It aids in pinpointing processes that can be streamlined or made more impactful, ensuring they are in sync with the organization’s objectives.

As an integral component of business process management (BPM) – a comprehensive structure aimed at overseeing organizational processes – BPA presents advanced organizations with a means to instill governance amidst complexity.

Regardless of size, every organization relies on systematic processes to achieve objectives. These could range from the straightforward task of engaging a potential client to the intricate process of issuing a purchase order.

Undoubtedly, your establishment has set processes for various tasks. But when did you last scrutinize them? How regularly do you assess if they amplify employee productivity or burden them with hindrances?

Lapses in business operations can result in economic setbacks and overshooting timelines. However, pinpointing snags in a workflow and discerning areas of enhancement can be challenging.

By the end of this guide, you will understand:

• What business process analysis is, and why is it important?
• The benefits of business process analysis
• The difference between business process analysis and business analysis
• How to analyze business processes using a step-by-step guide
• The most critical business process analysis examples or techniques
• The benefits of business process analysis tools
• Some examples of business process analysis tools

What Is Business Process Analysis?

Business process analysis is a tool organizations employ to enhance their efficiency. It entails scrutinizing a process and pinpointing areas for improvement.

Neglecting to analyze your processes can lead to the continuation of redundant or outdated methods, especially as an organization grows and evolves — with more hands on deck and the adoption of emerging technologies.

Regularly reviewing and assessing your processes helps pinpoint and rectify inefficiencies and aids in documenting every step, thereby refining training resources for new employees.

Why Is Business Process Analysis Important?

Organizations stand to gain significantly from conducting a business process analysis. Periodically reviewing and assessing processes is crucial for pinpointing areas of enhancement.

In the current technological climate, characterized by continual innovation from competitors, organizations have a significant risk of becoming obsolete should they adhere to antiquated methodologies.

As a best practice, a comprehensive business process analysis should be undertaken before integrating new technological solutions such as automation. Being well-prepared is a cornerstone of achieving success.

Consider the issue of bottlenecks – a challenge every organization encounters occasionally. How best to navigate these operational roadblocks?

Clear signs of bottlenecks in your operations signal an urgent need for business process analysis to propel your company’s growth and efficiency. 

Manifestations of these bottlenecks can range from recurrent delays and heightened customer grievances to confusion among stakeholders and a dip in productivity.

Benefits of Business Process Analysis

Understanding BPA empowers businesses to refine their operations, offering manifold benefits for those who engage in it consistently. 

Here are the advantages you stand to enjoy when you delve into analyzing your organizational workflows:

Optimized Systems for Superior Outcomes

A prevalent misconception among managers and business leaders is that only struggling enterprises need to tweak their operations. 

Yet, even if a system functions well, it doesn’t mean there’s no room for improvement. If a system has sustained over time, its robustness is evident. 

However, striving for the best is a mantra to abide by. Building on the strengths of prevailing processes not only augments systems but also boosts productivity. 

This enhanced framework remains familiar, ensuring a smoother transition for teams, culminating in goal realization.

Enhanced Satisfaction Among Employees And Clients

A company’s revenue isn’t serendipitous. It’s the result of effectively catering to consumer needs. Ensuring that the procurement and product delivery processes are simple but streamlined and user-friendly is essential. 

In parallel, efficient systems cultivated post-BPA foster a positive workspace where employees can efficiently serve clients and achieve organizational objectives.

Uniformity in Employee Actions

Top-tier companies prioritize standardized business processes. By leveraging BPA to formalize and document procedures, there’s a surge in operational consistency. 

This structured approach eliminates ambiguity, enabling staff to confidently execute tasks. 

Such clarity facilitates performance tracking and adherence monitoring, promoting a culture of accountability and tangible outcomes.

Paving the Way for Digital Transformation

BPA plays a pivotal role in highlighting areas needing overhaul before embarking on a digital transformation journey. 

Assessing and refining processes pre-transformation ensures amplified performance coupled with cost optimization.

Fostering Innovation and Ongoing Enhancement

While repetition can become tedious, the goal isn’t to swap out effective processes but to augment them. 

Innovative approaches can unveil superior operational strategies, especially when existing methodologies are outdated or subpar. 

BPA acts as a catalyst for innovation and ongoing enhancement, maximizing ROI through business process transformation (BPT).

Synchronization with Strategic KPIs

As businesses expand, maintaining interdepartmental coherence becomes challenging. However, BPA facilitates real-time insights into bridging communication voids. 

Moreover, it refines the integration process for newcomers, ensuring everyone is aligned with their roles, leading to improved results.

Detecting Bottlenecks

BPA assists in discerning operational inefficiencies. 

For instance, in e-commerce, if delays lead to order cancellations, a meticulous analysis can pinpoint the exact cause, enhancing delivery timelines, reducing cancellations, and bolstering profit margins.

Identifying Cost-Effective Operational Strategies

Building on the earlier point, a notable benefit of business process analysis is its ability to streamline business transactions through efficient and concise methods. 

By implementing these refinements, businesses can mitigate mistakes, elevate performance standards, and strengthen customer confidence in the company’s offerings.

The Difference Between Business Process Analysis Vs Business Analysis

Business Process Analysis (BPA) and Business Analysis are pivotal methodologies in organizational advancement, spotlighting unique facets of operational dynamics. 

Here’s how they stack up against each other:

Business Process Analysis (BPA)

• Definition: BPA is a niche within business analysis, zoning in on scrutinizing and enhancing an organization’s operational processes. Its mission is to amplify process efficiency, streamline performance, and heighten effectiveness.
• Core Functions: BPA delves deep into the structure of tasks and functions, unearths process bottlenecks, and recommends upgrading workflow dynamics.
• Characteristic: Recognizably process-driven, BPA employs tools like flowcharts, process maps, and diagrams to visualize operations, with its eyes set on bolstering operational agility and minimizing redundancy.

Business Analysis

• Definition: This is a comprehensive study of an organization, targeting areas from process dynamics to strategies, system integrations, and organizational structures. Business analysts wear multiple hats—from identifying business needs and challenges to charting solution blueprints.
• Core Functions: Their responsibilities span understanding overarching business landscapes, outlining project or initiative prerequisites, and bridging communication channels among stakeholders. 
• Characteristic: BAs are experts in data analyses, requirements management, and process optimization. They can navigate through complex business operations and provide valuable insights for stakeholders.

This might mean orchestrating feasibility assessments, crystallizing business needs, steering change management efforts, or ensuring that business objectives and tech solutions resonate.

Here is a breakdown of how business process analysis and business analysis differ:

Scope

BPA zeroes in on evaluating and refining specific organizational processes.

Business Analysis casts a broader net, delving into diverse business components, including strategy, need assessment, and tech integrations.

Focus

BPA is all about process agility, optimization, and bottleneck obliteration.

