data flow diagrams are, by definition, data-focused and don’t provide a clear way to include all stakeholders in the process whereas BPMN can.

Nevertheless, if your workflows are largely data-driven or based on information flows, this form of business process notation could suit your needs.

5. Gantt Charts

In the late nineteenth century, Gantt charts were the gold standard, and they’re sometimes still used. For example, a student preparing a dissertation will often be called on to provide a Gantt chart that breaks the task down into sub-tasks, each of which has a specific time-frame.

It’s still a useful tool, but in the BPM context, it is a little too simplistic to accommodate the many subtasks involved in completing some business processes. However, when preparing for projects with distinct timelines, businesses still find Gantt charts helpful.

Whereas Yourdon’s notation focuses on data, Gantt charts are time-focused, so time-sensitive processes can easily be captured and tracked. It’s easy for the people in charge of different parts of the process to see when they are meant to begin work and by when each task should be complete. Managers can use their Gantt charts to check whether all the subprocesses are running according to schedule.

6. PERT Diagrams

The early twentieth century saw the introduction of Program Evaluation and Review Technique (PERT) diagrams, which seek to break business process flows into timelines by estimating the shortest, longest, and likeliest times for the completion of each step in a business process.

The value of the PERT diagram is that it not only shows the critical path that must be followed towards outcomes but also helps to determine realistic time-frames for the process. That makes it particularly helpful in setting goals and targets and in comparing different process approaches to determine which will be more efficient.

7. Functional Flow Block Diagrams

Functional Flow Block Diagrams may have been around for a few decades, but they still have their uses in business process mapping. Their focus is the order of execution of tasks or functions in a sequence of ordered blocks.

Each functional block can be further broken down in a separate diagram showing the sub-tasks within each functional block. Of course, this results in a whole lot of diagrams representing a single process, but it’s easy to cross-reference them in relation to the first-level diagram.

Some businesses prefer FFDs because, despite the need for several diagrams, they’re relatively easy to follow – even when the process is rather complex.

8. Integrated Definition for Function Modeling (IDEF)

Like functional Flow Block Diagrams. Parent activities give rise to child diagrams. There are various forms of IDEF, but for enterprise modeling, IDEF0 is the permutation to use. It’s certainly a sophisticated system, but its limitation lies in in its complexity.

There are 15 forms of IDEF and each addresses a different type of flow. Thus, there are different forms of IDEF for functions, information, data, simulation model design, process description capture, and so on.

9. Petri Nets and Colored Petri Nets (CPNs)

You may need a course of study before you can effectively use them, but Petri Nets, and their Colored Petri net cousins are worth noting as one of the possible ways in which business processes can be mapped. Unlike flow charts, which struggle with parallel processes, Petri Nets are helpful in mapping processes in which several sub-processes must happen simultaneously or must be synchronized.

The CPN consists of places, transitions, and arcs, and although the mathematical language used to express them is complex, a person who is well-versed in their use can deploy them, and the related math, to test processes out.

BPM Software: Best Use of Business Process Modeling Techniques

While BPM modeling techniques are useful on their own, they’re best used through BPM software.

The software allows you to create process models online, as well as letting you digitize your processes. Meaning, the processes are enforced by the software, making sure that your employees follow the best practices.

To get the most out of your processes, give our BPM software a try.

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Beginners Guide to Business Process Modeling and Notation (BPMN)

By Kate Eby | November 28, 2016

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Although many big organizations still use the written word to describe their processes and requirements, a significant amount of evidence suggests that pictures are a better way to communicate. This is where modeling languages come in. Modeling languages allow companies to show their processes pictorially to minimize error and miscommunication. They can also be used to delineate responsibilities, find areas for improvement, and plan for future changes.

In this article, we look at business process modeling and notation (BPMN) as a standard of modeling languages for enterprises. We’ll discuss what it is, what it was, and how it should be used. We’ll review BPMN elements and extended elements in detail, as well as provide guidelines for modeling and tips for using the notation. We present examples of BPMN models, and finally, we’ll offer a method for choosing a BPMN tool.

What Is Modeling Notation and BPMN? An Overview

Process modeling notation is a language that’s readable to humans and that describes the structure and elements of a business sequence. The vocabulary is defined, and the language is organized such that we understand how it should flow and how the information is presented. As a data science, process modeling notation includes about 40 different elements, delineated with rules about their use.

This language tells stories about our work. By creating a model similar to a flowchart with this language, a business can capture, analyze, understand, automate, and even optimize their processes. As with any language, it’s important to learn the terms and rules of grammar. Since the 1960s, countless notations and their varying structures have come and gone. When it comes to a modeling notation, experts recommend that you choose a standard that is based upon your purpose, that it is supported by a wide number of tools, and that comes with training and references.

Business Process Model and Notation (BPMN) is a standardized graphical notation that is used globally for business process modeling . It is open source, which means that the original code is available for anyone to change and use. The specification defines its symbols and shapes precisely.

BPMN starts and ends with the business process flow diagram. This is a technical map of an organization’s flow and practices, presented in a standardized language, and available for users to improve, share, and follow.

The Object Management Group (OMG) , a nonprofit technology standards consortium, governs and maintains BPMN. OMG offers several certification programs, including the OCEB Certification (OMG Certified Expert in BPMTM) for BPMN. The field of business process management (BPM) approves of standardization and often uses software (BPMS) that includes the BPMN language. Some are low-code platforms, meaning that the business can configure its BPMS to work with its incumbent software and needs.

The BPMN language is not owned by a commercial enterprise, though Trisotech is a commercial software and consulting company that helped develop BPMN by building on its standards internationally. It has also been involved in developing and setting BPM standards, XPDL, BPSim, and CMMN, and is considered a leader in BPMN consultation.

At its core, BPMN is intuitive. Even when staff members do not understand the exact symbols, they can figure out the meaning of the workflow. However, for more advanced users, the nuances are apparent. For example, in the simple process below, Lane 1 starts a task. This could be your company, which is the pool. Your department is Lane 1, which starts the process and completes the first task. The work is then sent to another department (in Lane 2), which sends it back for Task 3 and completion. This seems more complex with the standardized language, but if you add names, it is very clear. You can model this simplicity throughout your processes, even those that appear very complex.

A simple BPMN process map

OCEB 2 Program

The OCEB 2 Program has five examinations, each offering a certification. After the Fundamental level, there is a track for business and another for technical. In the BPM world, these certifications assure employers that you understand not just the principles, but also the practice of BPM. The OCEB 2 Certification was designed by 25 BPM professionals from the commercial industry, with the intent of providing this assurance to their peers and prospective BPM employers. The certification gives BPM practitioners an edge over their uncertified competitors.

When to Use BPMN

Different users of BPMN describe it as simultaneously complex, simple, prohibitive, and helpful. There are certainly times when you will prefer to use this standardized language. Three reasons you would want to use BPMN versus another notation include:

Its use is tied to organizational objectives . In this scenario, your business would require a specific modeling notation language in order to stay consistent, especially if they have international business interests. Out of necessity, this modeling is generally more formal than most.

You commonly use the same handful of elements in a specific concept . In this scenario, you are able to draw selectively from BPMN as needed, and there is less concern about other users misunderstanding.

You want to show your breadth of BPM knowledge . Nothing says you are a BPM expert like understanding the modeling language designed specifically for it. When you apply for positions that require BPM expertise, this knowledge and experience could set you apart.

OMG merged with the Business Process Management Initiative (BPMI), the inventors of BPMN, in 2005. Since its inception, five releases of BPMN have followed. BPMN 2.0 arrived in early 2011. The five versions and their dates of release are below. Each version is linked to its official specifications.

BPMN 1.0, released May 3, 2004

BPMN 1.1 , released January 17, 2008

BPMN 1.2 , released January 3, 2009

BPMN 2.0 , released January 3, 2011

BPMN 2.0.2 , released January 3, 2014

BPMN was originally a modeling notation that was meant to give all stakeholders, from high-level decision makers to technical staff, a standardized language for diagrams. But with the release of version 2.0, BPMN became about models and notation. The difference is that instead of standardized models alone, BPMN offers a standardized XML (Extensible Markup Language) schema that can map between software tools. At this time, more than 80 tools support BPMN.

OMG originally developed the Business Process Definition Metamodel (BPDM) as a bridge between BPMN and software. BPDM describes the rules, constraints, and theories of BPMN so that software programs can map and use it with an XML syntax (such as the Business Process Execution Language, or BPEL). The originators thought users should be able to move process models from one modeling tool to another without losing information. According to OMG , “By providing a common, syntax-independent vocabulary for business process concepts, BPDM standardizes the way BPMN diagrams are stored and exchanged.” However, according to experts, the advent of BPMN 2.0 negates the need for BPDM. Further, experts say that BPEL does not fully support BPMN.

BPMN 2.0 also improves the following:

Semantics : The execution semantics (meanings) for all BPMN elements were formalized.

Notation : New diagram types were added with new contexts for use. These include choreography and conversation diagrams. Choreography diagrams center on the flow of messages and between-process interactions. These diagrams chiefly focus on the interaction between the pools. There is no central control, responsible entity, or observer. Conversation diagrams focus on conversations between the participants, showing a bird’s-eye view of the information exchange between participants. BPMN 2.0 also made improvements to events, adding non-interrupting events and event subprocesses. We discuss the event improvements in the “Extended BPMN Modeling Elements” section of this guide. With sub-processes, BPMN 2.0 added more than 50 new elements. Elements are the symbols that represent different parts of the process.

Technical : The formal meta-model was defined.

Example of choreography diagram. The choreography diagram in the center represents the communication between the pools.

Example of conversation diagram. Conversations diagrams show a different view and incorporate two new elements: the hexagon and the double line.  

According to some experts, not everything in BPMN 1.0 has a partner in BPMN 2.0. However, software packages are available that provide migration pathways to update older models.

OMG states that there will not be another version of BPMN for at least two to three more years. Since many users want a stable long-term platform, OMG is not in a hurry to get to BPMN 3.0. In 2014, OMG did release a complement to BPMN called the Decision Model and Notation (DMN), which provides a separation in the decision and the process. DMN was designed to work to connect with BPMN as a schema model in XML format via the identified processes and tasks, as well as through the decision knowledge base data type. In other words, BPMN shows the processes, while DMN models show how decisions are made in the processes.

BPMN’s main goal is to be a notation that all users can understand. This includes not only the businesspeople who manage all of the processes, but the business analysts and the technical developers. Other goals of BPMN include:

Provide a consistent structure.

Be highly readable throughout all levels of the process.

Ensure that the model is complete without any additional documentation required.

Be able to be shared with IT as an executable process.

Your BPMN diagram should represent not only business process activities, but can and should show the following:

Any information that is exchanged during process implementation.

Control checkpoints that show the sequence of data exchange and activity implementation.

Personnel roles and any needed additional personnel.

What information systems support the process.

How the process in regulated in the business rules and legal framework.

The implementation.

BPMN Diagram Perspectives

Many organizations strive for interoperability, where different software applications and IT systems are able to communicate, exchange data, and use the information and knowledge from the exchanged data. You can consider interoperability from three perspectives: private business processes, public business processes, and collaboration business processes. For IT, these perspectives are important for the ability to exchange data.

Private business processes detail:

Internal activities

Departments responsible for each task

Documentation

Rules that regulate the processes

Information systems

Public business processes:

Concentrate on the interaction between internal processes and those of other organizations

Do not review organizational structure, information systems, or rules

Collaboration business processes:

Show all interactions for every organization in the process (two or more businesses)

Do not provide internal processes for any organization

Help identify the software that supports the processes

Contain two or more pools

This makes sense in BPMN, because part of the purpose of BPMN 2.0 is to exchange BPMN models between different software systems. There are noted limitations on this interchange; these are intentional on the part of the designers of BPMN 2.0 because they wanted to ensure maximum flexibility. Visually, these include colors of shapes and text, shape decorations such as shadows, gradients, backgrounds, text wrapping, and thickness and style of lines. Semantically, these include proprietary extensions such as the script of a script task, user task implementation, and global user task implementation.

BPMN Constraints

For all of BPMN’s capabilities, it is specifically constrained to business processes. Some organizations and analysts assume that BPMN is a magic bullet for all of their process modeling needs. However, the following processes are not meant to be supported by BPMN:

Organizational structures and resources

Functional breakdowns

Data and information models

Business rules

These types of processes can be addressed in other UML models or additional documentation. It must be noted that BPMN models are not data flow diagrams (DFDs), which show the flow specifically of data information from one place to another. These diagrams provide only one view of a process through the data.

Target Audience for Business Process Modeling Notation

BPMN was designed so that all users can understand it: businesspeople, business analysts, and IT staff. Although the BPMN originators had these groups in mind during development, they were also concerned with how they could link BPMN to other OMG standards. Further, although the standard supports all of these professionals, not all professionals design to the same level.

Bruce Silver discusses three levels of BPMN users in the trainings that he conducts. Level 1 is your typical user who employs only a handful of symbols. Their diagrams are simple and conform to a very traditional standard. Some journals estimate that almost 90 percent of users are at this level of design. (This figure is referenced by many blogs and periodicals, but there is no specific study that supports it.) Level 2 users provide the layer that IT professionals can then add to. It is essentially a more advanced business process layout using less common

BPMN Elements

BPMN keeps elements of a business process model to a minimum so that the look and feel of the diagram stays as consistent as possible. You can always add more detail after the basic categories are complete.

There are two types of elements: descriptive and analytic. Within this framework, you’ll find over 40 different elements, each with rules about when they can and cannot be used. Business analysts developed descriptive elements to model processes as documentation, and technical staff developed analytic elements to model executable processes within the software.

The five basic categories of elements are:

1. Flow Objects . These define the behavior of business processes.

Events: What happens during a process. There are three main types: Start, Intermediate, and End. An event is also what happens during a process. For example, an event could be that “a message is sent,” “an error occurred,” or “cycle is completed.”

Activities: Work performed in a process; also known as tasks .

Gateways: These determine the sequence flow path in a process. Gateways have internal markers that give additional detail to show how the flow is controlled. These are decision points in a process. For example, if a condition is true, then processing continues one way; if false, then another.

2. Data : These elements call out information about the activities. Data is either provided or stored for the activity.

Data objects

Data inputs

Data outputs

Data stores, where processes can either read or write information. A data store continues beyond the life of the process.

3. Connecting Objects : These connect the flow objects to each other or to other information.

Sequence flows: This element shows the order in which activities are performed.

Message flows: This displays the messages and the order of flow between participants.

Associations: This element is used to link information and artifacts (see below).

Data associations: These have an arrowhead to indicate direction of flow in an association.

4. Swimlanes : In BPMN, a swimlane is an element that shows where the responsibility for the process resides, and a pool represents the participant. Lanes break apart the pool as a partition of responsibility, showing the location of activities. Lanes can also delineate phases (first phase, second phase, etc.). In other words, a pool is a container for a single process, and a lane classifies the activity within it.

Lanes do not have semantics in BPMN; they are merely a partitioning concept. You can arrange swimlanes either vertically or horizontally. Lanes are optional and may be nested. Some issues with swimlanes:

Flow elements are connected differently depending on whether they are in a pool or between pools.

Only message flows can be used when communicating between pools. Message flows designate the exchange of messages.

A pool cannot contain more than one process.

Sequence flows should not be used between pools. Lanes are more appropriate where sequence flows are necessary, not pools.