Business Analysis is anchored in decoding business necessities, troubleshooting, and ushering in transformative shifts.

Tools and Techniques

BPA leverages tools like process mapping, flow diagrams, simulations, and analytical methodologies to fine-tune processes.

Business Analysis deploys tools such as stakeholder dialogues, SWOT evaluations, requirement extractions, and cost-effectiveness studies.

Outcome

BPA’s endgame is a smoother, highly efficient process mechanism.

Business Analysis aims for a holistic grasp of business demands, potential solution pathways, and implementable strategies.

Stakeholders

BPA engages with stakeholders intrinsically involved in honing process efficacy and performance.

Business analysis interacts with stakeholders, from leadership echelons and IT brigades to end-users and external allies.

Role

BPA professionals are laser-focused on elevating process standards and outcomes.

Business analysts don a multi-dimensional role, converting business visions into tangible action plans, fostering stakeholder communication, and ensuring harmonization across diverse organizational arms.

Step-By-Step Guide To Analyzing Business Processes

Analyzing business processes is an essential part of any organization’s success. It helps identify inefficiencies, streamline operations, and ultimately improve the overall performance of the business.

This process can be complex and overwhelming, especially for those new to the concept of business process analysis.

To ensure a successful BPA initiative, follow our step-by-step guide below:

Define Objectives and Select Process

Determine your goals for implementing BPA. Choose a specific business process for examination and set clear metrics, benchmarks, and plans to gauge the success of your changes.

Collect Relevant Information

Once the target process is selected, amass all pertinent data, documents, and resources. Engage stakeholders who interact with the process regularly for insights. Their firsthand experiences will offer a comprehensive understanding of how the process operates within the company.

Visualize the Process

With the data at hand, illustrate the process from beginning to end. While traditional methods like paper sketches or whiteboards work, modern workflow management tools can offer a more detailed visualization of the entire process.

Spot Opportunities for Enhancement

Examine the visualized process and pinpoint areas that can benefit from enhancement. This might entail removing repetitive tasks, introducing automation, or tweaking parts of the workflow to boost efficiency.

Implement, Observe, and Iterate

Act on the identified improvements and observe the process’s performance against the initially set benchmarks and goals. BPA is an ongoing journey, so maintain regular monitoring. Be open to revisiting and refining the process as new improvement opportunities emerge, steering clear of a complacent approach.

Important Business Process Analysis Techniques

For successful business process analysis, you must arm yourself with tried-and-tested techniques and tangible metrics, discarding reliance on mere theory or guesswork. 

While the idea may seem straightforward – identify the problematic process, delve deep into the issues, and innovate – it’s more intricate in practice.

A myriad of strategies can lead to rewarding outcomes. However, it’s essential to understand that not all yield identical results. 

Misjudged analysis might exacerbate issues if underlying obstructions remain unidentified. 

Examples of business process analysis strategies include:

Gap Analysis

Gap Analysis, sometimes termed “needs analysis,” is pivotal in evaluating diverse organizational performances. Its role? 

To help businesses diagnose their present status, pinpoint discrepancies between current achievements and desired success levels, and assess if the company optimally utilizes its resources.

This technique recognizes the existing scenario by examining factors like finances, time, and manpower and contrasts it with an aspirational position. By identifying these disparities, leaders can blueprint an actionable plan to propel the company ahead.

The methodology of gap analysis unfolds over four stages:

• Setting Organizational Goals: Define clear, measurable, and achievable objectives.
• Assessing the Current Situation: Harness historical data to gauge present performance vis-à-vis objectives.
• Data Gap Analysis: Review collected data to comprehend why the performance isn’t hitting the mark.
• Report Compilation: Prepare a comprehensive report detailing gaps and an action plan to meet company targets.

Value-Added Analysis

This technique targets process inefficiencies and identifies the indispensable components of a product or business process. The objective is to accentuate steps that add genuine value and eliminate redundant ones, ensuring the end product’s value surpasses its creation cost.

To conduct a rigorous value-added analysis, each activity linked to a process must undergo thorough scrutiny. This methodology can be conceptualized as:

Value added = Post-activity product value – Pre-activity product value

Activities are then grouped under:

• Real-Value Added (RVA) Activities: Actions enhancing customer experience.
• Business-Value Added (BVA) Activities: Internal actions aiding organizational objectives that customers overlook.
• Non-Value Added (NVA) Activities: Steps lacking customer and business value.

Root Cause Analysis

RCA delves deep to pinpoint the actual catalysts behind process challenges. It seeks to address root problems rather than superficial symptoms. 

Visual tools, like the Ishikawa diagram, can illuminate where process breakdowns occur and their triggers.

Observational Analysis

This technique provides a real-time perspective by directly observing processes and uncovering steps that might be overlooked or underestimated. It also serves to confirm the workers’ comprehension of the process. 

The challenge is ensuring the observer’s presence doesn’t skew the procedure.

Experience Examination Analysis

This strategy capitalizes on the wisdom of seasoned employees. Unlike observational analysis, it gleans insights from those with years of on-ground experience. 

This method can expose links between root causes and inefficient activities and is especially beneficial in capturing the nuances that only long-standing employees would recognize.

For businesses with veterans possessing rich process knowledge, leveraging this method ensures the retention of unique insights, proving invaluable for the entire organization. 

Whether corroborating findings from other analytical methods or seeking a deeper understanding, experience analysis is indispensable.

Benefits of Business Process Analysis Tools

The rise of business process analysis (BPA) software has been driven by a need for streamlined operations, optimized productivity, and clear communication among teams. 

Here are seven core advantages of employing BPA tools:

Boosting Employee and Customer Satisfaction

With BPA tools, complex steps are simplified, and processes become more efficient. This results in smoother operations for employees, allowing them to meet deadlines effectively. 

From the customer’s perspective, BPA can help identify and rectify pain points in their journey, such as unnecessary delays due to redundant steps, leading to a more satisfactory experience.

Minimizing Errors

Traditional manual processes often become convoluted when multiple individuals handle them, each with their own unique approach. With their systematic and automated approach, business process analysis tools offer the advantage of reducing errors, leading to enhanced reliability, accuracy, and cost savings for the business. This precision also enables the development of high-quality and cost-effective product features.

Seamless Integration

Compatibility is seldom an issue with leading BPA tools. 

Whether you’re using a Chrome browser or a mobile device running Android or iOS, these tools are designed to integrate smoothly, allowing users to manage processes effortlessly, regardless of their device.

Saving Precious Resources – Time and Money

Efficiency is the main focus of business process analysis. Automating repetitive tasks frees up time for more strategic activities, directly impacting the company’s bottom line. 

Many BPA platforms also offer comprehensive solutions, eliminating the need for multiple subscriptions and leading to financial savings.

Optimizing Communication Among Team Members

Effective communication is critical in ensuring that teams work synergistically. BPA tools provide a platform for streamlined communication. Visualizing processes allows team members to identify bottlenecks and work together to brainstorm solutions.

Sharing, saving notes, and model creation become more straightforward, fostering a more cohesive team environment.

Centralizing Workflows

An effective BPA tool guarantees that processes are clear, concise, and centralized. Such a system eliminates redundant efforts, reduces the chances of errors, and ensures that teams operate cohesively.

Enhancing Visual Representation and Collaboration

The adage “a picture is worth a thousand words” rings true in the context of BPA tools. These tools facilitate the development of process diagrams, which provide a visual representation of workflows. This simplifies understanding and makes it more straightforward to pinpoint areas that require improvement.

Such visual representations, combined with collaboration features, enable stakeholders to share insights, provide feedback, and work together toward optimizing processes.

Examples of Business Process Analysis Tools

Many business process analysis tools are available in the market, each boasting advanced features to enhance your analysis and foster better teamwork.

BPA tools are a boon for organizations inundated with intricate processes that span multiple departments, resources, or data repositories.

They offer the convenience of creating diagrams, visualizing workflows, sharing insights with stakeholders, archiving notes, designing models, and activating automation functions.

Here’s a list of some renowned business process management tools:

• Adonis
• Asana
• BIC Process Design
• Bpanda
• FlowRight
• Bizagi
• Camunda
• Wrike
• Zoho One

What’s Next For Business Process Analysis?

Business process analysis is a technique employed to examine and enhance the efficiency of a process. 

When done well, business process analysis can strengthen operational outcomes and boost customer contentment.

Each time you issue a purchase order, greenlight a travel request or address a customer query, you likely follow a consistent sequence of actions. 

Undertaking a business process evaluation allows you to refine these sequences, ensuring that every step adds value and there’s no redundancy.

It’s essential to distinguish between business process analysis (BPA) and business analysis (BA). While they might sound alike, their focus is distinct. BPA zeroes in on scrutinizing business workflows, utilizing data from this examination to propose improvements.

Conversely, business process transformation delves deeper into pinpointing specific organizational challenges or necessities, encompassing areas like finance, research, recruitment, or budgetary adjustments rather than strictly process-oriented matters.

The post What Is Business Process Analysis? Benefits, Tools, And Steps appeared first on Digital Adoption.

But the advantage given by data isn’t free— it takes work to get the most out of data while avoiding the regulatory pitfalls. Digital transformation must happen for companies to truly use data to their advantage. Companies need the right frameworks, policies, and tools to maximize their data’s value.

Digital transformation starts with understanding customer needs. Companies must ensure that their customers’ data is collected and utilized ethically and securely.

That’s where Data Lifecycle Management (DLM) comes in. 

Data Lifecycle Management is businesses’ most widely used approach to handling data.

Praised for its simplicity, Data Lifecycle Management makes it easy to collect, store, use, and dispose of data. It helps businesses mitigate the risks associated with carrying data and ultimately leads to a better understanding of what it takes to leverage data successfully.

We’ve put together this guide on everything you need about Data Lifecycle Management. Armed with this knowledge, we’ll prepare you to take your business to the next level and tap into the benefits of data.

What Is Data Lifecycle Management (DLM)? 

The given definition for DLM is “the application of a set of principles, processes, and technologies for data management and storage.”

But what does that mean?

Put simply, DLM helps businesses get the most out of data. It’s a comprehensive set of practices that not only help enterprises to capture better data but also ensures they’re handling that data correctly.

DLM covers many essential data management areas, including data governance and security, storage, archiving and disposal, backup/recovery, scalability/performance tuning, analytics, and reporting. It also includes several additional practices that can help optimize how businesses handle their data. 

DLM aims to create a more efficient and cost-effective data storage system that allows businesses to get the most out of their data. DLM helps organizations develop faster, more accurate business insights, reduce operational costs, and support agile decision-making.

Understanding The Importance of Data Lifecycle Management 

In an increasingly data-driven world, large amounts of data are unwieldy and difficult to manage. Without DLM, a data scientist looking for the proper subset of data is like looking for a needle in a haystack, but all of the hay is just numbers and letters on a screen.

DLM helps ensure the right data is in the right place at the right time. This makes it easier for data scientists or analysts to draw meaningful, relevant, and timely conclusions. It helps analysts generate more value for businesses more quickly.

Understanding The Chief Data & Analytics Officer Roles In Future Enterprises is critical to implementing an effective DLM process. A CDO is responsible for delivering data and analytics solutions and services that enable organizations to achieve business objectives through data assets.

Furthermore, if data is valuable to a business, it benefits competitors and malefactors. Companies must protect data. They must handle all data in adherence to internal and external regulations— the consequences for failing to do so are dire.

Data lifecycle management streamlines the process of protecting and managing data. 

Neglecting to leverage data lifecycle management is a dangerous game with little return.

The Three Primary Objectives Of Data Lifecycle Management 

1. Data Security & Confidentiality 

For human-focused companies, data often comes from information about people, whether customers or employees.

Employee or customer data is often personal and sensitive. Collecting it requires permission, which comes with a responsibility to protect the data from unauthorized access. That’s why data security should be a top priority for businesses.

DLM provides guidance on how to collect data legally and share data securely. The framework has been developed with data protection policies at the core. 

It helps maintain confidentiality by ensuring businesses delete data thoroughly.

2. Data Integrity 

Data is only useful if you trust it, which is why data maintenance is critical to businesses. When using data to inform major business decisions, you must be able to count on the data being reliable, precise, and accurate.

Poor data integrity can be dangerous, leading you to draw incorrect conclusions with confidence.

DLM helps you maintain the integrity of any collected data by outlining how that data should be handled, copied, and stored.

3. Data Availability 

Data by itself does nothing. Teams of people need to analyze and manipulate it. While one objective of DLM is to protect data from those who shouldn’t be able to access it, another objective is to keep it readily available to those who can access it. 

Data lifecycle management aims to ensure the teams who need to access data can, exactly when they need to, with minimal friction.

Notably, DLM also aims to make data archiving more effective. By following processes for data archival, businesses are less likely to delete data and regret it because they need it later.

The Five Stages Of The Data Management Lifecycle 

According to the data lifecycle management framework, these five stages are designed to break down the data life cycle into manageable chunks. 

They’re written to apply to all businesses, which means you might have additional business rules for data processing, which you may want to implement at the appropriate stage.

1. Collect, Generate & Evaluate 

Data collection methods are varied and abundant. 

Enterprise applications, IT infrastructure, and internet of things (IoT) devices are just a few examples of quantitative data collection.

Surveys, feedback forms, and opinion polls are examples of qualitative data collection.