5. Artifacts : These are used to give extra detail about the process. The two standardized artifacts are:

Groups: This is a hatched box around a group of elements to designate visually that they are related. This does not affect sequence flows.

Text Annotations: Extra text, attached with an association, that gives additional information. Also known as a comment.

6. Message : This element is shown in the tables in the specification guide for BPMN, but not put into a specific category. It is used in extended notation as well. A message represents communication between participants.

The five basic categories of BPMN elements.  

Extended BPMN Modeling Elements

Extended modeling elements take the basic elements, add notation, and change their meaning while still showing consistency. The following sections are a foray into extended elements. The elements shown are not meant to be exhaustive, but provide the most commonly used elements in BPMN.

An example of an extended element is the use of a Start Event. A message element is then added, and the meaning changes from plain “Start” to a “Start triggered by a message.” The extended modeling element in this scenario allows users to specify how the event begins, not simply that it has begun, adding to the detail in a process.

Events Extended

We know there are three type of events: start, intermediate, and end. These events can also be broken down into catching events, throwing events, and interrupting or non-interrupting events. A trigger defines catching events. Once the trigger is activated, the event starts. Throwing events are assumed by BPMN to trigger themselves. They do not react to triggers; instead, the process triggers them. Whether an event is interrupting or non-interrupting is related to the action. When an interrupting event is fired, the action is blocked. When a non-interrupting event is fired, the action continues.

Extended Event Sub-Processes

Activity Tasks, Sub-Processes, Transactions, and Call Activities Extended

You can add to tasks as well, with extra notation to show more specificity. The following image shows the notation and the meaning of each.

Receive waits for a message from an external participant.

Script is a task executed by the engine.

Manual is a task the operates without the aid of engines or applications.

Receive (Instantiated) is a task that is designed to wait for a message to arrive from an external participant. It then instantiates a process.

Service is a task that uses a web service or automated application.

User is a human task scheduled through a manager.

Send is a task that is designed to send a message to an external participant.

Business Rule is a task that confirms with the business rules engine the input prior to executing.

Three types of markers are specified for a task as well. These include loop, multiple instance, and compensation.

Loop will continue as long as the condition is true; a numeric cap may be specified.

Multiple instance may execute in parallel or sequentially. An expression or a data-driven setup can be used to determine the number of instances.

Compensation tasks specify some type of recompense or payment, either into or out of the process.

Loop tasks, sequential multiple instances tasks, and compensation tasks, respectively.

Sub-processes show lower levels or more detailed levels in a process event task. A collapsed sub-process is shown below:

Additionally, you can combine four types of markers with the sub-process marker. These include loop, multi-instance, ad-hoc, and compensation.

Source: OMG

Transaction Sub-Process

A transaction sub-process is embedded. You can use it to group multiple activities and show that they either fail or succeed collectively. These groupings of processes are surrounded by a double border to show they are a transaction.

In the above example, the flow moves to a Cancel End Event in the case of an error due to unavailable bookings. This activates the process rollback, and any completed reservation activity will be undone. The tasks in this example are undone in the reverse order that they were completed.

Gateways Extended

Notation may be added to gateways to represent different kind of control behavior, such as making decisions, branching, merging, forking, and joining. The types of possible gateways are exclusive, event-based, inclusive, complex, and parallel.

Exclusive gateways are the main type. They may have the X in the middle, or they may be empty. They model alternative paths and are where the diversion takes place.

Event-based gateways are used to model the alternative paths, but are based on events that occur, not the expression of flow.

Inclusive gateways can be used to model alternative and parallel paths. They evaluate all condition expressions and take paths with a positive result.

Complex gateways model complex synchronization behavior.

Parallel gateways create and join parallel flows. They check no conditions.

Data Objects Extended

Data objects are available in processes and sub-processes. Aside from the main type of data object, you can add notation to indicate data input, data output, collection data item, collection data input, and collection data output. Data inputs and outputs relate to the entire process. Collection data relate to the actual collection of some type of information during the process.

From left to right: Data input, data output, data object collection, data input collection, and data output collection.

Connecting Objects Extended

The addition of extra notation to connecting objects can extend their usage in BPMN. These include conditional flows, default flows, exception flows, and compensation associations.

Conditional flows are used in merging and branching in place of a gateway. A conditional expression is defined at its origin.

Default flows are only selected if no other sequence flows available. Conditions on a default sequence flow are always ignored. There may be only one default flow per object.

Exception flows occur outside of the normal flow of the process and are based on an intermediate event on the boundary.

Compensation associations are used when an activity is canceled, and the process must be set to its original state.

Conditional flows and default flows.

Exception flows and compensation flows.

BPMN Critique

Critics have written widely about BPMN and why it is not appropriate for widespread use. The majority of the criticism centers on BPMN’s complexity. With more than 100 unique elements (resulting from the five main elements and their additional notation), it is too much to learn, too easy to make errors, and too granular for business processes alone, according to critics. Further, doing BPMN for the sake of doing BPMN causes more harm than good.

Other risks of BPMN include:

Mistakes in the Modeling Elements : This would decrease the clarity of process flows, rather than increase the communication.

Increased Complexity in Modeling : With more time required for analysis, the value of the product decreases.

Lack of Stakeholder Understanding : If stakeholders need everything explained, it could introduce errors and incorrect information.

Bruce Silver , who helped draft BPMN 2.0, says, “Business analysts should learn the semantics and rules, and that for most effective use the method and style of BPMN should also be learned.” Most professionals and organizations stick to a handful of symbols, so there is not much to learn. This in fact makes the notation simple. Diagrams can be extended for more granularities as needed, such as with an IT implementation. Further, BPMN is designed to model both human-centric and IT processes with equal accuracy. It also has the power and precision to display a clear vision of how your business works, saves time by showing unnecessary tasks, and reduces your employees’ rates of overlooked, forgotten, or poorly executed work.

BPMN diagrams have certain capabilities that other modeling languages do not. According to Silver, “Restricting BPMN to the part that is familiar from traditional process mapping is to miss its essence, which is the expressiveness required to describe not only the process’s normal or ‘happy path,’ but the various exception paths as well, and to do so with the semantic precision needed by IT to translate any proposed improvement into a working implementation.”

Essentially, Silver is saying that while it is well and good to model the few simple elements, the real value of BPMN lies in its capacity for the unusual circumstances (the exception paths) and to have those translated for automation. (Note: A happy path is the default scenario that features no exceptions or error conditions — the sequence of events where everything goes as expected.)

Even with the criticisms leveled at BPMN, it is still one of the most widespread and desired standards for process modeling available today. According to “ The State of Business Process Management 2016 Report” from BPTrends, 64 percent of businesses surveyed are interested in adopting BPMN.

Guidelines of Process Modeling

Process modeling guidelines are the same for any language or notation. In a 2009 paper on process modeling, authors Mendling, Reijers, and van der Aalst explain the main guidelines of modeling, regardless of the language used. They outline guidelines that may be considered best practices:

Use as few elements as possible in the model. This aids readability and decreases errors.

Minimize the routing paths per element. BPMN regulates routing paths via gateways.

Use one start event and one end event. BPMN requires this, and depending on the software it does not allow more than one. BPMN does give intermediate events where required.

Model as structured as possible. This means that the diagrams are balanced. In BPMN, gateways should not be used to join and split at the same time; they should be balanced and joined equivalently. Further, the same type of gateway should be used to split and join the flow.

Avoid or routing elements. This means that elements in models should not be an either/or question, but modeled such that the decision is an and or an xor . An xor gives mutually exclusive answers. In BPMN, gateways are not capable of being and .

Use verb-object activity labels in your naming convention. This decreases ambiguity.

Draw your models left to right (not top to bottom) unless the bulk of your stakeholders write ideographic languages (such as Japanese, Chinese, etc.) for easier understanding.

Decompose the model if it has more than 50 elements. That is, break a system into its component subsystems, processes, and subprocesses. This is related to guideline number one, in that having the least amount of elements keeps the errors low. BPMN has sub-processes that can decompose a model.

How to Select a BPMN Modeling Tool

To take full advantage of the BPMN modeling language, use a tool. Although you can draw BPMN with a pencil and paper, doing so does not take advantage of the majority of its benefits. Software programs that specialize in BPMN allow users to model faster and easier, and it enforces the majority of the BPMN rules automatically. Software tools also decrease errors in the diagram, allow for easier reading on the human eye, and give the all-important capacity to capture the associated XML.

What are the recommended criteria in choosing a BPMN tool? At last count by BPMtips.com , there were anywhere from 70-100 tools that could fully support BPMN modeling. These include free, open source, and proprietary tools, as well as tools whose sole function is not BPMN, but support it anyway. To further complicate the selection process, a number of plugins to existing programs support BPMN modeling. The choice you make is critical because much time and money will be invested in not only learning BPMN, but in the production of the models.

Experts agree that if your business needs the standardization of BPMN, then the tool should first be able to claim BPMN compliance. For BPMN 2.0, compliance is defined within the ISO/IEC 19510:2013 standard. This ISO standard represents the best practices in business modeling. If the language is meant to be consistent in its meaning, it must first be standardized. In this, the tool must have four types of conformance:

Process Modeling Conformance supports the elements and attributes of three subclasses: the descriptive, analytical, and common executable. The descriptive and analytical subclasses provide the information necessary to visually represent the diagrams. The common executable is the description of the data for the XML and meta-model.

Process Execution Conformance tools must fully support the import of process diagrams. This is the support and interpretation of the meta-model via the semantics and activity lifecycle.

BPEL Process Execution Conformance supports full mapping, from BPMN models to BPEL.

Choreography Modeling Conformance tools provide elements, appearance, semantics, and interchange, as well as BPMN choreography types.

Aside from actual BPMN conformance, one method to choosing a modeling tool is as follows:

Define your business objectives and requirements. Know ahead of time what functional and nonfunctional requirements your business will have for BPMN.

Define the selection criteria and the weight of each. Do your users need syntax checks? Do they need pop-up menus? Do they need help in documentation? Develop a chart that delineates your business’s required criteria, so you can pick a program that meets your needs.

Identify some candidate tools. With as many tools available to date, it is impossible to test-drive all of them. Once you delineate and weight your selection criteria, some of the potential tools will not be feasible. From there, if demos are available, order them. Evaluate how easy it is to install, identify any operability problems, and explore the support in the BPMN tool.

Test-drive one model. Once you discover the best candidates, use a consistent model that represents your company to test across the remaining applications.

Select your winner. Once you have multiple examples of the same model, you will have notes on each program, how easy the model was to develop, and the end look and feel. This should lead to your choice of BPMN tool.

How to Implement a BPMN Process Map

It is clear that BPMN is a relatively simple, straightforward language that professionals use to standardize their process maps. If you have existing process maps, you could start by standardizing them with BPMN symbology. If you haven’t mapped processes before, start by creating the maps:

Download Mapping Processes Checklist

Download Optimizing a Process  Checklist

Quintessential Tips for Working with Business Process Modeling Notification

There is little doubt that learning BPMN is complicated, but it appears to be a worthwhile venture. Some BPMN experts have formal education, and some do not. Reading the current specification manual from OMG is not considered the best way to learn to model BPMN. Most, if not all, experts agree that learning through doing is best, putting the elements into understandable context.

Model with a top-down approach. According to Stephen White in an interview on the Leonardo Blog , “The top-down approach will ensure that the depth of modeling is consistent throughout the effort of process modeling in your organization. I'm not saying that every single process model needs to be the same amount of granularity. It depends on the purpose.”

Every BPMN symbol should have a label.   

Events should be labeled object + past participle . For example, “Process started.”

• Start events should have how the process is activated.
• End events should have the process “end state.”

The pool should always be labeled with the process name and role (for lanes).

Tasks should be labeled as verb + object . For example, “Eat lunch.”

Gateways should be labeled with a question. For example, “Packaging complete?”

Outgoing sequence flows should be labeled with answers to the gateway questions. For example, “yes” or “no.”

Avoid crossing flows as much as possible. A good process layout with few crossing lines is easier to read.

Symmetric structures are easier for the human brain to understand.

Draw equal task sizes. However, the size of the task element does not indicate the size of the task in BPMN.

Show exception handling explicitly.

Use message flows consistently. Attach the message flows to the boundary of the process pool at all levels of the diagram to add to your business context.

Consider using sub-processes to define scope. Sub-processes can be wrapped around part of your sequence when exceptions occur without penalty.

Limit the number of concepts in the model. Since most BPMN users are describing business processes, users should keep it simple and only use the required elements for maximum readability.

Set standards for your organization. Clear, regularly used conventions, such as elements, naming, methodology, and layout should be developed per business so that there is additional consistency for stakeholders.

Consider using a legend that explains the symbols for stakeholders who are not often exposed to BPMN.

Try not to simply send diagrams out to stakeholders, but take the time to explain the processes to those not trained in BPMN.

Consider making two models of the same process if you have a large number of stakeholders without BPMN experience: one model for business users (with less elements), and one executable model.

BPMN Diagram Samples

The following models are from OMG, and they represent most of the elements described in this guide. This should give you an understanding of how a BPMN diagram looks.

The Pizza Collaboration

Shipment process of a hardware retailer

Other Business Process Modeling Languages

No discussion of BPMN would be complete without reviewing other modeling languages, such as BPEL, YAWL, and UML. These languages have been used in the evolution of BPMN, to make it more applicable and garner wider use in the industry.

Business Process Execution Language (BPEL) and BPMN

BPEL (officially known as web services - business process execution language, WS-BPEL) is an XML-based orchestration language that allows companies to seamlessly work together by using web services to share data. It was created to standardize how processes are executed. Generally, it is meant for completely automated processes, especially when companies want to turn processes into XML for automation, even robotic process automation (RPA).

BPEL is based on web services in that each of the business processes involved are considered to be a web service. BPEL specifies the order in which web services should be invoked. An orchestration language identifies the executable process of message exchanges with other systems. BPEL supports two types of business processes: executable and abstract processes. BPEL is mainly meant to be employed by IT users, primarily because there is no graphical notation associated with it. BPEL is not meant to be accessed by business analysts or end users.

BPEL was often used in conjunction with earlier versions of BPMN. Users wrote BPMN notation, and BPEL was the execution language. Although there was and currently is a very high degree of correlation between BPMN and BPEL, there is no perfect system for one-to-one mapping between them. Some business processes may map in a way that is not executable. With the release of BPMN 2.0, BPEL was no longer necessary as the core XML language. BPMN 2.0 came with its own XML specification language.

Current trends in the industry suggest that more businesses are leaning toward using BPMN 2.0, and BPEL adoption has decreased considerably since 2007. According to “ The State of Business Process Management 2016 Report ,” only 8 percent of businesses are interested in adopting BPEL.

There are arguments within the industry that revolve around when to use BPEL vs. BPMN, especially since there is overlap between the two, and many problems could be solved using either BPMN or BPEL. Most large enterprises do not consider using only BPMN or BPEL; instead, they use both, depending on the scenario. Experts recommend that if your organization needs both, keep the BPEL worker processes in separate composites from the BPMN business processes. The following is a chart, culled from countless sources around the web, that details different scenarios where either BPMN or BPEL are recommended.

Yet Another Modeling Language (YAWL)

YAWL (yet another modeling language) may be considered an alternative language to BPEL. YAWL is based on Petri nets, which are part of a mathematical modeling and reasoning language. It is also open source, which means that the original source code is available to anyone to change and use. YAWL is considered easier in communicating to stakeholders than BPEL because of the intuitive user interface. YAWL and BPMN have some concepts in common — namely, tasks, gateways (as a decorator in YAWL), and flow.