The general idea with data creation is “more is better.” But don’t be afraid to use intuition to judge whether a particular data creation initiative wastes resources.

After data collection comes data classification, where you should evaluate data for potential uses and classify it so that it’s easier to find and refer to later.

If you gather data but believe it won’t be helpful, you should discard it at this stage— it’s an early opportunity to carry out some data cleaning.

2. Store, Manage & Secure 

Once collected, you need to store data somewhere. But the best solution for storing data depends on the kind of data.

Quantitative data is usually considered “structured data.” Cold hard metrics, numbers, and objective values are relational. That means it’s easy to relate and compare to other relational data sets.

It’s common to store such data in a relational database system.

Conversely, qualitative data is usually “unstructured data.” It’s text-heavy and not relational, so storing it in a non-relational database (like NoSQL) is more common.

Data protection is also critical at this stage. You should encrypt sensitive data for the sake of data protection. Data storage is a tricky business, and there are governmental policies in place, like GDPR, which mandate good data protection practices from companies.

Now that you’ve protected the data from external threats, you must also protect it from internal threats. Backing data up provides redundancy, which makes it trivial to recover should any data-loss event occur.

3. Use, Share & Distribute 

Outages aren’t the only internal threat to data. This stage of DLM defines who within an organization can access data and what they can use it for.

Typically, data undergoes a process called “data munging” before it’s usable for humans. This is transforming or manipulating data to make it relevant and readable.

Generally, this is the time when data handling is most sensitive. You should have audit trails of who accessed which data and when. You should only give access to sensitive data if there’s sound business justification.

In some cases, companies use data collected by external companies, especially for marketing and advertising purposes. 

4. Archive, Register & Record

Once data has outlived its usefulness, you should archive it. This is an in-between stage, where a business doesn’t think it needs the data but wants to retain the possibility of accessing it just in case. 

Archive locations are usually less accessible than live data storage environments. This makes for more efficient storage.

However, archived data should be accessible without needing IT to restore it from a backup storage device. It’s essential to getting the most out of your data and could be necessary for investigative purposes.

Archived data is typically stored in separate storage space from operational data. The data migration process from the live environment to the archive is a change request.

5. Destroy, Delete, Reuse 

It can be tempting for an organization to skip this step because “the more data, the better, right?”

Wrong. 

You absolutely cannot ignore the data destruction stage. As regulations continue to develop, it’s an increasingly important step. 

It’s important to understand that stored data you don’t need is a waste of resources and exposes you to unnecessary risk. 

Most big businesses have a data retention policy that dictates how long they keep static data. Once the time outlined in this policy has passed, you must perform data deletion.

Some regulations, like GDPR, mandate data deletion under the right circumstances. GDPR states that all citizens have a “right to be forgotten,” so a business must delete their data following a written request from a citizen.

So it’s essential to have a process for data deletion.

How Can Data Lifecycle Management Help SMEs?

Relational databases, archives, and backups… might sound excessive for small to medium-sized enterprises (SMEs), but even small businesses can benefit from implementing data lifecycle management.

In a startup or small business environment where every resource has to stretch further, data can be your silver bullet for guaranteeing efficiency.

A data-driven approach will help you rest a little easier, knowing you’ve backed up your business decisions with high-quality data.

It also stands to reason that the consequences of poor data management are more severe for SMEs and startups.

Mishandling sensitive data can lead to fines but also compromises the trust customers have placed in your business— and that trust is virtually impossible to rebuild.

That said, you can follow the basic principles of data lifecycle management while making it easier for yourself and your business. For example:

• You could collect qualitative data using forms and surveys, which is much easier to manage and understand than quantitative usage data.
• You can use cloud-based solutions for storing your data, which are cost-effective, cheap, and low-hassle.
• There exists a category of tools known as Integration Platform as a Service (iPaaS) which allow you to more easily maintain and apply data, even if you’re not an expert.
• You don’t have to squeeze the maximum value out of your data. SMEs might benefit more from only using data to reap low-hanging fruit. This keeps time and effort to a minimum while still providing value.

What is Hot, Warm, and Cold Data?

We use these temperature descriptors to categorize data based on how easily and quickly practitioners need access. This system helps businesses operate more efficiently by keeping the right data in the right place. 

Hot Data

Hot data could also be called “active data.” It’s frequently accessed data that someone or something is currently working on. Analysts, practitioners, and software systems may require immediate access to it. For example, customer information during online transactions is hot data that your eCommerce system must be able to access quickly.

Another example of hot data is video files, which an editor stitches together.

Hot data is accessed frequently and is actively being used. You should store it in high-performance, low-capacity storage, close to the people or programs who want to use it, for example, on a local SSD drive.

Warm Data

Warm data is pertinent to some active projects that practitioners don’t need to access frequently. For example, if a business were launching a new product, it might keep all market research related to the product launch in warm storage.

Analysts need to access this data daily, but they move or copy it from warm storage to hot storage to work on it. Then move it back once they are done.

Warm storage is usually “capacity-optimized,”— meaning it’s kept on devices that allow a balance between capacity and performance. These might be local HDDs or production file servers.

Cold Data

You need to keep cold data, but people must actively work on it. You could consider it “inactive data.” Once a project manager finishes, they might move all the project data to cold storage. 

Another example of cold data is financial, HR, or legal records, which you might have to keep just in case they’re needed.

The philosophy behind cold data is “cheap and deep.” In other words, high-capacity, low-performance devices like archives and file servers. The purpose of cold storage is to provide the cheapest means to keep data.

The Benefits Of Having A Set Process For Managing Data

Data Compliance 

For most of us, data compliance regulations are a real headache to wrap our heads around. Data lifecycle management can alleviate that headache because compliance considerations are built into the framework’s core, which helps you know when to keep and destroy data.

75% of countries have data localization rules, and companies with customers in different countries must adhere to them.

Collecting customer activity data and leveraging DLM to organize, store and protect them is the best way forward. Effective data lifecycle management allows businesses to easily access and analyze customer data to generate more insightful customer profiles.

Complying with these regulations independent of following a set process is daunting, risky, and probably not worth the work.

Data Usage and Access

Ensuring employees have quick access to relevant data enables them to work more agilely. 

They spend less time trawling through data and more time creating value. They can make faster decisions and react to changes more quickly.

To put it briefly, it accelerates the time-to-value of any business initiative.

Optimized Efficiency 

DLM allows you to “right-size” your data storage solutions, keeping costs low where possible and performance high where necessary.

Furthermore, a robust data-maintenance process helps develop a leaner database of more relevant data. Allowing you to trim the fat, so to speak, with regular data archiving.

Heightened Customer Experience 

Well-managed data can give a business insight into a customer’s experience that wasn’t possible before—allowing analysts to marry traditional quantitative data with qualitative data to develop a deeper understanding of the customer journey.

This has even led to adoption of eXperience Level Agreements (XLAs) in some businesses, which are in place alongside Service Level Agreements (SLAs) to help measure and maintain the level of experience customers receive.

Data Governance 

While data compliance refers to adherence to external regulations, data governance refers to internal standards.

An established process makes it easier for IT teams to govern data effectively and follow internal quality and security protocols. It’s a big help in data cleaning efforts to have transparent processes to follow.

Data Mining & Segmentation 

Data mining and segmentation should be integral to any data lifecycle management strategy. Mining customer data allows a business to identify patterns and trends, which can then be used to refine customer segmentation for targeted marketing campaigns or product recommendations.

Data Lifecycle Management Best Practices 

We’ve covered many of the factors that contribute to good data management. Like how and why you should have a process for data destruction, the importance of data encryption, and so on.

But data sharing isn’t just a bag of risks with no upside.

It’s time to talk about how businesses can get the most value out of data sharing and how to build an organization that uses data as a powerful tool for growth and agility.

Disseminated Data Management 

Data management needs to be a company-wide effort. You should train all employees on handling data— at the very least, security and privacy protocols. Production teams and data analysts should be further trained to:

• Be able to access the data they need without having to raise requests with the IT
• Exercise good data-loss prevention (DLP)
• View data with a scrutinous eye, and assess whether they can move it to colder storage.

Knowing you’ve trained all employees in data management makes data sharing less risky.

Centralized Repository 

Every business has security processes, and there’s no need to reinvent the wheel. 

Keeping data in a centralized repository makes it more easily accessible for all employees while benefitting from internal security by default.

Remember: You should back up business data to a safe and secure environment to improve data redundancy.

Data Stewardship 

Data stewardship helps keep an organization’s data quality high.

Assigning data stewards responsible for overseeing database management processes can be beneficial.

As is often the case with business processes, having a select few champions for data management in a business environment gives the rules more authority. 

It also clarifies to users whom to reach out to with issues or questions. Data stewards aren’t solely responsible for administrative tasks like classifying data but can lend their expertise.

Data Training 

Regulations continue to evolve, as do data management technologies. Continuous staff training ensures you meet regulatory changes with preparation and effectively utilize cutting-edge technology.

Additionally, data analysts should receive ongoing training to better categorize and manipulate data.

Data management is an iterative and ongoing process— there’s always room for improvement.

Data Aggregation

When analyzing data, it’s easy to get caught up in the details. Taking a step back and looking at the bigger picture is often beneficial.

Aggregating data can provide a high-level, macro view of a business’s data. This is just as useful for spotting trends and developing insights as the finer details are.

Data Standardization

Data standardization is trying to keep all data in the correct “types.” Data can be in the form of PDFs, survey results, or database entries. 

Data of the same types are easier to marry or compare, which is a powerful tool. 

You’ll get more out of collected data if you can keep it to the same file types.

Data Lifecycle Management Alternatives 

HSM— The Data Storage Supertool

Hierarchical Storage Management (HSM) is a tool that monitors data usage. HSM dynamically moves data to the appropriate storage system based on how often users access the data.

If data usage is high, it’s considered “active,” and HSM will move it to locations where retrieving data is quicker and easier.

HSM will move less critical data to colder storage media.

This takes a lot of the administration out of data management, as HSM does its job without business users knowing.

HSM takes a lot of the work out of deciding how to store data and can help with decisions around deleting data, as it’s easy to see how long data has been held without being accessed— this identifies suitable candidates for data destruction.

HSM isn’t so much an alternative to DLM as it is an additional option.

ILM 

Information Lifecycle Management (ILM) is similar to DLM, with a few key advantages. Primarily, ILM also encompasses business processes on physically stored information. 

Certificates, letters, contracts. Anything that isn’t digital. Information Lifecycle Management processes provide more in-depth guidance on how to manage data in this format and how it can be stored securely.

ILM also makes finding specific information related to a chosen topic easier. For example: Finding all of the data on one customer to dispose of it following a GDPR request.

DLM focuses more on categorization instead, and it’s easier to search my attributes like file type, size, or date. Which indexing function is more valuable is a matter of debate.

The bottom line is that ILM may be a better alternative if your business deals with digital and non-digital information. DLM is the more streamlined solution if you only deal with digital data.

Looking Ahead: What’s Next For Data Lifecycle Management?  

The future of Data Lifecycle Management (DLM) is most certainly tied to the wider adoption of AI tools in businesses.

A 2021 McKinsey survey found that 57% of businesses have adopted AI in some form. And of those adoptees, 47% are using AI for some form of data analytics.

But businesses still haven’t realized the true power of AI-driven data. Another McKinsey report found that while 75% of companies in the metals and mining industry have implemented some form of AI, less than 15% have realized a meaningful impact.

There’s still a lot of work before AI becomes a must-have part of your data strategy.

DLM might also be affected by the Internet of Things (IoT) and edge computing. As IoT devices grow more powerful, they can process more data, which could change the way data is stored. 

For example, hot or warm data could be stored on IoT-enabled devices, which can also process data— pushing data accessibility to new heights. 

This, in turn, will affect a business’s Agile capabilities. 

Under the Agile philosophy, analysts would be better positioned to make decisions based on the data they process. This leads to faster reactions to changes and lends a competitive edge to organizations that lean into it. 

Finally, it’s essential to recognize that DLM must be iterative. Most importantly, for security purposes. New threats are constantly developing, and DLP technology, processes, and training must be continuously improved to stay ahead of malefactors.

The requirements of data management are only growing more critical and more complicated. Implementing a tried and tested set of practices like DLM is a proactive way to ensure you’re doing data right.

The post Data Lifecycle Management: Everything You Need To Know appeared first on Digital Adoption.

But many sales reps mistakenly use the discovery call to promote a product’s features instead of learning about the prospect.

Let’s discuss the sales discovery process that you can use to optimize your sales team.

What is sales discovery?

Sales discovery is the first step for the sales rep to connect and learn about their prospect. In this phase, they research, ask questions, answer their prospects’ questions, and unearth helpful information about them. 

It helps the sales rep to determine whether the prospects qualify as serious buyers. They can then move them down the sales funnel. 

The steps for the sales discovery process

During the sales discovery process, the reps need to research and tailor their questions to the prospects. 

Let’s discuss the steps;

1. Have an up-front strategy and role play

Before making the discovery call, the sales reps should research and know their prospects. 

The best approach is to explore the prospects on social media like Linked In, Twitter, or Facebook. 

The team can:

• Go through their profiles and understand their career aspirations
• Check if they have any history with your organization
• Check if any employee has shown interest in your product.

Then, go through their organization pages to have a glimpse of what they do. They can also rely on Google searches and news to gather more information. 