Unified Modeling Language (UML)

Unified Modeling Language (UML) is a general-purpose modeling language also managed by OMG and published by the International Organization for Standardization (ISO) as an approved language standard. UML is similar to BPMN in that it is an open source modeling language. Whereas the whole of BPMN is devoted to business process modeling, only UML’s activity diagram is suitable for business process modeling. Overall, UML is object-oriented, while BPMN is process-oriented.

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The complete guide to business process modeling (BPM)

If you’ve been in business for a while, then you understand the importance of your processes. Your profitability is completely tied to your ability to design, manage, and optimize your business processes and operations.

Sadly, many business owners never take the time to actually map and model their processes in a visual way, leading to a lack of understanding of their own business. In this blog, we’ll take you through why business process modeling is essential for modern organizations and how to implement it today. Let’s start with the basics.

What is business process modeling?

First, we need to make sure we’re all in sync about what a process is.

A business process  is the logical sequence of events that lead to a particular outcome relevant to your organization. A process includes all the activities or tasks in a chain of events that accomplishes something. Some examples of common business processes are issuing purchase orders, product assembly, shipping products,  invoicing clients , and estimating project costs.

Business process modeling is the practice of back-engineering each process in your business to understand the different components needed to achieve the goal and finding potential improvements for each component.

It’s a business analysis and continuous improvement discipline that helps you maximize any process through critical examination. For example, a typical business process model might look something like this:

( Image Source )

Though the above is only one example, there are other popular techniques for business process modeling. We’ll discuss some of these techniques more in-depth a bit later, but first, we’ll look into how process modeling can impact your company.

Benefits of business process modeling

As organizations evolve, so do their processes. We live in a hyper-accelerated world where businesses face massive changes almost overnight. If you don’t have a strategy in place to adapt to this constantly changing environment, your organization won’t survive for long. Cultivating a culture of learning and innovation within your organization is paramount. This fosters an environment that not only adapts to change but also anticipates it, staying one step ahead of industry dynamics.

In short, if you don’t model your processes, you’ll never know whether you’re operating at your best, and you’ll miss out on huge opportunities.

Some key benefits of process modeling are:

• Better alignment:  align your activities with the core goals of your business
• More control:  improve the way you control your activities and resources
• Better productivity:  maximize your time and focus on what really matters
• Improve your bottom line:  reduce inefficiencies, costs, and bottlenecks
• Produce better products and services:  build more efficient production processes that delight your customers

A solid process model isn’t just a drawing or visual representation of your process—you’ll need other elements to really get the most out of this strategy.

8 critical elements of business process modeling

Diagrams —like the example we saw above—are just one of the many elements involved. To fully model a process, you must create a document with the following elements:

• Scope statement:  a relevant description of the process name, as well as when the process starts and ends
• Outcome:  a definition of the desired outcome of the process
• Description:  a step-by-step walkthrough of the process description (i.e., the different steps that need to be executed to achieve the desired outcome)
• Exceptions and variations:  a description of potential alternative process paths based on conditional data or action triggers
• Entry criteria and inputs:  the elements you must have in place to execute the business process
• Exit criteria and output:  what must be true once the process is completed
• Dependencies:  a description of any other process or activity that’s dependent on this one
• Process flow diagram:  a visual representation of the business process and its components

By documenting the entire process using these elements, you’ll have a clearer idea of where to start, as well as be able to communicate your full plan to your team and stakeholders.

It’s important to remember that business process models should include both visual and textual information to analyze each process at a more granular level. With that said, let’s look at some examples.

What are 5 business process modeling techniques?

Now that you understand the elements of a business model, let’s examine how can you represent your processes visually, starting with these five techniques:

• BPMN diagram
• UML diagram
• Gantt chart
• PERT diagram

1. Business process modeling notation (BPMN) diagram

BPMN stands for Business Process Modeling Notation, and it’s a technique that helps you represent your processes in a visual manner through 100+ proprietary objects.

Some of these objects include:

• Process flow object:  represents the sequence flow and execution of tasks
• Pool:  represents process participants
• Swimlane:  define sub-groups and divisions within pools
• Data object:  represents information flowing through the process
• Artifacts:  used to define how tasks and activities are organized

BPMN provides you with clear specifications for each diagram. By having a unified strategy or “language” to model your processes, you can make sure everyone is on the same page.

The example we shared earlier is a fairly simple business model diagram. Here’s an example of a more complex one:

2. Flowchart

Flowcharts are one of the simplest and most widely-used techniques for process modeling. As the name suggests, flowcharts help you map out the sequence flow of activities you need to perform to complete a specific process.

In a flowchart, you should represent each step in the process with a shape. Then, you should connect those shapes with lines or arrows to indicate the logical progression of each step.

Here’s a simple process model example:

As you can see, flowcharts can use different process diagram shapes to represent different stages of the process. In the example above, we have two different shapes:

• Rectangle:  represents start and end points
• Diamond:  represents specific activities

In practice, you can use many different shapes to represent the different components of your processes — especially when you’re dealing with a complex process.

Flowcharts are simple yet powerful tools to communicate a business process in a way everyone can understand.

3. UML diagram

Communicating the value of software design isn’t always easy, especially when you’re dealing with a non-technical audience.

This is where UML comes in handy.

UML stands for Unified Modeling Language. It’s a modeling technique that helps you describe the elements that make up a specific software system and how such elements interact with each other.

UML involves different types of diagrams, which can be broken down into 2 main categories: structural diagrams and behavioral diagrams.

Structural diagrams represent the structure of a system. That is, the different elements and objects that make up the software. Some of the most popular structural diagrams include:

• Class diagram:  mainly used for data modeling in a system
• Component diagram:  describes the physical structure of the system in question
• Deployment diagram:  describes the execution strategy and structure of the system

Behavioral diagrams, on the other hand, focus on the relationship between the objects in a system — how the different objects interact with each other to achieve a particular goal. A few common behavioral diagrams are:

• Use case diagram:  describe the possible interactions between user and system
• Activity diagram :  graphical representation of a user’s activities and actions when using a system
• State machine diagram:  represent the behavior of an object within a system

4. Gantt charts

Gantt charts are used to plan a project’s schedule against tasks and dependencies on a horizontal bar chart.

Setting up a Gantt chart is easy on monday.com because you have access to a built-in Gantt View and a widget for your project dashboard . You can also make changes to tasks directly in the Gantt View.

5. PERT diagrams

Similar to Gantt charts, PERT, or Program Evaluation and Review Technique, is a framework to map out task dependencies and estimations for a project’s duration.

This type of flowchart is useful for the early stages of planning when sorting through how all the pieces go together.

Let’s pause quickly; we’ve already covered the importance of business process modeling, as well as some of the most common techniques for visual process representation.

But if you want to achieve the highest level of performance in every one of your processes, you need the right system — a system that helps you centralize all your workflows onto a single place and can automate repetitive activities.

Business modeling processes and monday.com — how to

monday.com is a powerful Work OS that helps you build a custom digital workspace for any type of process, regardless of its complexity. To show you how it works, let’s follow a four-step process to model, manage, and improve your processes and operations.

1. Streamline the process

To improve any existing process, you must break it down into components. Consider what you need to achieve the goal. With the answer to that question in mind, you then need to prioritize those activities based on the impact they make on your bottom line.

Once you organize your activities in a progressive order, coordinate the execution with your team. You may also want to identify which activities can be automated and how.

To achieve all this, you need a flexible system that adapts to your needs and helps you streamline your processes. With monday.com Work OS, you can access fully customizable, pre-built templates to structure different processes in various industries, including:

• Advanced Project Management Template
• CRM Template
• Recruitment and Onboarding Template
• Social Media Planner Template

You can explore our complete list of templates in our  Templates Center . We also provide you with over 250,000 automations, so you can speed up your operations and improve your productivity. A few tasks you can easily automate include:

• Recurring activities
• Notifications
• Item creation
• Dependencies
• Integration recipes

For more on monday.com Work OS automations, watch this short video below:

Finally, monday.com helps you centralize your entire organization into a single workplace, which makes it easier for you to streamline your workflows and improve your processes. You can create or add documents, files, automations, various views, data, and more all from monday.com Work OS.

2. Implement

Once you’ve defined your processes, it’s time to implement them. Start with a platform that allows you to collaborate with your entire team, remove silos between departments, and track progress with ease.

For instance, on monday.com Work OS, you can invite your entire team from the start and access powerful collaboration tools to improve your communication, including:

• File sharing
• Instant-messaging
• Video conferencing

For instance, you can click any of your items on your boards and add context to each task in real-time. This way, you can brainstorm ideas, get direct feedback from your peers, and improve your operations much faster.

From task management to resource allocation, you can structure and manage all your business processes more efficiently.

You can’t improve what you can’t measure. That’s why you need a system that helps you monitor all the information that’s important to you and analyze your progress.

Access powerful reporting dashboards that help you track everything from revenue to productivity, time, sales, tasks, performance, and more on monday.com.

Dashboards make it easy to understand the overall performance of your processes and optimize accordingly. The best part? These dashboards are fully customizable, and you can adapt them to your exact needs.

4. Optimize

Finally, you should schedule a meeting with your team to analyze the data you collected in the last step and brainstorm how to improve current process. Consider asking:

• Where are the major bottlenecks?
• Is the team working productively?
• Are you using your resources wisely?
• Where are your biggest revenue leaks?

By answering these questions, you’ll be able to spot major issues in your processes before they start snowballing and fix them fast. Since monday.com Work OS is fully customizable, optimizing and adapting your processes to your new process ideas is completely feasible for any type of organization.

Frequently asked questions

What are the four phases of business process modeling lifecycle or bpm, what are the basic elements of bpmn.

Four elements of BPMN are flow objects, connecting objects, swimlanes, and data.

Ready to improve your business processes?

Hopefully, now you have enough understanding of the overall process, as well as why it’s crucial for the success of your business. And if you’re looking for a platform that helps you optimize each of your processes with surgical precision, then monday.com Work OS may be a great fit for you.

To see for yourself, we suggest you start with our  Advanced Project Management Template . It’ll help you get your business process modeling off to a great start.

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The Definitive Guide to Business Process Modeling

Last Updated on April 3, 2024 by Owen McGab Enaohwo

Featured Bonus Content: Download the FREE Checklist for Business Process Modeling! You will get access to a complete worksheet to help you map your current as-is business process and determine your to-be business process. Click Here To Download It.

Introduction

To say that we are living in an era of plenty would be a colossal understatement. But we seldom stop to reflect and appreciate how all the amenities we take for granted today make it to our hands. While it may seem that many of the technological breakthroughs that enable high-quality goods to be created and distributed only started around the middle of the 20th century, the science of business process has existed and been evolving far longer than commonly known.

Even though means, materials and efficiencies have no doubt increased manifold since, the underlying principle remains essentially the same. But business process modeling as a concept wouldn’t take shape until the early 20th century when gantt charts, flowcharts, functional flow block diagrams, etc started being used to document and affect business methodologies.

Whether it was Henry Ford’s Model T that halved the price of cars or Just-in-Time manufacturing that greatly reduced the time it takes to manufacture and distribute goods, every quality of life improvement can be traced to an innovative business process.

But even as business process models have helped power many industry trends, companies today are confronted with challenges that until recently were non-existent. Just look what Airbnb, Uber and Lyft have done to their respective industries. With newer methods of working such as BYOD, digital nomadism and remote working gaining popularity, companies are being forced to work in asymmetrical ways that both challenge older business process models and present interesting new advantages.

Since remote working is expected to at least equal fixed location working by 2025, companies have to adapt and update their business process models to function efficiently in this new dynamic. In the interest of self-preservation, companies are best to anticipate radical, sometimes devastating changes unless they want to be caught unprepared. But such challenges also demand that we answer some perplexing questions:

• How does a company opt for a business process model if there is no guarantee it will remain useful as markets or work practices change?
• If a company does come up with a set of business process models, can they be updated on the fly?
• Are the company’s current processes really inefficient to the point they have to be replaced?
• Is new technology presenting newer models that can be leveraged to provide a competitive advantage?

In the following sections, we will attempt to answer each one of these questions (among others) to help you find and implement the best business process for your business’s unique way of working and challenges. Let’s begin.

The Definitive Guide to Business Process Modeling – Content Index

Chapter 1: defining a business process model, chapter 2: four business process modeling techniques, chapter 3: how to select a business process modeling technique for your company, chapter 4: how you’re probably underestimating business process modeling, chapter 5: five questions to ask before creating your business model, chapter 6: tools for business process modeling, concluding thoughts, defining a business process model.

Despite the best of intentions, businesses rarely operate at their highest efficiency. Important things get overlooked: office politics, power games, people getting sick and lost opportunities all play an unfortunate, albeit inevitable, role in a company’s life. A business process model is therefore a tool that can be used to graphically present how a company works and identify opportunities to improve processes.

The term first appeared in 1967 in S. William’s paper titled Business Process Modeling Improves Administrative Control which explored physical control systems for understanding business processes. The strategy uses graphing methods such as flowcharts, Gantt charts, data-flow diagrams, Petri nets, etc., to illustrate all the different business functions and how they interact with one another. The following is a simple illustration of a BPM.

Two types of business process models are drawn: as-is models that represent how a company works presently, and to-be models that denote how a company should look in the future.

As-is Business Models: An as-is model defines and lists out all the functions of a business as they exist today, complete with their strengths and weaknesses. These consist of all the roles, responsibilities, steps, exceptions, etc. While as-is business models aren’t necessary, creating one can be extremely beneficial to tracking the company’s performance over time. Certain situations also require as-is business models to be obtained before moving forward. For instance:

• The company is facing issues such as customer service inquiries not getting processed in time.
• Orders are taking an inordinate amount of time to get processed, far more than the industry standard.
• There is palpable confusion regarding responsibilities and users often overstep their boundaries.
• The management has discovered methods to improve efficiency in certain processes or automate them entirely.

These are some of the more common reasons, and many more such scenarios can be added here. Documenting business processes is a good practice in itself as it can uncover many issues that may plague a company, often unknowingly.

To-be Business Models: These models define the state that an organization wishes to be in. Oftentimes, a to-be model is an as-is model with procedural improvements. However, if a company wishes to rewrite how it works entirely, then a completely new model can be created.

For instance, if a company grows, then it might have to add a new department or a warehouse that will come with its own set of processes. The company will then need to document all the new functions and processes into its existing business process model and assess how each of them affects the rest of its functions.

Over the years, many different business process modeling techniques have come up, each with its strengths and weaknesses. Let’s take a look at some of the most popular ones and what advantages they have to offer.

Four Business Process Modeling Techniques

Even a cursory online search will reveal a plethora of modeling tools you can use to get a good idea of what your company’s processes look like. The problem, however, is that many of these tools are either untested or simply ideas without any sound real-world applications. While you are encouraged to find as many actionable insights online as possible, let’s take a look at four of the most well-known business process modeling tools.

Business Process Model and Notations (BPMN)

By far the most common business process modeling technique, BPMN uses flowchart based graphical notations and is similar to activity diagrams found in the Unified Modeling Language.

BPMN is popular because the notations used within it are intuitive and simple for business users, yet provide enough technical semantics for some of the more complicated processes.

The notations are standardized so they can be understood by all stakeholders.

The model was developed by Business Process Management Initiative (BPMI) which merged with the Object Management Group in 2005 and is ISO 19510 compliant.

As part of its standardization, BPMN uses five categories for denoting business functions. They are:

• Connecting Objects: Connects different tasks via lines. Solid lines represent task transfers; dotted ones are for messaging.
• Flow Objects: Represents events with circles; activities with rectangular boxes; gateways and control points come in diamond shape.
• Swimlanes: Details how different responsibilities are to be shared within a process. Here, a sub-task is denoted as a “pool” and lanes represent people or departments.
• Artefacts: Used to show extra information that isn’t part of the process but can help illustrate it better.
• Data Objects: Are used to denote four data types. A page icon is used for singular data objects; page icon with arrow is for data input and outputs; and a container is used for data stores.

BPMN is an evolving system that is being added to all the time. For the most updated version of BPMN, check out bpmn.org/ .

Subject-Oriented Business Process Management (S-BPM)

A communication based tool, S-BPM is derived from CCS-Calculus by Robin Milner which was designed to provide a mathematical framework to understand communication systems. S-BPM uses a simple five-symbol system to model any process. The underlying premise of S-BPM is that every system is built up of subjects which can be a locus of activity, a process or a computational unit. Notations here can be mapped as follows:

• Subject (who): the subject
• Object (with what): data
• Predicate (what): action

A subject executes an action on an object. The notation is best illustrated with a flowchart of a quiz, where an asker asks a question to a responder, who then provides an answer which is then responded to with feedback (if it’s needed).

Flowchart Technique

Everyone knows of the humble old flowchart and its many uses. Most of the other business process models are essentially just a different iteration of flowcharts with a few features added for greater flexibility. While flowcharts have been superseded, they still remain relevant due to their simplicity.

Flowcharts are used for documenting sequential actions, simple processes and functions. A standard flowchart can be made with just two symbols: a rectangular box to denote an action, and a diamond-shaped box to highlight decisions. Even so, over the years many symbols have been added including oval rectangles for start/end functions, parallelograms for input/output, circles for connectors, triangle for inventory, rectangle with rounded corners for alternate processes, and so on.

Even though more advanced tools are certainly available today, the simplicity of flowcharts make them an ideal starting point for companies looking to get into business process modeling. Their intuitive nature makes them easy to understand with little or no training, which is why they are still being used in business and technological applications even to this day.

Activity Diagrams (UML)

Unified Modeling Language was created in 1994 by Grady Brooch, Ivar Jacobson and James Rumbaugh primarily for documenting software systems. Despite being complicated due to the sheer amount of information and techniques added to it since its inception, UML has use cases beyond software and has been successfully applied to business functions as well.

Activity diagrams that are a part of behavioral diagrams in UML offer a very efficient way to record business processes as they are designed to document flow of actions. Even in UML, activity diagrams are the second most popular tool after class diagrams. Activity diagrams can be created using five basic components:

• Start node: uses a black circle to symbolize the beginning of an activity
• Action: uses a box (sometimes with rounded edges) to denote an action taken by an actor
• Decision node: represented by a diamond, has one input and two or more outputs
• Control flows: uses arrows, join and fork symbols to connect the different steps
• End node: Uses a black within a white circle symbol to denote the end of a process

Other symbols used include the hourglass symbol to highlight the amount of time between processes, arrow box to represent outgoing events, an arrow fletch symbol for incoming events, and a document symbol for annotations.

How to Select a Business Process Model for Your Company

Your company’s business process is a subset of its entire business process management lifecycle and as such needs to fit into your strategy. As Gartner says, “Processes span organizational boundaries, linking together people, information flows, systems and other assets to create and deliver value to customers and constituents.” A typical BPM lifecycle looks like:

As the model itself will be a small part of your productivity equation, it’s best to consider all the other variables that will play here. As such, you must:

Generate organization wide buy-in: Your business process model needs to document every step of your value chain. Most of these steps will be known best to the people who perform them every day, i.e., your team members. Asking everyone to share how they do what they do and what they might want to improve will be not only a great way to communicate the need for documenting your business process model, but involve everyone too which will help implementing any new model(s) all the more easier.

Map your as-is processes: Once you have some buzz built around your BPM initiative, it’s time to create a database of all the existing processes you are currently using. Consider sending a form to all your team members with a series of questions that helps them define their roles, responsibilities, processes they follow and any issues that they might be facing.

Relate the processes to your business strategy: Many processes are thought of and implemented in the spur of the moment as and when the need arises. Since there is no guarantee that these processes actually help achieve the company’s goals efficiently, they should be mapped against the latter.

Define your to-be processes: By now you should have a good idea on what your overall process chain looks like, which processes add the most value to your organization, which can be replaced and which are simply dead weight. Your ideal to-be BPM should therefore include the processes that your company has mastered, upgrade legacy processes that are falling behind, and replace those that are obsolete. You can also add processes that new technologies are enabling at this stage.

Implement Continuous Process Improvement (CPI): If you haven’t already, that is. The idea behind CPI can be traced back to the Japanese philosophy of Kaizen which highlights the importance of continually improving yourself, your service/product and your organization’s culture. The primary focus of CPI is to continuously look out for and remove sub-optimal processes from the value chain. This can be accomplished via constantly reflecting on the processes, the value they add to your organization, and how they can be used as a foundation to build something even better. Improvements can be added in an iterative manner or in one fell swoop as needed.

While the steps mentioned above will help you with the cultural aspect of organizational change, selecting the right business process modeling tool will need a different approach. Wenhong Luo and Y. Alex Tung in their paper titled A Framework for Selecting Business Process Modeling Methods give an excellent strategy on how to go about finding the right process modeling tool for your organization. They highlight five steps that can help you do so:

Identification of modeling objectives: List out the reason why modeling business processes is required. Are you trying to get a better idea of how your business runs? Do you want to improve certain processes/sub-processes only? Do you feel that your legacy processes are facing obsoletion? Have you discovered inefficiency in your value chain? Several reasons can also coexist throughout the business process reengineering effort as well.

Identification of required perspectives and desired characteristics: Once the modeling objectives have been ascertained, you can determine from which perspective a model will be crafted. Luo and Tung suggest that models can either be from the object perspective , which emphasizes the objects being manipulated, i.e. data, documents or physical items, or from the activity perspective which highlights the activities being performed and the relationship between each activity.

So if the objective of your modeling initiative is to help employees understand their roles better, then your models should be from the activity perspective. The model should ideally be simple to understand as non-technical people will be required to study and implement it. On the other hand, if your model is to examine process performance, then it should be drawn from the object perspective.

Identification of alternative BPM methods: In this step, all the viable BPM tools, complete with their respective strengths and weaknesses, are listed. From the example above, let’s assume your objective is to enhance employee performance. You therefore consider BPMN, activity diagrams and flowcharts as potentially ideal modeling tools. Both offer great activity perspective potential and have a plethora of features to help you achieve your goal.

Evaluation of modeling methods: Your selected models are now weighed against their respective strengths. Upon deeper analysis, you discover that activities that BPMN can highlight with a single symbol sometimes require several symbols (and steps) in AD. The conclusion shouldn’t come as a surprise, though, as AD being a derivative of UML is, in fact, object based at its heart since it was created to model software systems.

That being said, BPMN is far more complex than needed and you realize that many of its core features such as swimlanes won’t even be needed. You only need enough visualization to help employees picture the entire process better. Flowcharts, on the other hand, are perfectly adequate as they are simple, and your staff is also well familiar with it, making implementation and buy-in easy.

Selection of the appropriate method: It is entirely possible that more than one tool will be needed. However, in our given example, flowcharts are the clear winner.

The decision making process that most companies will face will no doubt be far more complex, and recreating a detailed account of what it might look like is beyond the scope of this article. The research paper goes into more depth on how to decide which business process modeling tool to select, so be sure to give it a read.

There is hardly a business process out there that cannot be documented with one of the four modeling tools mentioned above. That being said, here are a few honorable mentions you can look into.

• Cognition enhanced Natural Language Information Analysis Method : CogNIAM attempts to integrate different classes of data, rules, processes, and semantics, and is also known as the “Knowledge Triangle.”
• Event Driven Process Chain : A simple ordered graph of events and functions, EDPC can be thought of as the flowchart technique on steroids.
• Formalized Administrative Notations : Useful for helping managers identify and describe responsibilities and operations.

How You’re Probably Underestimating the Benefits of Business Process Modeling

Documenting business processes is incredibly easy to underestimate. So often, we end up getting carried away by daily goals, deadlines, and handling customer issues to the point where we forget about how the underlying processes can be enhanced.

Even if documenting and modeling business processes may seem like a fairly mundane chore, neglecting it can have catastrophic consequences for a business. According to market research firm IDC, companies can lose 30% every year due to inefficiencies.

Companies are often guilty of continuing with the same processes simply because they have become too accustomed to them as well. Such practices result in inefficiencies getting deeply entrenched into the organization’s culture and can hurt its performance in the market. The opposite is true as well. General Electric reported that a one percent increase in oil production led to an additional 80 billion barrels of oil per year.

James Proctor , director of professional services at the Inteq Group, in his white paper on Misconceptions of Censuring Current State Mapping , suggests four reasons companies give when ignoring current state mapping and analysis:

We already have a process, it works, so there’s no need to evaluate and improve: Beyond  the processes that are explained in onboarding tours, rule books and management sessions, a company’s staff also maintains procedural knowledge gained by experience over time. This deep business knowledge is almost always maintained in the minds of the people and rarely documented, even though it has a very high say in how a company produces its output. The consequence here is twofold:

• The knowledge is lost when an employee leaves the company. Or,
• The processes remain inefficient as they are never discussed openly.

One of the advantages of mapping current processes is that they can help a company mine its intuitive, subjective knowledge. It can also help answer the processes what and how, thereby enabling the company to build on top of it.

We know our processes don’t work, so let’s move to the latest, greatest thing: Also known as “shiny object syndrome,” this line of reasoning is again given to jump to a new solution without trying to understand what the underlying problem is. Oftentimes, there will be salvageable knowledge that can serve an organization, or the processes itself will need some fixing. Organizations also ignore the human element in their processes where vested interests and poor allocation of resources can come together to wreak havoc on the output. As most companies will follow industry specific processes, they can misdiagnose problems.

Mapping business processes can help companies understand where they are going wrong, what they can do to fix it, and how to go about affecting their solutions. Consequently, they may uncover solutions that do not require a complete overhaul, making new process implementation both easier and more affordable.

We are outsourcing our business process to a third party, so we don’t need to look into our processes ourselves: Many times, companies will look to specialized vendors to help them come up with better business processes—no doubt a great way to fast forward to a new desired step. But simply relying on another company’s solution can also result in lost knowledge and overlooked opportunities to increased efficiency.

A desired future state can only be attained once the current state has been understood. In fact, even after implementing a radically different method, 60% to 80% of a business’s existing concepts continue to apply . Reason being, while the processes themselves may be altered slightly, their fundamental premise (i.e., business logic) will remain the same. Moving to a third-party solution will require an astute understanding of a company’s current processes and how they can coexist with the vendor’s solution, making business process mapping all the more necessary.

We have industry best practices already at work, so we don’t need to innovate: While existing workflow templates are no doubt a great, well-tested source to draw your organizational design from, they are best not taken at face value. Most such instructions draw from their respective sources experience, business challenges, and subjective views on how to go about solving certain problems. These insights may or may not apply to your company’s particular operation. You may find utility in some parts of the template and rely on your existing models for other functions.

The best organizations use templates to create their own business processes that are tailored to their strengths while helping them overcome their weaknesses. A business model becomes more than a tool to complete a process as quickly as possible and can be used to differentiate a business from its competitors.

The bottom line here is that there is never a good reason not to document your processes and procedures. Even if a business process model doesn’t seem necessary now, there are plenty of scenarios that may prove to be invaluable.

Five Questions to Ask Before Creating Your Business Process Model

Even though the importance of having a business process model in place is well established, there needs to be a well-defined use case starting out. The following five business analysis questions are a great way to create a framework for mapping business processes:

What are you currently doing?

Essentially you list out all the processes, activities and sequences that are currently being carried out by the company to create its product/service. Consider listing each activity and process in detail, who is responsible for it, and any issues you may be facing in executing it.

What are you currently doing that is not needed?

In other words, of all the activities and processes listed, which can you do without and/or can be replaced? Many organizations have business processes and policies that either have little or no value.

More often than not, these will be legacy ware that has been in practice for a long time and can be replaced with more modern tools. On other occasions, procedures and policies may have been put in place to comply with legislations that have since been removed, making said policies obsolete.

What are you currently doing that can be improved?

When obsolete processes are discovered, the first impulse is usually to replace them quickly. However, analysis can reveal that certain business policies, processes, and procedures can be improved with minor modifications. Improvement is always best prioritized over replacement as it can lead to substantial improvement in performance at lower costs.

What are you not doing that you should be doing?

Many times, stakeholders become aware that a procedure, policy or process is proving to be a bottleneck. They may also be aware of certain actions or tools that can help to iron out the kinks and drive up productivity but are unable to implement them either due to financial or time constraints. Listing out such problems along with available known solutions will be a good start toward getting more people involved and thereby putting them into practice.

What are you not doing that you don’t know you should be doing?

Not all requirements can be known ahead of time, and the same can be said for potential solutions. This question is to coax stakeholders into looking out of their immediate vicinity to find solutions that may exist they are currently unaware of. Asking third party specialists and analysts, researching online, and keeping up-to-date with industry news, are all great ways to get some new ideas flowing in house.

Business Process Modeling Software

Obviously, creating modeling for your business processes is an involved and tedious task that is going to take some time. And if you are planning on using spreadsheets, emails, document files and PDFs to document your processes, then it will take longer than it really has to. A number of cloud-based business process tools exist today that are designed from the ground up to help companies create, distribute, and track their processes, all from one place. Not only do these tools greatly speed up documentation, but also act as a central repository for all the company’s knowledge, making process implementation all the more efficient.

Here are five such tools:

SweetProcess

Features: Document processes, procedures and policies, steps can be added to each as checklists and can include videos and/or pictures, enables training on the job

Price: Starting at $99/Month for team of twenty with $5/additional member

Free trial: 14 days

The software above is designed for process mapping and documentation. But none of them really delve into the basic components of BPM. In fact, most business process modeling tools only deal with the process part of the equation while ignoring its two siblings: policies and procedures. And yes, all three are very different in definition and application. An organization’s business schematics needs the proper implementation of all three in order to be implemented successfully. The difference between them is:

• Policies : A list of rules and guidelines that need to be followed to accomplish a goal.
• Procedures : The outline on how to carry out a task.
• Processes : The exact step-by-step instructions on how to complete a task.

Essentially, processes make up a procedure, and procedures make up a policy . All three components work best when they use the preceding tool as context. This is where SweetProcess shines. The platform allows users to systematically create their policies, procedures, and processes, and assign them to teams and/or users.

SweetProcess also allows companies to capture information in real time and integrate it into their overall business model effortlessly. People can be trained on new procedures on the spot and all their feedback can be recorded on the job card for future reference.

Users can implement a document-as-you-go process model where their business process model can be revised and adapted based on new information, technique, or technology. In other words, companies need not assign a huge part of their time and manpower to revising their business process—it can be done on the fly as and when needed.

ProcessMaker

Features: Highly intuitive and personalizable dashboards, output document builder, easy to track KPIs

Price: $1,500/month for standard package

Free trial: 30 days

Some of the biggest challenges that a company faces when coming up with new processes appear mundane on the surface. For instance, maintaining paper records and backups, signing soft copies digitally and coming up with a unified design that everyone in the company can work with can give managers more than a headache. ProcessMaker takes care of these issues (among many others) by providing a simple interface to both create and distribute process-related documents.