Once the team has all the information, each rep should ask the following;

• What questions is the prospect likely to ask?
• What challenges are they facing in their business? 
• Do you have examples of your work (or success stories) in case they want to know?

Then the team can role-play to understand the probable situations. You can have a coach to help the team through this. 

2. Ask provocative questions and listen

Thought-provoking questions help the sales reps learn about the prospect’s challenges, how they plan to tackle them, and what it’d take to convince them to adopt your product. 

For instance, let’s say your prospect is struggling with change management in their organization. What specific challenges are they facing? What solutions have they tried? 

Rather than selling your solution, the sales rep should aim for a meeting of minds. 

So, the rep should guide the prospect to analyze their problem and ‘discover’ the solution by offering their industry knowledge and relevant research. 

The most important part for the sales rep is listening to the prospect, following their thought process, and offering valuable insight.

When Gong analyzed sales calls, they found that most of the top sales performers’ talk-to-listen ratio was 43:57. That means they listen more and leave the prospects to do the talking.   

3. Use storytelling tactics

After your sales rep and the prospect are on common ground, the rep can bring in a story. A story grabs the prospect’s attention and makes them relate to your product experientially. 

To get it right, the sales rep can give an example of a challenge that a different organization faced and solved with your solution. But to make their point valid, they can present testimonials and case studies. 

For example,

“When I was working with a certain client, he claimed that his sales team spent only a third of their time selling, and it largely affected his business. But when we trained his team on the importance of selling, they improved by 80 percent and started making sales.”

Follow that with a leading question asking them if they want to overcome the challenges. And if not yet, what would make them want to overcome the challenge?

4. Establish the next steps 

To close the deal successfully, the sales rep will summarize your product’s value in the prospect’s organization (i.e., how does it help the prospect achieve their goals?).

They can approach this in two ways;

• Emphasize how your product will help solve the challenges you have discovered through the call.
• Help them agree that the product is necessary to help solve their problem. You can talk of a demo at this stage. 

These two closing processes will open up another date for a call. It will also bring in other stakeholders who are essential for the sales process.

5. Remember to record the discovery calls

It’s good to record your discovery calls to avoid losing important information and get ideas on how to improve your discovery process. Your team can use call recording software.

The recorded calls will help your team; 

• Analyze the flow of the conversation. Did the rep use the right tone? How did they answer the questions? etc. 
• Improve on your future discovery calls. Analyzing what worked and what didn’t helps the team know what to eliminate or add. 
• Follow up with the prospects. Once they go through the recording, they’ll know whether to continue pursuing a prospect. 

The best sales discovery process questions

The sales team can tailor the questions into four subsections. Questions that set the stage, qualify, disqualify and establish the next steps. 

Examples of questions that set the stage;

When setting the stage, the sales rep takes time to know the prospect’s company. It helps them decide on whether to move forward. 

• Tell me about the company.
• Your role in the company
• The metric you are responsible for. 

Questions that qualify

Qualifying questions help the rep figure out how to help the prospect. 

• Tell me about your goals.
• When do you need to achieve them?
• What areas are you struggling in? 
• What would success [in the problem area] look like?

Questions that disqualify a prospect

These questions will help you have a plan and budget.

• When are you planning to implement a solution? 
• What’s your budget?
• Who’s responsible for paying? 

Questions that determine the next steps

• Who else is involved in [solving the problem]? 
• How can we help you improve [problem area]?
• Would this be the first time you’re purchasing this product?
• Can I call you again on [date & time]?

Discovery call checklist

A discovery call checklist is essential to help sales reps stay on track. The checklist can help sales reps make the right questions and close deals quickly. 

Here’s what it’d look like:

• Research the prospect
• Take time to build rapport and trust
• Understand the prospect’s struggles
• Show them how things would look like if they solved the problem 
• Prove your credibility with a success story/testimonial
• Identify the decision-makers in the prospect’s company
• Get a follow-up meeting

That sums up the sales discovery process. But did you know that transparency could also optimize your sales process? Find out why it’s the emerging priorities for sales leadership in this post.

The post 5 Step Sales Discovery Process to Optimize your Sales Team appeared first on Digital Adoption.

This is where process mapping comes into play. 

As the name suggests, a process map is a diagrammatic representation of all the steps into a business process. It captures the sequence of each step, the people involved, the timeline, etc. 

Processing mapping has numerous benefits, and we will be exploring them soon. 

In this post, we will be examining what a high-level process map is all about, how it works, and how to create one. 

What is a high-level process map?

The essence of process mapping is to give a diagrammatic overview of the steps of a business process. 

Take marketing – one of the most vital business processes – for example. It involves a lot of parts, some of which include lead generation and nurturing, advertising,  sales closure, etc. These parts or steps create a process map when pieced together in a diagrammatic form. 

This map can either be well-detailed, capturing all the nitty-gritty of an operational process. 

Or it can be cursory and concise, and that is what a high-level process map is about. 

A high-level process map is created to give a brief, quick overview of a business process without much detail. It is often used at stakeholders or board meetings to provide concerned parties with a summary of business processes without divulging much information. 

Benefits of high-process mapping

One of the chief purposes for creating a process map is to help businesses spot and eliminate inefficiencies in their operations to boost performance. 

Process maps also come in handy during employee onboarding, enabling recruits to get up to speed with their job roles. 

Additionally, process mapping can help make the life of your employees better. When everyone knows the step involved in a project and who is responsible for what, bottlenecks are eliminated, and things run smoother. 

How does high-level processing mapping work? 

High-level process maps work using flowchart diagrams to illustrate the steps involved in a process, such as procurement, customer onboarding, change management, employee training, etc. 

High-level process maps use a set of shapes such as squares, circles, and diamonds to show the sequence that goes into a business process. It also captures vital information about a process. For example, it can show who is responsible for what, when a task should be completed, the next step to be followed once a task is completed, and lots more. 

High-level process maps make it easy for team members to understand their role in a process and work efficiently. It allows project managers to identify critical areas to improve processes and boost efficiency. 

High-level vs low-level process map

A high-level process map may not be ideal in all cases, hence the need for a low-level process map  

What is a low-level process map, and how is it different from its high-level counterpart?

A low-level process map intuitively zooms in on the minutest detail to give a deeper insight into what is involved. 

Take procurements, for example. A high-level process map might only capture and illustrate the flow between the procurement department on the vendor. A low-level map will further capture how quotation and vendor payment receipts are handled, expected delivery time, and lots more. 

One of the major challenges with low-level process maps is that it often fails to show “who is responsible for what”. Having a mix of high-level and low-level process maps can greatly help a business organization. 

How to create a high-level process map for your business/organization

You can use a couple of techniques to create a high-level process map for your business. The SIPOC technique happens to be one of the most popular. 

SIPOC stands for Suppliers, Input, Process, Output, Customers, and a flowchart shows how all these elements are connected. 