ProcessMaker is a drag and drop BPMN-based process-making tool that allows users to create their own process models without needing to know any programming knowledge. Entire processes can be created offline and synced with the company’s database when the user goes online. BPMN elements such as Gateways can be designed on customized conditions and form-fields can be created print-ready with definable variables.

ProcessMaker also comes with a responsive dynamic forms designer which can be customized to any requirements, have sub-forms and can be integrated with outside variables and files. Their dynaforms function uses the same drag and drop functions that the BPMN tool does, but developers can edit the forms in JavaScript if they so choose. The forms can auto-adjust to desktop, laptop or smartphone screens.

By far the most interesting feature that ProcessMaker comes with is their awesome dashboards. The Process Efficiency Index (PEI) is an intelligent system that learns from your processes over time and establishes better performance levels using resource costs and comparative rankings, among other factors. The Employee Efficiency Index (EEI) carries out a similar analysis of every user, and suggests ways they can improve their performance.

Features: Unique five-step app wizard, attaching Google Docs, prebuilt reports, hands-off workflows

Price: Starts at $149/month for 30 users

With over 10,000 customers in 121 countries, Kissflow is easily one of the most popular BPM tools out there. If there’s one constant theme in all the reviews that it has garnered, it is that the software offers unprecedented ease in helping users create and use workflows.

True to its name, nothing in Kissflow requires elaborate coding knowledge. All forms and process workflows can be created with drag and drop items. The software is built from the ground up to be scalable and can easily add users, data objects, and complexity with ease. It also offers out-of-the-box integration with Zapier so documents can be moved to and from any of the 1,500 web apps online.

Kissflow has some very well thought-out access controls and lets process creators define and implement accesses at each step of a process based on a users rights and responsibilities. The app can send out updates to all the users within a process based on predefined conditions automatically. Tasks can be escalated to certain teams and individuals if predefined conditions are triggered.

With the app’s robust reporting features, your entire auditing process can easily be carried out online. Custom reports can be created right down to specific processes with the same drag and drop functionality that Kissflow is known for. Even so, the app allows you to create a paper trail for manual audits or backups if necessary.

Zoho Creator

Features: Smart reports, collaboration tools, multi-language tools, custom reports

Price: Starts at $5/user/month

Free trial: 15 days

Like Kissflow and ProcessMaker, Zoho creator is billed as a code-free process creation tool that users can jump into and start fiddling with. Unlike the previous two, however, Zoho is ideal not only for small, medium and large businesses, but freelancers as well, thanks to a very low starting price of $5 per month.

Zoho has one of the most inclusive workflow management features, including access control, a robust approval process control system, advanced workflow configuration, and business process automation that allows emails and predefined messages to be sent at each step of the way and many more.

Even though Zoho creator can easily be used by non-technical users easily, the platform has one of the best app creator features in the business. If your work requires building custom apps, then Zoho can not only provide you with a workflow management suite, but an app development platform as well. Combining both the features can drastically decrease development time.

Features: Proprietary Nintex connectors, heavy emphasis on mobility and automation, easy to create process-friendly forms

Price: Starts at $950/100 processes/month

While Zoho Creator and Zoho offer process documentation and modeling features as part of an elaborate cloud based productivity suite, Nintex is wholly dedicated to process management only. Consequently, it offers far more “process management” oriented features than most other competing products. Nintex allows users to plan, map, and share processes with a few simple clicks.

Furthermore, Nintex allows processes to be automated without any coding knowledge. The software can help users identify processes that can be automated. The processes can then be automated using Nintex’s Robotic Process Automation (RPA) bots. RPA is usually thought of as a daunting, expensive task, which is why Nintex allows users to choose the number of processes they want to automate, rather than the number of bots they implement. This stands in stark contrast to typical RPA pricing that is often very confusing and is implemented differently from one vendor to the other. 

Business process reengineering is all the rage today because companies are coming face to face with the truth that change is becoming ever more pervasive. The slow, steady-as-we-go approach that has served organizations so well until the cloud took over is now decidedly obsolete and needs to be replaced with a forward thinking, faster model that adapts to newer market conditions and changes on the fly.

The most obvious question here is, do time tested processes become obsolete also, and whether companies really need to start from scratch? Obviously, we’d all want our hard-earned knowledge to stick around, and there’s always the danger of poorly understanding whether change really serves a purpose and carry any short/long term value.

Business process modeling done the old way would require far too intensive an effort to really understand the value of a new direction. Cloud-based tools such as the ones mentioned above become an utterly indispensable tool to speed up the process and keep up with the new reality that we work in.

Business process modeling means documenting every step that your company takes and there’s plenty that can be overlooked or missed. Download our free checklist on creating a business process model to stay on track!

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Using Business Process Modeling and Tools

Summer kay september 15, 2020 business process automation (bpa).

Table of Contents

Great organizations continually improve their processes over time, striving to make them as efficient and cost-effective as possible. Business process modeling is a tool that organizations use to evaluate their current processes.  It allows the creator to visualize a more efficient process.  In this post, we explain how business process modeling techniques give you the knowledge to improve performance across your enterprise.

What is business process modeling?

Business process modeling is a technique that involves creating a visual depiction of a business process . This is typically achieved by using business process modeling tools like flowcharts and universal business modeling process notation (also known as BPMN ).

Next, business process modeling is used to identify improvements in an organization’s business processes or workflows. It does this by mapping two different iterations of a given process. The first is the process as it currently exists without implementing any changes. The second is what the process will be once improvements have been made.

It is possible to manually sketch out the steps in a process. This method is, however, far more time-consuming, and less effective than leveraging an automation solution like business process modeling software . With software organizations can easily create and run a process model to identify areas for improvement.

As written in a previous blog post, business process mapping techniques , “you can’t manage what you don’t measure.”

Business process modeling vs business process mapping

The terms business process modeling and business process mapping are often used interchangeably. While the techniques are similar, there is a difference. Business process modeling is generally used to map out low-level processes. In other words, the purpose of the diagram is to provide a somewhat broad overview of how a process works.

Business process mapping, however, can be used to create both broad and highly detailed diagrams. Where maps are detailed, their purpose is to provide operating procedures to guide stakeholders on the efficient completion of a process. Note that both business process modeling and business process mapping are used as part of a broader initiative like business process management .

The benefits of business process modeling

Business process modeling is a highly effective technique that offers organizations a broad range of benefits. Some of these benefits include:

• Identifies areas for improvement . The primary use of business process modeling is to provide stakeholders with a better understanding of the way that a process works with an eye towards implementing improvements.
• Transparency . A business process model shows how tasks are expected to be performed, who is accountable for them, and how a process contributes to the achievement of a business objective. This serves an important role in increasing trust and accountability throughout an organization.
• Agility and flexibility . Business objectives and strategies can change in an instant (think COVID-19). With business process modeling stakeholders can immediately identify and implement improvements consistent with new objectives.
• Standardization across departments . Many processes in an organization, particularly in larger ones, involve similar steps and tasks. For example, purchase order requests are often submitted at the unit level rather than the enterprise level. Using process models, stakeholders can identify best practices across units to implement efficient procedures throughout the organization.

Consider this example of an organization:

“… when reviewing a business process flow chart, a company’s senior management team may recognize that departments that offer incentive programs, such as employee of the week, are more productive than those that do not. As a result, they may choose to provide incentives to employees company-wide.”

Understanding, streamlining and automating processes results in more efficient and more profitable businesses. Through the use of process mapping, information is readily available for important decision making.  By graphically depicting workflows, the organization gains transparency in the various workflows throughout the business. Having this information at the ready creates a strong foundation for business agility and speeds the go-to-market efforts for new products and services.  

Modeling Elements

Companies use a standardized set of elements provided by the business process modeling notation to model processes. As BPM.com noted in a 2016 white paper, there are four basic types of elements:

• Events , indicated by circles. These can include the start and endpoints of an activity.
• Activities , drawn as rectangles and comprise multiple steps, such as forms and output documents.
• Gateways , identifiable by diamonds. These indicate the various paths an activity can take.
• Sequence flows , marked as arrows (solid, dotted, and so on).

Business Process Modeling Tools

There are many different business process modeling tools that can be used to improve workflows, making them more efficient and cost-effective.

SIPOC Diagrams

A SIPOC diagram is a tool used in the Six Sigma methodology. SIPOC is an acronym that helps stakeholders to identify the key elements of a process improvement project. The elements are the suppliers, inputs, process that is being improved, outputs, and the customers that receive the outputs.  

Business Process Model and Notation (BPMN)

BPMN diagrams are business process modeling tools that were developed by the Business Process Management Initiative (BPMI). The technique is like UML diagrams and is a standardized method for creating flowcharts – a step by step diagram of a process. Thus, when creating a process model, you use the elements specified under the BPMN methodology.  

Unified Modeling Language (UML) Diagrams

UML is a developmental modeling language that is used to provide a standardized way to visually represent a system. Diagrams include a system’s actors, actions, roles, and classes and help to gain a better understanding of or to document a system. UML was created in 1994 and its rapid rise in popularity led to it being published as an approved ISO standard in 2005.  

Value Stream Mapping

Value stream mapping is a business process modeling tool used to analyze the existing and future states of a process. These maps show all critical steps as well as the flow of materials and information through a process.  

An IPO, or input-process-output model , is a functional graph that identifies inputs, outputs, and required processes. The inputs consist of the information or materials that are introduced into a business process. This triggers the tasks that are required to produce the outputs that are the objective of a business process.

Gantt Charts  

Gantt charts are simplistic diagrams that provide a visualization of the overall time taken to complete a task or process. More specifically, Gantt charts can show the start and end times/dates of a process, the required tasks, and how long each took to complete.

Modeling process improvements

As evidenced by the different process modeling tools that we discussed in the last section, there are different ways to utilize the method. There are, however, some general steps that are used when the goal is to improve a process. These include:

•   Creating a model of the existing process . This can be done using one of the business process modeling tools discussed above or any of the other dozen or so commonly used techniques.
•   Identifying areas for improvement . Process models highlight bottlenecks and inefficiencies in existing workflows. Consider how these issues can be improved and evaluate how the process is operating from an efficiency and cost perspective.
•   Creating the new and improved process . Armed with the knowledge that you gained modeling the existing process, implement the changes. Note that with business process modeling software you can test the new process prior to launching it in real-time.

BPM software features

We mentioned above that business process modeling is not a standalone method. Rather it is used as part of a larger initiative like business process management (BPM). As such, a process modeler is an essential feature of a BPM software solution .

A process modeler allows users to design business processes using an intuitive and easy to use drag and drop feature. Users can drag and drop tasks as well as decision points directly on the modeling canvas. Additional elements like forms, users, and data connectors can also be added. It is also important for users to be able to test their new process designs. This is accomplished with a process validation engine. Process validation engines allow users to test their new process designs to ensure they are working prior to deployment.

ProcessMaker offers an industry leading low-code business process management software that gives organizations access to powerful business process modeling tools. ProcessMaker has helped organizations around the globe to transform their business processes.

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Business Process Modeling: Definition, Benefits, and Examples

Team Kissflow

Updated on 20 Mar 2024 • 4 min read

In today's complex business world, CIOs use technology as a key tool to improve how a company works. One important tool they use is Business Process Modeling.

Even though Business Process Modeling isn't a new idea, it's still a game-changer. As CIOs push for new IT initiatives that match wider business goals, they know that the key to better productivity is seeing, studying, and improving the detailed processes that make their organizations run.

So, what is Business Process Modeling, and why do you need it? This guide will look at Business Process Modeling from a CIO's perspective. We'll explain what it is, how it works, and how it can transform business productivity and efficiency. Just like a CIO uses technology to achieve strategic success, business process modeling acts as a roadmap, leading businesses towards a future of efficient processes, improved teamwork, and excellent performance.

What is Business Process Modeling (BPM)?

Business process modeling   (or) process modeling, is the analytical representation or put simply an illustration of an organization’s business processes. Modeling processes is a critical component for effective  business process management .

Process modeling software gives an analytical representation of 'as-is' processes in an organization and contrasts it with 'to-be' processes for making them more efficient.

Many business process modeling tools end up producing something like this:

Get rid of redundancies through effortless process design.

Why use business process modeling.

Your first step in modeling is actually pen and paper. However, to actually run a   business process , you will need to digitize that process in a way that a workflow engine can understand.

Business process modeling software   allow you to represent your process in a digital way that can then be transferred to a live automated process.

There are many benefits to business process modeling:

• Gives everyone a clear understanding of how the process works
• Provides consistency and controls the process
• Identifies and eliminates redundancies and inefficiencies
• Sets a clear starting and ending to the process

Business process modeling   can also help you group similar processes together and anticipate how they should operate. The primary objective of business process modeling tools is to analyze how things are right now and simulate how should they be carried out to achieve better results.

Kissflow, our   BPM Software , Streamline your business with superpowered processes.

Business Process Modeling Techniques

Business process modeling can be expressed through flowcharts, programs, hypertext, or scripts. There isn’t just one way to implement business process modeling; in fact, you can choose from   as many as 12 techniques.

Here are some of the most common business process modeling techniques:

1. Business Process Modeling Notation (BPMN)

BPMN 2.0 has become something of a standard syntax used by process analysts and those who create business modeling tools. It is a relatively simple usage of lines, arrows, and geometric shapes that all communicate the flow and nuances of the process. A process consultant can look at a BPMN 2.0 model and know exactly how it should function.

“Eventually, when [those] companies get their products shipping and crank up their marketing machines,  BPMN  will be the unquestioned standard for process modeling and execution. But right now, we are still between the news and the reality.” - Bruce Silver, Process Consultant and Author of the book BPMN Method and Style

However, BPMN 2.0 is still a learned language, and although relatively simple, isn’t immediately intuitive for the regular business user. It is a great tool for process consultants, but not helpful for those looking to create their own applications.

2. Universal Process Notation

Instead of having a new language to learn, a more intuitive system is   Universal Process Notation   or UPN.

UPN provides a simple box for each task to be completed. The box shows what happens, who is assigned to it, and when it happens in the sequence. It is extremely useful for IT to design and analyze processes, for management to comply to business norms, and - more importantly - for end business users to understand processes as intended. Kissflow uses UPN in its modeler.

3. Flowchart Technique

Flowcharts explain complex process flows in a simple yet effective way. They illustrates process steps in their sequential order, going from inputs to actual process to outputs. In fact, flowcharts provide the basic framework for BPMN to display advanced process flows.

Kissflow, our   process tracking software , can help your business stay constantly aware of every last business process.

4. Gantt Charts

Rather than showing the steps sequentially, Gantt charts are able to show the entire process using ‘time taken’ as one of the main axes. It does a better job of showing the overall time taken to complete a project than other options.

5. Petri-Nets

Traditionally a modeling technique in mathematics, petri-nets are also useful for modeling business processes. Petri-nets classify or color-code complex workflow steps, users, and routes in different colors.

What Do I Need in a Process Modeling Software?

Most   BPM Suites   include business process modeling tools in them. However, some have the modeler as a separate application.

The modeler is one of the most important elements in a BPMS , and you should spend a lot of time learning it before committing to buy a suite.

Great business modeling tools should:

• Be easy to learn for the business departments
• Be simple for IT teams to communicate with other departments
• Be inexpensive and industry compliant
• Have an integrated workflow editor tool with graphic interface
• Be able to simulate workflow before implementing

Learn more about process modelers .

Check out why these   6 BPM Software   are at the top of the competition!

The Challenge:

RENU Contracting and Restoration grappled with unreliable manual processes, difficulty managing complex tasks, and inefficient tracking of process issues. They needed a solution to transform their operations, increase productivity, and ensure accountability.

The Solution:

Michael Casamento, Director of Process and Procedure at RENU, discovered Kissflow during a web search. Impressed by its features, ease of use, and value for money, he implemented it. RENU began building workflows for check requests and merchandise returns. The success of these implementations led to the automation of other operations, such as claims processing, debit memo processing, and maintenance requests.

The Outcome:

Kissflow has become essential for managing many of RENU's critical processes. The company has experienced enhanced productivity, time-saving in process creation, increased accountability, minimal development time, and improved end-to-end trackability of processes. Michael praises Kissflow for its well-designed user interface and responsiveness to community input. Integrations with other apps via Zapier have further improved operations. Now, RENU looks forward to building an on/off-boarding process using Kissflow.

Utilizing a platform like Kissflow for business process modeling can be a game-changer for businesses. It allows organizations to visualize, analyze, and optimize their workflows in a user-friendly interface. 

This not only enhances productivity but also fosters improved collaboration and operational excellence. With its comprehensive and intuitive tools, Kissflow empowers CIOs and other business leaders to seamlessly align IT initiatives with broader business objectives, paving the way for strategic success in the ever-evolving landscape of technology and business.

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Aug 07, 2020

10 Business Process Modelling Techniques Explained, With Examples

Business process modelling isn’t a new concept. However, when implemented effectively it can help optimise business process and identify any challenges in your established systems. Business process modelling gives you the opportunity to map out all of the steps in your business process, giving you a visual reference so that you can better understand, analyse and improve workflows.

In his white paper ‘10 Perilous misconceptions of censuring current state mapping & analysis’, James Proctor debunks a number of misconceptions about business process modelling, such as “[w]e already know what we do, let’s just skip to what we need to be doing going forward – so no need to map and analyze existing processes.” He explains that business process modelling should begin by answering five questions that will provide a framework to start thinking about how you do business. 

These questions are:

• What are you currently doing?
• What are you currently doing that is not needed?
• What are you currently doing that can be improved?
• What are you not doing that you know you should be doing?
• What are you not doing that you don’t know you should be doing?

When it comes to describing what your business does, you could probably sum it up in a matter of sentences. However, the reality is that it can only achieve its purpose by your team working together to complete a series of tasks in succession, in order to produce a final result. Business process modelling allows you to map out all of these steps into a visual representation, so that you can better understand, analyse, and improve the workflow or process.

Fundamentally, business process modelling involves identifying, defining, and representing a process in its entirety, in order to aid communication of that process. It also has the following benefits:

• Allows you to identify tasks that are redundant and remove them
• You can spot bottlenecks in the process and improve process efficiency by eliminating them
• Efficient processes can be identically repeated, even when a new staff member must perform that part of the process

There are several techniques in business process modelling:

1. Business process modelling notation (BPMN)

Business process modelling notation (BPMN) is comprised of symbols that are used as a representation of tasks and workflows. Any symbols can be used in your business process, but using standardised ones allows you to collaborate with outside analysts more easily, and it spares you from having to invent your own visual language.

BPMN symbols fall into the following categories:

• Circles . Events are displayed inside of circular shapes
• Rectangles . Activities fit into rectangular boxes
• Diamonds . Control points or gateways are represented as diamond shapes
• Solid lines . Shows task transfers
• Dashed lines . Shows messages
• Swim lanes . These make provision for subprocesses that share responsibilities and how they interact. The swimlanes are the people or departments that the subprocess impacts on

• Dotted lines . These point to the flow object that the extra information expands on
• Squares outlined with dots and dashes . These group related elements in the diagram
• Square bracket . Text annotations are added here

2. Unified modelling language diagrams

Unified modelling language (UML) is a more modern approach to modelling and documenting processes. UML was initially developed by software developers, but has been successfully used in business process modelling, with a more object-oriented approach to its 14 UML diagram types.

3. Flow chart technique

This is a graphic representation of something that is manufactured or produced, which gives people involved in the project or process a single reference point. Flow charts use basic shapes and arrows to define relationships, such as processes, decisions, or data.

4. Data flow diagrams

Data flow diagrams (DFDs) show how data enters a system from external sources, how data moves internally within the system, and how the data is stored. DFD symbols vary slightly, but are mostly based on the same principles:

• Squares . These show external entities, which are either the source of data, or the destination
• Rounded rectangles . These represent processes that receive data as input, interact with it, and then produce an output
• Arrows . These show the flow of data, either as electronic data or physical items
• Open-ended rectangles . This represents data stores, and include electronic stores like databases or XML files, as well as physical stores, such as or filing cabinets or stacks of paper

5. Role activity diagrams

Role activity diagrams (RADs) are used to map out the intangible roles or ideas of behaviour that are desired within the company. These can often be functions within the business, systems in IT, or customer and supplier roles. RADs are easy to read and understand, and often provide a different perspective on a process, which helps support communication.

6. Role interaction diagrams

Interaction diagrams are business process models that graphically illustrate the interaction of various processes with each other within a system. Interaction diagrams come in two forms: sequence diagrams and collaboration diagrams. There are two types of interaction diagrams typically used to capture the various aspects of interaction in a system:

• Sequence diagrams . A sequence diagram shows the interaction between objects in the sequence in which they take place. Sequence diagrams describe how the objects function within a system, and in what order, and are often used to document and understand what is required for new and existing systems

• Collaboration diagram . 15 Collaboration diagrams are used to define and clarify the roles of the objects that carry out a certain flow of events in a visual format, and serve as the main source of information when determining class responsibilities and interfaces

7. Gantt charts

In the late 19th century, Gantt charts were the gold standard, and are often the go-to business process model for companies preparing for projects with distinct timelines, or that have time-sensitive processes that need to be captured and tracked. Gantt charts make it easy for people involved in different parts of a process to see when they are meant to start work, and by when each task should be complete, and to check whether all the subprocesses are on schedule.

8. Integrated definition for function modelling

Integrated definition (IDEF) for function modelling displays when parent activities give rise to child diagrams. There are 15 forms of IDEF and each addresses a different type of flow for functions, information, data, simulation model design, process description capture, and so on.

9. Coloured Petri nets

When a system has numerous processes that interact and synchronise with each other, then coloured Petri nets are ideal. This modelling technique is used to design, specify, simulate and verify systems.

Petri nets are unique in that they can represent both a state – such as passive, unsent, or waiting – and an action – such as send, receive, or transmit – in the same diagram. Coloured nets use colours to differentiate their symbols, and use a formal, mathematical representation with well-defined syntax and semantics.

10. Object oriented methods

The object oriented method of business process modelling is more than just modelling with objects: it encompasses message-passing, encapsulation (where internal detail is hidden), inheritance from class to subclass, and polymorphism (where the same procedure can operate on different data types).

Which business process modelling technique will you select for your business? Find the one that will ensure those involved in the system or process carry out their tasks in a consistent and efficient way, producing a predictable, measurable outcome.

Think more strategically about your business process designs

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• 2 Proctor, J. (2018). ‘10 perilous misconceptions of censuring current stat mapping & analysis’. Retrieved from Inteq Group .
• 3 (Nd). ‘What is BPM?’. Retrieved from Workflow Management Coalition . Accessed 22 April 2019.
• 4 (Nd). ‘The why and how of business modelling’. Retrieved from KissFlow . Accessed 22 April 2019.
• 5 Pearson, S. (Nd). ‘9 best business process modeling techniques (with examples)’. Retrieved from Tallyfy .
• 6 Pearson, S. (Nd). ‘9 best business process modeling techniques (with examples)’. Retrieved from Tallyfy .
• 7 Ceta, N. (Nd). ‘All you need to know about UML diagrams: types and 5+ examples’. Retrieved from Tallyfy .
• 8 Pearson, S. (Nd). ‘9 best business process modeling techniques (with examples)’. Retrieved from Tallyfy .
• 9 Rouse, M. (Aug, 2008). ‘Flowchart’. Retrieved from TechTarget .
• 10 Ambler, S. (Nd). ‘Data flow diagram (DFDs): an agile introduction’. Retrieved from Agile Modeling .
• 11 Bangerter, J. (Jul, 2017). ‘Data flow diagram symbols, types, and tips’. Retrieved from LucidChart .
• 12 (Sep, 2018). ‘Business process modeling techniques with examples’. Retrieved from Creately .
• 13 Jain, A. (Nd). ‘Unified modeling language (UML) | Sequence diagrams’. Retrieved from GeeksforGeeks . Accessed 22 April 2019.
• 14 Jain, A. (Nd). ‘Unified modeling language (UML) | Sequence diagrams’. Retrieved from GeeksforGeeks . Accessed 22 April 2019.
• 15 (Nd). ‘What is UML collaboration diagram?’. Retrieved from Visual Paradigm . Accessed 25 April 2019.
• 16 (Sep, 2018). ‘Business process modeling techniques with examples’. Retrieved from Creately .
• 17 Pearson, S. (Nd). ‘9 best business process modeling techniques (with examples)’. Retrieved from Tallyfy . Accessed 25 April 2019.
• 18 (Sep, 2018). ‘Business process modeling techniques with examples’. Retrieved from Creately .
• 19 Jensen, K. (Jun, 2005). ‘An introduction to the theoretical aspects of colored Petri nets’. Retrieved from Springer Link .
• 20 (Sep, 2018). ‘Business process modeling techniques with examples’. Retrieved from Creately .
• 21 (Nd). ‘Object oriented methodologies’. Retrieved from Career Ride .

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8 Types of Business Models & the Value They Deliver

• 26 May 2016

You want to start a company but aren’t sure about a viable business model. How might you create something that people are willing to pay for and could earn you a profit?

Before diving into potential strategies, it’s important to understand what a business is and does. At its heart, a business generates value for its customers. A business model is a specific method used to create and deliver this value.

What Is Value in Business?

A successful business creates something of value . The world is filled with opportunities to fulfill people’s wants and needs, and your job as an entrepreneur is to find a way to capitalize on these opportunities.

A viable business model is one that allows a business to charge a price for the value it’s creating, such that the business brings in enough money to make it worthwhile and continue operating over time. Whatever the business is offering must also satisfy the customer’s needs and quality expectations.

It’s important to note that value is subjective. What’s valuable to one person may not be to another. Moreover, the concept of value excludes any moral judgments about the intrinsic worth of an offering. For example, while most would agree that human life is more valuable than sports, some professional athletes make far more money than the average brain surgeon.

Nonetheless, the concept of value provides a useful bedrock on which to begin building your business model. In particular, consider what forms of value people are willing to pay for. Here are eight potential business models and the forms of value they deliver—as well as the pros and cons of each—to help you get started.

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8 Types of Business Models to Explore

A product is a tangible item of value. To run a successful product-focused business, try to produce the item for as low a cost as possible while maintaining a reasonable level of quality. Once the item is produced, your objective should be to sell as many units as you can for as high a price as people are willing to pay to maximize profit.

Products are all around us. From laptops to books to HBS Online courses (products don’t have to be physical), products are a classic form of value with high upside if you can get them right.

• Pros: Many products can be easily duplicated. Thus, firms can achieve economies of scale after bearing some upfront costs of production.
• Cons: Physical products need to be stored as inventory, which can increase costs. They can also be damaged or lost more easily than, say, a service.

Related: How to Create an Effective Value Proposition

A service involves offering assistance to someone else for a fee. To make money from your service, provide a skill to others that they either can’t or don’t want to do themselves. If possible, repeatedly provide this benefit to them at a high quality.

Like products, services are in abundance, especially in the knowledge economy. From hairdressers to construction workers to consultants to teachers, people with lucrative skills can earn good money for their time.

• Pros: If you have a skill in high demand or a skill that very few others have, you can charge a fair price for your time and stand out in your field.
• Cons: If you don’t charge enough for your services, or many people have your skill, your business may not be as lucrative.

3. Shared Assets

A shared asset is a resource that many people can use. Such resources allow the owner to create or purchase the item once and then charge customers for its use. To run a profitable business around shared assets, you need to balance the tradeoff of serving as many customers as you can without affecting the overall quality of the experience.

For instance, think of a fitness center. A gym typically buys treadmills, ellipticals, free weights, bikes, and other equipment and charges customers monthly membership fees for access to these shared assets. The key is to charge customers enough to maintain and, if needed, replace their assets over time. Finding the right range of customers is the key to making a shared asset model work.

• Pros: This model provides people access to a lot of assets they wouldn’t otherwise have access to. In addition, many people are willing to pay a lot for access to trendy social spaces.
• Cons: Because they don’t own the assets, customers have little incentive to treat your resources well. Make sure you have enough in your budget for quick fixes, if necessary.

4. Subscription

A subscription is a type of program in which a user pays a recurring fee for access to certain specified benefits. These benefits often include the recurring provision of products or services. Unlike a shared asset, however, your experience with the product or service isn’t affected by others.

To have a successful subscription-based offering, build a subscriber base by providing reliable value over time while attracting new customers.

The number of subscription services has exploded in recent years. From magazines to streaming services to grocery and wine delivery subscriptions, businesses are turning to the subscription-based model, often with great success.

• Pros: This model provides certainty in the form of predictable revenue streams, making financial forecasting a bit easier. It also benefits from a loyal customer base and customer inertia (for instance, customers may forget to cancel their subscription).
• Cons: To run this model, your business operations must be strong. If you can’t deliver value consistently over time, you may want to consider a different business model.

5. Lease/Rental

A lease involves obtaining an asset and renting it out for an agreed-upon amount of time in exchange for a fee. You can lease virtually anything, but it’s in your best interest to rent assets that are durable enough to be returned in good condition. This ensures you can lease the good multiple times and, perhaps, eventually sell it.

To profit from leases, the key is to ensure that the revenue you get from leasing the asset before it loses value is greater than the purchase price. This requires you to price the rental of the item strategically and potentially not lease to those who may not return it in good condition. This is why many rentals of high-value items require references, credit checks, or other background information that can predict how someone may return the leased item.

• Pros: You don’t have to have a novel idea to make money using a lease business model . You can purchase assets and rent them to others who wouldn’t buy them for full value and earn a premium.
• Cons: You need to protect yourself from unexpected damage to your assets. One way to do so is through insurance.

6. Insurance

Insurance entails the transfer of risk from a customer to a seller of an insurance policy. In exchange for the insurance company (the seller of the policy) taking on the risk of a specified event occurring, they receive periodic payments ("premiums" in insurance lingo) from the policyholder. If the specified event doesn’t happen, the insurance company keeps the money, but if it does, the company has to pay the policyholder.

In a sense, insurance is the sale of safety—it provides value by protecting people from unlikely, but catastrophic, risks. Policyholders can take insurance out on almost anything: life, health, house, car, boat, and more. To run a successful insurance company, you have to accurately estimate the likelihood of bad events occurring and charge higher premiums than the claims you pay out to your customers.

• Pros: If you calculate risk accurately, you’re guaranteed to make money using the insurance business model.
• Cons: It can be difficult to accurately calculate the likelihood of specific events occurring. Insurance only works because it spreads risk over large numbers of policyholders. Insurance companies can fail if a large portion of policyholders is impacted by a widespread, negative event they didn’t see coming (for example, the Global financial crisis in 2007 and 2008).