SIPOC  mapping can be done on cardboard, on a whiteboard, etc. 

First, you must first determine the entry and endpoints of your process and what is involved. You don’t necessarily need to go into details. 

When you are done with that, the next thing you will want to do is to identify who your Suppliers are and list them in the supplier section. 

After that, the next step is to determine what you want your final results to be and capture them in the Output section of your map. 

The next step is to populate your map’s customer section. This is where you will list out the people who will benefit from your process’s outcome. 

At this point, you are ready to show the map to your team and get their input. 

Difference between SIPOC and Process Map

Although similar to a huge extent, SIPOC and Process Map aren’t the same. 

The critical difference is that while SIPOC captures the macro details giving a general overview of it, a process map zooms in to capture the minute, refined details. This allows stakeholders to gain deeper insight into a business process. 

For best outcomes, it’s best to mix the two. 

Organizational level process map 

Put simply. An Organizational level process map is a flowchart that makes it easy for business establishments to coordinate their operation and the people involved in it. 

It is also composed of annotations and shapes that help illustrate the processes involved in an operation. 

An Organizational level process map makes it easy for a business organization to spot and fix operational inefficiencies and stop revenue leaks. 

It can also help to boost employee motivation and make your people perform at their best. 

Conclusion

High-level process maps make it easy for you to understand your business operations better and make the needed adjustments to arrive at favorable outcomes. 

Thankfully, creating one isn’t that hard. 

The post What is a high-level process map? appeared first on Digital Adoption.

This calculation considers various financial aspects to give a more accurate representation of the company’s value.

This metric or KPI is pivotal for assessing a company over time, establishing fiscal targets, making informed decisions, and evaluating potential acquisitions.

The enterprise value formula is also used when considering alliances and joint ventures, corporate bond issuance, international public offerings (IPOs), banking credit, portfolio management, risk evaluation, and occasionally top-management bonuses. 

This formula can help create a fair company valuation that aligns with well-established and widely accepted systematic appraisal methods.

But why factor in debt and cash in a company’s valuation? 

When acquiring a company, the buyer pays the equity value, often set above the market rate in mergers and acquisitions. Additionally, the buyer assumes the company’s debts. 

However, they also inherit the company’s cash, justifying its subtraction from the valuation. 

This is why it is important to include debt and cash in a company’s valuation to ensure fairness.

By the end of this article, you will know:

• What an enterprise value and its associated formula
• An enterprise value formula example
• What does an enterprise value formula tell you
• Why an enterprise value matters for your business
• The difference between an enterprise value, market cap, and a P/E ratio
• How to use enterprise value as a valuation multiple
• The limitations of enterprise value
• How you can demonstrate that you understand enterprise value on your resume 

What Is Enterprise Value (EV)?

Enterprise value (EV) captures the holistic worth of a company in financial terms. This value encompasses the market capitalization, which is the going rate of its shares, and its net debt, which factors in its liabilities and cash on hand. 

By amalgamating these numbers, the enterprise value paints a picture of the approximate amount one would need to acquire the company.

In essence, when considering enterprise value, you’re looking at the sum needed to satisfy all the stakeholders with a financial claim in the company. 

This includes compensating equity holders or shareholders and settling any outstanding debts to lenders. If you were to purchase the company, you would need to cover the cost of its shares and be obligated to clear its debts. 

Upon acquisition, the company’s cash reserves come into your hands. This accessible cash effectively reduces your acquisition cost, explaining why, in determining the value of a company, one adds the debt but deducts the cash.

What Is An Enterprise Value Formula

A company’s enterprise value (EV) provides a comprehensive snapshot of what it would cost an investor to buy the entire company outright. Essentially, it represents the complete takeover price. To determine this, one can use the enterprise value formula:

Enterprise Value (EV)=Market Capitalization+Value of Debt+Preferred Stock+Minority Interest−Cash and Cash Equivalents

The components involved in the EV calculation are:

Market Capitalization

This is the aggregate value of a company’s outstanding common and preferred shares.

Value of Debt

This encompasses both long-term debt and short-term debt obligations.

Preferred Stock

These shares have a higher dividend claim than common stock.

Minority Interest

This accounts for the value of a subsidiary in which the company owns less than 50% stake.

Unfunded Pension Liabilities (if applicable)

This represents the amount a company is short of to meet pension commitments or the funds that need to be set aside for pension disbursements in a plan that isn’t pre-funded. If this figure is available, it can be added to the market capitalization.

Cash and Cash Equivalents

These are liquid assets like money market funds, short-term government bonds, commercial paper, drafts, and others that can be quickly converted into cash. Since acquiring a company means gaining its cash reserves, this amount is subtracted to reflect the net cost to the buyer.

Enterprise Value Formula Example

Consider a hypothetical company, ABC Limited, with the following financial details:

Shares Outstanding: 3,000,000

Current Share Price: $4

Total Debt: $2,000,000

Total Cash: $1,000,000

From the information provided:

Market Capitalization = Shares Outstanding × Current Share Price

= 3,000,000 × $4

= $7,000,000

With no Preferred Stock and no Minority Interest stated, their values are $0.

Outstanding Debt = $5,000,000

Cash and Cash Equivalents = $1,000,000

To calculate enterprise value, use the EV formula:

EV=MarketCapitalization+PreferredStock+OutstandingDebt+MinorityInterest–CashandCashEquivalents

Enterprise Value = $7,000,000 + $5,000,000 – $1,000,000

= $11,000,000 or $11 million.

Who Can Use An Enterprise Value Formula?

In mergers and acquisitions, financial experts, especially investment bankers, can use an enterprise value as a yardstick to evaluate companies, assisting their clients in making informed decisions about potential acquisitions or mergers.

Beyond the M&A landscape, EV is also a cornerstone metric in various other financial and accounting calculations. 

For instance, it can be paired with indicators such as EBITDA to derive ratios that offer a nuanced perspective on company value, facilitating more comprehensive business comparisons.

Why Does Enterprise Value Matter For Businesses?

An enterprise value is important for businesses and is an invaluable instrument for gauging a company’s size and comprehending how it leverages debt. 

For instance, certain burgeoning tech stocks might appear excessively valued when solely assessed through market capitalization. 

However, accounting for minimal or non-existent debt and subtracting a substantial cash reserve may reveal that the enterprise value provides a starkly distinct valuation compared to mere market cap.

Enterprise Value Vs. Market Cap

Market capitalization doesn’t wholly capture a company’s worth because it overlooks key components like debt and available cash.

By accounting for these factors, enterprise value offers a more holistic view, thus presenting a clearer picture of a company’s value.

Although they seemed identical when evaluated solely on market cap, their enterprise values reveal a distinct disparity in their overall worth.