Related: 5 Steps to Validate Your Business Idea

7. Reselling

Reselling is the purchasing of an asset from one seller and the subsequent sale of that asset to an end buyer at a premium price. Reselling is the process through which most major retailers purchase the products they then sell to buyers. For example, think of farmers supplying fruits and vegetables to a grocery store or manufacturers selling goods to a hardware store.

Companies make money through resale by purchasing large quantities of items (usually at a bulk discount) from wholesalers and selling single items for a higher price to individuals. This price raise is called a markup.

• Pros: Markups can often be high for retail sales, enabling you to earn a profit on the items you resell. For example, a bottle of water might cost 10 cents to produce, whereas a customer may be willing to pay $1.50 or more for the same bottle.
• Cons: You need to be able to gain access to quality products at low costs for the reselling business model to work. You’ll also need the physical space to store inventory to manage sales cycles.

8. Agency/Promotion

Agents create value by marketing an asset, which they don’t own, to an interested buyer. They then earn a fee or a commission for bringing the buyer and seller together. Thus, instead of using their own assets to create value, they team up with others to help promote them to the world.

Running a successful agency requires good connections, excellent negotiation skills , and a willingness to work with a diverse set of individuals. One example is a sports agent who promotes players to teams and negotiates on their behalf to get the best deal. In return, they typically receive compensation equal to a certain percentage of the contract.

• Pros: You can highly profit from expertise and connections in your industry, be it publishing, acting, advertising, or something else.
• Cons: You only get paid if you seal the deal, so you have to be able to live with some uncertainty.

Setting Your Business Up for Success

These eight types of business models each have pros and cons and deliver value in their own ways. If you’re looking to start a business and need a place to start, one of these could be the best fit for your venture and entrepreneurial skill set .

Interested in honing your entrepreneurial skills? Explore our four-week online course Entrepreneurship Essentials and our other entrepreneurship and innovation courses to learn the language of the business world.

This post was updated on February 19, 2021, and is a compilation of two posts, previously published on May 26, 2016, and June 2, 2016.

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What Is a Business Process? | Definition, Importance and Examples

Last Updated March 8, 2024

A business process is a standardized method a company uses to accomplish routine activities. Business processes are critical to keeping your business on track and organized. In this article, you will learn the definition of a business process, how business processes differ from business functions, and why business processes are essential to every type of company.

What Is a Business Process?

At its core, a business process is a repeatable collection of steps a company uses to accomplish a goal. Good processes are crucial to making progress toward your goals and improving your business’s operations.

The purpose of a business process is to help your company reach a specific target. If you want to accomplish things as a business, processes allow you to take repeatable, consistent steps forward. 

A good process meets three essential criteria:

• Repeatability:  All processes must be designed to be repeated. A process that you don’t intend to repeat is an action plan instead of a true process. It’s the difference between routine purchases and buying a new facility.
• Transparency:  Processes also need to be trackable, allowing you to monitor them for success. A good process has built-in data-tracking steps, allowing you to compare performance and efficacy over time.
• Agility:  Processes that are set in stone don’t hold up in the real world. A process should be adaptable to multiple situations so small changes to the work environment don’t cause delays. Furthermore, a good process should be easy to update in case of more significant or permanent adjustments. 

When your processes meet all three of these criteria, they are more likely to support your business’s goals. 

Business Process vs. Business Function

Business processes are often confused with business functions. These concepts are similar but should not be confused with each other. 

A business function is a collection of related activities performed by a particular department in your business. The activities that make up a business function are interconnected and difficult to separate. For instance, a critical business function is human resources, the management and organization of your staff, and hiring policies. 

Meanwhile, a business process is a collection of activities designed to achieve a specific outcome. Unlike a function, the activities aren’t necessarily directly connected to one another. Instead, they come together to support a single end result. For instance, your company may have a staff retention process that includes work done by HR, maintenance, and management with the intention of reducing turnover.

At its core, a business function consists of tightly related activities with a general goal, and a business process is a collection of loosely related tasks with a specific target. A well-run company involves both business processes and functions. In fact, many functions will be involved in multiple processes. The HR function will be involved in hiring processes, retention processes, and disciplinary processes, as well as many others.

The Importance of Business Processes

Business processes help keep your company on task, prevent errors, and increase the speed with which your staff can accomplish their work. Without defined processes, there’s no way to guarantee that anyone does a task the same way twice. Your products or services may not have consistent quality, data may not be collected consistently, and legal documentation may fail to meet regulatory standards. 

On the other hand, implementing processes provides consistency, which then allows you to offer higher-quality products, services, and customer service. Well-designed business processes also make your company more efficient. When your staff members understand how they’re supposed to perform tasks, they accomplish them faster and make fewer mistakes. 

Efficiency and quality are only two of the benefits of building better business processes. Other advantages of implementing business processes include:

• Locating opportunities for improvement: When developing methods and procedures, you must examine your current tactics. In the process, you will both identify existing problems and have the opportunity to fix them. For instance, if your current processes rely on out-of-date technology, you can revise them to include modern alternatives.
• Reducing costs:  By developing faster and more efficient processes, you can also reduce your company’s expenses. You will both save on direct material costs if you discover ways to minimize waste and indirectly save on payroll as your employees waste less time on inefficient methods.
• Working toward long-term goals:  A critical step in rewriting your current methods is identifying the tasks your staff must accomplish during their daily routine. You can develop new processes that include actions that progress toward your company’s long-term goals. Taking daily steps toward your targets increases the likelihood that you will achieve those goals in a timely fashion.

Examples of Business Processes

Once you understand what a business process is, you can break it down into different “types.” There are four types of business processes that every company needs to develop. Below, the four types are broken down with examples of what they can look like in practice. 

Operational Processes

Operational processes are the most fundamental parts of a business because they’re directly responsible for creating and delivering products and services. 

Product Development

The product development process involves creating and improving your offerings over time. This process looks different at every business, but the basic structure is the same:

• A market opportunity is identified that the company can address.
• The development team brainstorms solutions to the problem.
• A few promising solutions are chosen for development.
• The demos are tested to see how they work.
• One version is chosen for release.
• The released version’s success is monitored.

This process repeats whenever the company wants to improve or update its current products or release something entirely new.

Manufacturing

Once your offerings have been developed, it’s time to produce them. The manufacturing process is usually one of the most obvious and well-designed business processes. It typically involves steps such as:

• Sourcing materials
• Transporting materials to the manufacturing location
• Following a predetermined order of steps to transform the materials into a product 
• Packing the product for delivery
• Bringing the packed product to the pickup location

If you have any experience with Lean methodology (a management mentality focusing on low waste and high efficiency), you’ve seen how a specific focus on manufacturing processes can improve a company’s operations. 

The delivery process may or may not be simple, depending on your business’s structure. It may be nothing more than bringing products to an on-site showroom, or it may require navigating international shipping laws. This process will look different for product-based and service-based companies. 

For instance, a product may be shipped to a wholesaler, to a retail store or directly to the consumer, and a service may be performed on your premises or at the customer’s location. Developing a well-thought-out delivery process can reduce wasted time, money, and effort regardless of your specific business model.

Sales Processes

Businesses need to sell their products, or they won’t succeed; the sales processes are the procedures businesses use to make sure they bring in revenue. 

The sales process is the collection of steps a company takes to discover a lead and convert them into a loyal customer. The overall sales process includes several subprocesses, such as:

• Lead generation
• Lead qualification
• Contacting leads
• Negotiation
• Closing the deal
• Nurturing current customers

Each of these subprocesses should be structured to support your business model. Together, they help you build toward generating more sales overall.

Marketing may be considered part of the lead generation sales subprocess, but it’s significant enough to warrant its own department in many businesses. In the marketing business process, your goal is to build trust in your brand and brand loyalty. Marketing may also involve subprocesses focusing on different types of advertising, such as social media, search engines, and physical ads.

Customer Service

The customer service process is part of the nurturing sales subprocess. Providing your current customers with excellent service encourages them to buy from you again in the future. The customer service process may involve learning what problems customers often face, trying the most common solutions, developing new solutions for unusual situations, and following up to make sure everything works. 

Supporting Processes

Supporting processes include the business procedures and departments that are critical to the operation of a business but aren’t directly connected to sales or product delivery. 

Managing your organization’s current assets and debts is fundamental to remaining solvent. Furthermore, accounting is essential for maintaining compliance with the Internal Revenue Service and other government regulations. The accounting process looks similar for many businesses, requiring in-depth record keeping, careful monitoring of bank accounts, loans, debts and assets, and staying up to date on legal requirements. 

Maintenance

Your maintenance and janitorial teams are critical to your business despite not directly contributing to sales. Instead, they perform essential upkeep that prevents future expenses. The vital tasks they perform keep your equipment and office from breaking down. Maintenance includes:

• Routine cleaning for your office
• Regular upkeep on manufacturing equipment

Management Processes

Management processes are the actions necessary to keep everything else running smoothly. 

There may be dozens of individual teams and departments in larger businesses. These teams can lose their connection with one another and the company’s ultimate goals if they aren’t being managed carefully. The management process is intended to keep larger groups of people on track. An example of the management process may involve:

• Scheduling regular meetings with individual teams.
• Scheduling regular meetings with department heads.
• Monitoring results from different employees.
• Assigning projects and work to appropriate teams.
• Rewarding strong performers and working with weak employees to improve their results.

The specific order and frequency of these steps can vary depending on your company’s management style. However, building a consistent management process helps your staff know what to expect and enables you to develop a coherent company culture.

The process of financing is different from that of accounting. Whereas accounting is responsible for tracking the assets and debts a company has, financing is the process of negotiating and managing additional funds and assets. The finance process involves applying for funding, negotiating terms and conditions, and following up with those terms to remain in good standing. This keeps the organization’s finances in check and ensures every department has the funding necessary to do its work.

Onboarding new staff is essential if you want your employees to perform at their best from the start. The onboarding process includes steps such as:

• Training employees on new technology.
• Educating them on safety and security procedures.
• Getting them onto your payroll and into other company systems.

Onboarding can be overlooked in smaller companies and departments, but it’s critical for getting new staff integrated into your business. Building a better onboarding process saves time and money by reducing mistakes and keeping your entire team on the same page. 

Business Process Management

There are dozens of business processes that you may already use in your company. Business process management (BPM) allows you to stay on top of these processes and reinvent them from the ground up. BPM is a collection of tools and techniques that help you focus on your operations and build new ones that aren’t simply minor improvements on past methods. By implementing BPM, your company can determine the most effective way to perform routine tasks and become more adaptable to real-world circumstances. 

Starting Your Business Process Management Journey with Villanova University

Business processes are a critical part of modern management. Understanding how these processes work and how to manage them can help you update your company’s approach to its most essential tasks. 

You can make BPM a part of your management style by earning a Certificate in Business Process Management online through Villanova. This three-course certificate program will teach you everything you need to know about BPM, from the basics of what a business process is to how to implement BPM in your organization. Enroll today or request more information to learn how a Certificate in Business Process Management can help you understand your business processes and identify how to improve them.

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7 types of process improvement methodologies you should know about

Business process improvements are methodologies in which a team evaluates their current processes and adapts them in order to increase profitability. This article highlights seven different process improvements your team can use to reduce inefficiencies and increase profit.

If businesses decided to consistently stay the same over time, many of them would collapse. Innovation requires change, and if businesses don’t change to meet customer demands, they won’t achieve much growth. 

This is why many organizations use some form of process improvement methodology to adapt their processes to customer demands.

What is process improvement?

Business process improvements are methodologies in which a team evaluates their current processes and adapts them with the intent to increase productivity, streamline workflows, adapt to changing business needs, or increase profitability.

7 types of process improvement methodologies

There are seven different business process improvement methodologies your team can use to help reduce inefficiencies. In most cases, the methodology you choose depends on why you want to improve your processes and what you’re looking to improve.

1. Six Sigma methodology

Six Sigma is often used in manufacturing, mainly because it helps minimize defects and inconsistencies. The goal here is to optimize for consistency, which in the end leads to customer satisfaction. 

There are two main processes used in Six Sigma: DMAIC for existing processes and DMADV for new processes. Since this article focuses specifically on improvements to existing processes, let’s dive into the DMAIC process. 

What is the DMAIC process?

DMAIC is a Six Sigma process used to optimize existing processes. DMAIC stands for:

Define the opportunity for improvement.

Measure the performance of your existing processes.

Analyze the process to find defects and root causes.

Improve processes by addressing root causes.

Control any improved processes and assess future process performance to correct deviations.

The bulk of the DMAIC process improvement happens during the analysis stage. During the analysis stage of DMAIC, teams use a fishbone diagram, or an Ishikawa diagram , to visualize the possible causes of a product defect. The head of the fishbone diagram states the initial problem—then as you follow along the spine of the fish, each rib lists different categories of issues that can lead to the initial problem. This type of visual analysis is a good way to identify the different issues one root cause can create.

2. Total Quality Management (TQM)

Total quality management (TQM) is a customer-focused method that involves continuous improvement over time. This technique is often used in supply chain management and customer satisfaction projects. 

TQM relies heavily on data-driven decisions and performance metrics. During the problem solving process, you use success metrics to decide how you can improve a process. 

Here some key features of TQM:

Customer-focus: The end goal of TQM is always to benefit the end customer. If your team is focused on improving quality, ask yourself how that process change may affect how end consumers experience your product.

Full-team involvement: Unlike other process improvement methodologies TQM involves the entire team—not just production. As a result, you may end up looking for ways to optimize more business-centric processes, such as sales and marketing, to benefit the end consumer.

Continuous improvement: Continuous improvement in business is the idea of making small changes with the goal of continually optimizing processes. There's a lot of variability when it comes to business, and continuous improvement helps your team adapt when outside circumstances change.

Data-driven decision making : In order to apply continuous process improvement, you must continually collect data to analyze how processes are performing. This data can help identify where there may be inefficiencies and where to focus improvement initiatives.

Process-focused: The main goal of implementing TQM is to improve processes. Other process improvement methods like Six Sigma work to minimize the amount of defects, while TQM works to decrease inefficiencies.

3. Lean manufacturing

This form of process improvement goes by many names, with lean manufacturing being the most common. It may also be referred to as Lean production or just-in-time production. Defined by James P. Womack, Daniel Jones, and Daniel Roos in the book "The Machine That Changed the World," Lean highlights five main principles based off of the authors' experiences at Toyota manufacturing. 

The 5 principles of lean

​Identify value

Value stream mapping

Create flow

Establish pull

Continuous improvement

4. Continuous improvement (kaizen)

The Japanese philosophy of kaizen guides the continuous improvement model . Kaizen was born from the idea that life should be continuously improved so we can lead more satisfying and fulfilling lives.

This same concept can be applied to business—because as long as you are continuously improving, your business can become more successful. The goal of continuous improvement is to optimize for activities that generate value and to get rid of any waste. 

There are three types of waste that kaizen aims to remove: 

Muda (wastefulness) : Practices that consume resources but don’t add value.  

Mura (unevenness): Overproduction that leaves behind waste, like excess product.

Muri (overburden): Too much strain on resources, such as worn out machinery or overworked employees.

5. Plan Do Check Act (PDCA)

The PDCA cycle is an interactive form of problem solving. It's used to improve processes and implement change. PDCA was created by Walter Shewhart when he applied the scientific method to economic quality control. Later, the idea was developed even further by W. Edwards Deming, who expanded on Shewhart's idea and used the scientific method for process improvement in addition to quality control. 

There are four main steps to the PDCA cycle:

Plan : Decide on the problem you would like to solve, and create a plan to solve it.

D​​​​o: Test and implement the plan at a small scale.

Check: Review how the actions in the Do stage performed.

Act: After reviewing the results of the test, decide whether or not you want to implement the change at a larger scale.

PDCA is an improvement cycle. This means that these steps can be repeated until your team reaches the desired result.

6. 5 Whys analysis

The 5 Whys analysis is a process improvement technique used to identify the root cause of a problem. It's a really simple process in theory: you gather a group of stakeholders who were involved in a failure, and one person asks: "Why did this go wrong?" Repeat this question approximately five times, until you get to the root cause of an issue. The 5 Whys analysis aims to identify the issues within a process, but not human error. 

Here's an example:

Problem: There was an increase in customer complaints regarding damaged products.

"Why did this happen?" Because packaging was not sufficient enough to protect the products.

"Why was the packaging not sufficient enough to protect the products?" Because the team testing packaging did not test past a certain level of stress.

"Why did the team not test the packaging further?" Because current standard processes indicated that the testing indicated was sufficient.

"Why did the current standard process indicate that this testing was sufficient?" Because this process was created for a previous product, and not this current product that is coming back damaged.

"Why wasn’t there a new process for the new product?" Because the project template for launching new products doesn’t include stress testing the new packaging. 

You can see from this example that the team asked “Why” until they identified the process error that needs to be fixed—in this case, adding a “stress test new packaging” step into their product launch template . When working with stakeholders in processes like this, it's important to identify the issues, and co-create next steps together so that your production can improve.

7. Business process management (BPM)

Business process management, or BPM , is the act of analyzing and improving business processes. Much like any organic being, businesses grow and shift over time. Your team may have implemented processes that worked when your team was small, but as you grow those processes may not scale in a way that allows your team to be as efficient as possible. 

Most of the time, BPM helps teams identify bottlenecks, ways to automate manual work, and strategies to improve inefficiencies. There are five main steps to business process management.

Analyze: Look at your current processes and map them from beginning to end. This is commonly known as process mapping.

Model: Draft out what you want the process to look like. Ideally, you'll have found any inefficiencies in the first step, and you can draft how you would like to solve them in this stage.

Implement : Put your model to action. During this stage, it's important to establish key success metrics so you can gauge whether or not the changes made were successful.

Monitor: Decide whether or not your project is successful. Are the success metrics you identified in step three improving? 

Optimize: As the process evolves, continue looking for inefficiencies in your process and continuously optimize as you go.

Manage process improvements to increase productivity

As a team lead, one of the most valuable things you can bring to your team are clearer processes and better workflows . When used effectively, process improvement increases your team's productivity and decreases inefficiencies. 

To increase clarity and improve processes, try work management. Work management tools like Asana can help you take your team’s productivity to the next level by standardizing processes, streamlining workflows, and keeping your team in sync.

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Yarilet Perez is an experienced multimedia journalist and fact-checker with a Master of Science in Journalism. She has worked in multiple cities covering breaking news, politics, education, and more. Her expertise is in personal finance and investing, and real estate.

What Is a Business Model?

The term business model refers to a company's plan for making a profit . It identifies the products or services the business plans to sell, its identified target market , and any anticipated expenses . Business models are important for both new and established businesses. They help new, developing companies attract investment, recruit talent, and motivate management and staff.

Established businesses should regularly update their business model or they'll fail to anticipate trends and challenges ahead. Business models also help investors evaluate companies that interest them and employees understand the future of a company they may aspire to join.

Key Takeaways

• A business model is a company's core strategy for profitably doing business.
• Models generally include information like products or services the business plans to sell, target markets, and any anticipated expenses.
• There are dozens of types of business models including retailers, manufacturers, fee-for-service, or freemium providers.
• The two levers of a business model are pricing and costs.
• When evaluating a business model as an investor, consider whether the product being offered matches a true need in the market.

Investopedia / Laura Porter

Understanding Business Models

A business model is a high-level plan for profitably operating a business in a specific marketplace. A primary component of the business model is the value proposition . This is a description of the goods or services that a company offers and why they are desirable to customers or clients, ideally stated in a way that differentiates the product or service from its competitors.

A new enterprise's business model should also cover projected startup costs and financing sources, the target customer base for the business, marketing strategy , a review of the competition, and projections of revenues and expenses. The plan may also define opportunities in which the business can partner with other established companies. For example, the business model for an advertising business may identify benefits from an arrangement for referrals to and from a printing company.

Successful businesses have business models that allow them to fulfill client needs at a competitive price and a sustainable cost. Over time, many businesses revise their business models from time to time to reflect changing business environments and market demands .

When evaluating a company as a possible investment, the investor should find out exactly how it makes its money. This means looking through the company's business model. Admittedly, the business model may not tell you everything about a company's prospects. But the investor who understands the business model can make better sense of the financial data.

Evaluating Successful Business Models

A common mistake many companies make when they create their business models is to underestimate the costs of funding the business until it becomes profitable. Counting costs to the introduction of a product is not enough. A company has to keep the business running until its revenues exceed its expenses.

One way analysts and investors evaluate the success of a business model is by looking at the company's gross profit . Gross profit is a company's total revenue minus the cost of goods sold (COGS). Comparing a company's gross profit to that of its main competitor or its industry sheds light on the efficiency and effectiveness of its business model. Gross profit alone can be misleading, however. Analysts also want to see cash flow or net income . That is gross profit minus operating expenses and is an indication of just how much real profit the business is generating.

The two primary levers of a company's business model are pricing and costs. A company can raise prices, and it can find inventory at reduced costs. Both actions increase gross profit. Many analysts consider gross profit to be more important in evaluating a business plan. A good gross profit suggests a sound business plan. If expenses are out of control, the management team could be at fault, and the problems are correctable. As this suggests, many analysts believe that companies that run on the best business models can run themselves.

When evaluating a company as a possible investment, find out exactly how it makes its money (not just what it sells but how it sells it). That's the company's business model.

Types of Business Models

There are as many types of business models as there are types of business. For instance, direct sales, franchising , advertising-based, and brick-and-mortar stores are all examples of traditional business models. There are hybrid models as well, such as businesses that combine internet retail with brick-and-mortar stores or with sporting organizations like the NBA .

Below are some common types of business models; note that the examples given may fall into multiple categories.

One of the more common business models most people interact with regularly is the retailer model. A retailer is the last entity along a supply chain. They often buy finished goods from manufacturers or distributors and interface directly with customers.

Example: Costco Wholesale

Manufacturer

A manufacturer is responsible for sourcing raw materials and producing finished products by leveraging internal labor, machinery, and equipment. A manufacturer may make custom goods or highly replicated, mass produced products. A manufacturer can also sell goods to distributors, retailers, or directly to customers.

Example: Ford Motor Company

Fee-for-Service

Instead of selling products, fee-for-service business models are centered around labor and providing services. A fee-for-service business model may charge by an hourly rate or a fixed cost for a specific agreement. Fee-for-service companies are often specialized, offering insight that may not be common knowledge or may require specific training.

Example: DLA Piper LLP

Subscription

Subscription-based business models strive to attract clients in the hopes of luring them into long-time, loyal patrons. This is done by offering a product that requires ongoing payment, usually in return for a fixed duration of benefit. Though largely offered by digital companies for access to software, subscription business models are also popular for physical goods such as monthly reoccurring agriculture/produce subscription box deliveries.

Example: Spotify

Freemium business models attract customers by introducing them to basic, limited-scope products. Then, with the client using their service, the company attempts to convert them to a more premium, advance product that requires payment. Although a customer may theoretically stay on freemium forever, a company tries to show the benefit of what becoming an upgraded member can hold.

Example: LinkedIn/LinkedIn Premium

Some companies can reside within multiple business model types at the same time for the same product. For example, Spotify (a subscription-based model) also offers a free version and a premium version.

If a company is concerned about the cost of attracting a single customer, it may attempt to bundle products to sell multiple goods to a single client. Bundling capitalizes on existing customers by attempting to sell them different products. This can be incentivized by offering pricing discounts for buying multiple products.

Example: AT&T

Marketplace

Marketplaces are somewhat straight-forward: in exchange for hosting a platform for business to be conducted, the marketplace receives compensation. Although transactions could occur without a marketplace, this business model attempts to make transacting easier, safer, and faster.

Example: eBay

Affiliate business models are based on marketing and the broad reach of a specific entity or person's platform. Companies pay an entity to promote a good, and that entity often receives compensation in exchange for their promotion. That compensation may be a fixed payment, a percentage of sales derived from their promotion, or both.

Example: social media influencers such as Lele Pons, Zach King, or Chiara Ferragni.

Razor Blade

Aptly named after the product that invented the model, this business model aims to sell a durable product below cost to then generate high-margin sales of a disposable component of that product. Also referred to as the "razor and blade model", razor blade companies may give away expensive blade handles with the premise that consumers need to continually buy razor blades in the long run.

Example: HP (printers and ink)

"Tying" is an illegal razor blade model strategy that requires the purchase of an unrelated good prior to being able to buy a different (and often required) good. For example, imagine Gillette released a line of lotion and required all customers to buy three bottles before they were allowed to purchase disposable razor blades.

Reverse Razor Blade

Instead of relying on high-margin companion products, a reverse razor blade business model tries to sell a high-margin product upfront. Then, to use the product, low or free companion products are provided. This model aims to promote that upfront sale, as further use of the product is not highly profitable.

Example: Apple (iPhones + applications)

The franchise business model leverages existing business plans to expand and reproduce a company at a different location. Often food, hardware, or fitness companies, franchisers work with incoming franchisees to finance the business, promote the new location, and oversee operations. In return, the franchisor receives a percentage of earnings from the franchisee.

Example: Domino's Pizza

Pay-As-You-Go

Instead of charging a fixed fee, some companies may implement a pay-as-you-go business model where the amount charged depends on how much of the product or service was used. The company may charge a fixed fee for offering the service in addition to an amount that changes each month based on what was consumed.

Example: Utility companies

A brokerage business model connects buyers and sellers without directly selling a good themselves. Brokerage companies often receive a percentage of the amount paid when a deal is finalized. Most common in real estate, brokers are also prominent in construction/development or freight.

Example: ReMax

How to Create a Business Model

There is no "one size fits all" when making a business model. Different professionals may suggest taking different steps when creating a business and planning your business model. Here are some broad steps one can take to create their plan:

• Identify your audience. Most business model plans will start with either defining the problem or identifying your audience and target market . A strong business model will understand who you are trying to target so you can craft your product, messaging, and approach to connecting with that audience.
• Define the problem. In addition to understanding your audience, you must know what problem you are trying to solve. A hardware company sells products for home repairs. A restaurant feeds the community. Without a problem or a need, your business may struggle to find its footing if there isn't a demand for your services or products.
• Understand your offerings. With your audience and problem in mind, consider what you are able to offer. What products are you interested in selling, and how does your expertise match that product? In this stage of the business model, the product is tweaked to adapt to what the market needs and what you're able to provide.
• Document your needs. With your product selected, consider the hurdles your company will face. This includes product-specific challenges as well as operational difficulties. Make sure to document each of these needs to assess whether you are ready to launch in the future.
• Find key partners. Most businesses will leverage other partners in driving company success. For example, a wedding planner may forge relationships with venues, caterers, florists, and tailors to enhance their offering. For manufacturers, consider who will provide your materials and how critical your relationship with that provider will be.
• Set monetization solutions. Until now, we haven't talked about how your company will make money. A business model isn't complete until it identifies how it will make money. This includes selecting the strategy or strategies above in determining your business model type. This might have been a type you had in mind but after reviewing your clients needs, a different type might now make more sense.
• Test your model. When your full plan is in place, perform test surveys or soft launches. Ask how people would feel paying your prices for your services. Offer discounts to new customers in exchange for reviews and feedback. You can always adjust your business model, but you should always consider leveraging direct feedback from the market when doing so.

Instead of reinventing the wheel, consider what competing companies are doing and how you can position yourself in the market. You may be able to easily spot gaps in the business model of others.

Criticism of Business Models

Joan Magretta, the former editor of the Harvard Business Review, suggests there are two critical factors in sizing up business models. When business models don't work, she states, it's because the story doesn't make sense and/or the numbers just don't add up to profits. The airline industry is a good place to look to find a business model that stopped making sense. It includes companies that have suffered heavy losses and even bankruptcy .

For years, major carriers such as American Airlines, Delta, and Continental built their businesses around a hub-and-spoke structure , in which all flights were routed through a handful of major airports. By ensuring that most seats were filled most of the time, the business model produced big profits.

However, a competing business model arose that made the strength of the major carriers a burden. Carriers like Southwest and JetBlue shuttled planes between smaller airports at a lower cost. They avoided some of the operational inefficiencies of the hub-and-spoke model while forcing labor costs down. That allowed them to cut prices, increasing demand for short flights between cities.

As these newer competitors drew more customers away, the old carriers were left to support their large, extended networks with fewer passengers. The problem became even worse when traffic fell sharply following the September 11 terrorist attacks in 2001 . To fill seats, these airlines had to offer more discounts at even deeper levels. The hub-and-spoke business model no longer made sense.

Example of Business Models

Consider the vast portfolio of Microsoft. Over the past several decades, the company has expanded its product line across digital services, software, gaming, and more. Various business models, all within Microsoft, include but are not limited to:

• Productivity and Business Processes: Microsoft offers subscriptions to Office products and LinkedIn. These subscriptions may be based off product usage (i.e. the amount of data being uploaded to SharePoint).
• Intelligent Cloud: Microsoft offers server products and cloud services for a subscription. This also provide services and consulting.
• More Personal Computing: Microsoft sells physically manufactured products such as Surface, PC components, and Xbox hardware. Residual Xbox sales include content, services, subscriptions, royalties, and advertising revenue.

A business model is a strategic plan of how a company will make money. The model describes the way a business will take its product, offer it to the market, and drive sales. A business model determines what products make sense for a company to sell, how it wants to promote its products, what type of people it should try to cater to, and what revenue streams it may expect.

What Is an Example of a Business Model?

Best Buy, Target, and Walmart are some of the largest examples of retail companies. These companies acquire goods from manufacturers or distributors to sell directly to the public. Retailers interface with their clients and sell goods, though retails may or may not make the actual goods they sell.

What Are the Main Types of Business Models?

Retailers and manufacturers are among the primary types of business models. Manufacturers product their own goods and may or may not sell them directly to the public. Meanwhile, retails buy goods to later resell to the public.

How Do I Build a Business Model?

There are many steps to building a business model, and there is no single consistent process among business experts. In general, a business model should identify your customers, understand the problem you are trying to solve, select a business model type to determine how your clients will buy your product, and determine the ways your company will make money. It is also important to periodically review your business model; once you've launched, feel free to evaluate your plan and adjust your target audience, product line, or pricing as needed.

The Bottom Line

A company isn't just an entity that sells goods. It's an ecosystem that must have a plan in plan on who to sell to, what to sell, what to charge, and what value it is creating. A business model describes what an organization does to systematically create long-term value for its customers. After building a business model, a company should have stronger direction on how it wants to operate and what its financial future appears to be.

Harvard Business Review. " Why Business Models Matter ."

Bureau of Transportation Statistics. " Airline Travel Since 9/11 ."

Microsoft. " Annual Report 2023 ."

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What is a software process model? Top 7 models explained