Enterprise Value Vs. P/E Ratio

The price-to-earnings ratio (P/E ratio) is a valuation metric that relates a company’s current share price to its earnings per share (EPS). Sometimes known as the earnings or price multiple, the P/E ratio doesn’t account for a company’s debt. 

In contrast, the Enterprise Value (EV) encompasses a company’s debt, providing a more holistic valuation. To obtain a well-rounded assessment of a company’s worth, the P/E ratio and enterprise value are often considered together.

Using Enterprise Value As A Valuation Multiple

Enterprise value (EV) is a foundation for various financial metrics that gauge a company’s performance. 

One such metric is the enterprise multiple, which connects the company’s entire valuation from all funding sources to its operational earnings, represented by earnings before interest, taxes, depreciation, and amortization (EBITDA).

EBITDA gives insights into the revenue drivers of a company as an alternative to straightforward earnings or net income in specific scenarios:

EBITDA = Net Income + Interest Expense + Taxes + Depreciation + Amortization

However, EBITDA might not always provide the complete picture since it omits the capital costs related to assets like property and equipment. 

When working capital inflates, EBITDA might exaggerate cash flows from operations. Additionally, it overlooks the impact of different revenue recognition policies on a company’s operational cash flow.

Another popular valuation metric is the EV-to-sales ratio (EV/Sales). This ratio is more precise than the Price/Sales metric because it accounts for a company’s value, including the debt it must repay.

A lower EV/Sales ratio suggests a company might be undervalued. In unique cases where a company’s cash surpasses its market cap and debt, the EV/Sales ratio can be negative, signifying it can settle all its obligations.

Enterprise Value Limitations

Enterprise value (EV) has limitations, especially when comparing companies operating in different sectors or growth stages. 

While EV gives a comprehensive view of the overall cost to acquire a company, considering factors beyond just market capitalization, it may not always provide a complete perspective on a company’s financial performance or health.

For instance, two companies might have identical market caps, but if one is laden with debt. At the same time, the other boasts substantial cash reserves; the latter would naturally be more economical to acquire. But this only tells part of the story.

Debt utilization varies across industries. A software firm heavily in debt with limited cash might seem less appealing than a debt-free firm with a similar market cap. 

However, the narrative changes when you compare companies across industries. Capital-intensive sectors like utilities or automobile manufacturing often require sizable debt to fund the necessary assets for revenue generation.

Furthermore, the growth stage of a company affects its EV. Startups or companies experiencing rapid growth might not have accumulated as much debt as their mature counterparts. 

Therefore, although the enterprise value formula provides valuable insights into a company’s worth, it is crucial to consider the industry landscape, growth stage, and debt utilization when making investment choices.

How To Show You Understand Enterprise Value On A Resume

When showcasing a knowledge of calculating enterprise value in your resume, consider the following points:

• Skills Section: Under your skills or expertise area, highlight your proficiency in business valuation techniques. You might list “Enterprise Value (EV) Assessment” to showcase your knowledge.
• Work or Internship Experiences: Detail your practical experience with EV in the descriptions of relevant positions. For instance: “Conducted comprehensive business valuations for multiple firms, employing techniques such as Enterprise Value.”

Next Steps For Enterprise Value

Enterprise value (EV) provides a fuller assessment of a company’s total worth and is often utilized by businesses contemplating mergers or acquisitions. 

Enterprise value offers a broader perspective on a company’s value than merely its market capitalization (market cap), which solely reflects the total market value of all outstanding shares. 

Market cap might give an idea of how the stock market values a company, but it doesn’t encapsulate the entire picture. This is because market cap omits crucial details like a company’s outstanding debts and cash reserves. 

While investors might use the enterprise value calculation to gauge a company’s scale and valuation, helping them make informed stock selections, combining an enterprise value formula with other valuation metrics is essential for a holistic view. 

Two commonly used ratios are EV/Sales and EV/EBITDA. The former indicates a company’s cash flow, while the latter suggests its earnings before interest and taxes.

Frequently Asked Questions

What Is The Difference Between Enterprise Value And Equity Value?

Enterprise value represents a third party’s total price to acquire a company’s stock and assets.

For public companies, determining the enterprise value involves multiplying the current share price by the total number of outstanding shares and adding any outstanding debt. However, calculating the enterprise value for privately held firms is more challenging as the value of their stock is not readily apparent.

On the other hand, equity value represents the portion of a company’s overall value, known as the ‘enterprise value,’ that belongs to its shareholders. To calculate the equity value, start with the enterprise value, which is essentially the cost for a third party to purchase the company’s stock and assets. 

From this, subtract any debt or equivalents, such as capitalized leases. Then, add back any excess cash or liquid assets the company possesses.

The resulting figure represents the total value available to the company’s shareholders, known as its ‘equity value.’

The post Enterprise Value Formula: What Is It And How To Calculate It appeared first on Digital Adoption.

In this post, we’ll explore the answer to that question, and we’ll also learn the pros and cons of each, as well as other alternatives to these process improvement methodologies.

Lean vs. Six Sigma

Let’s begin by looking at lean.

What is lean?

Lean is business methodology aimed at achieving aims such as:

• Improving quality
• Reducing waste
• Increasing customer value

The methodology began in manufacturing, but it is since spread to many other disciplines from product development and product management to supply chain management.

It is founded on principles such as continual improvement, which is the idea that performance improvement should be an embedded feature of the business.

Lean is a relatively easy to understand system and it usually generates positive results, which is perhaps why it has become so popular in recent years.

Using lean, for instance, businesses will often realize benefits such as:

• Improved business efficiency
• Increased customer satisfaction
• Lower business costs
• Reduced time-to-market

Reducing waste, such as useless labor or transportation, is one of the key means by which lean can achieve these goals – and, as mentioned, this is one of the primary focuses of the methodology.

Yet there are other ways to achieve the same benefits without focusing so heavily on waste reduction. 

Six Sigma offers a different approach. 

What is Six Sigma?

Six Sigma is another process improvement methodology that aims to systematically and continually optimize processes. Like lean, many of its benefits include:

• Increased business efficiency
• Reduced costs
• Increased customer satisfaction
• Better Business outcomes

However, whereas lean focuses on waste reduction, Six Sigma focuses on reducing variation and defects.

To this end, Six Sigma relies heavily on data-driven processes, statistics, and scientific approaches to solving business problems. Also, since the focus of Six Sigma does differ from lean, the outcomes will also differ to a certain extent. 

For that reason, some use a hybrid approach that combines elements from both lean and Six Sigma.

What is Lean Six Sigma?

Lean Six Sigma, unsurprisingly, attempts to combine the best of both lean and Six Sigma into a single methodology.

For instance, goals for Lean Six Sigma can include:

• Reducing waste
• Reducing product defects
• Minimizing variation within systems
• Maximizing customer satisfaction

Lean Six Sigma has in fact become so popular that there are a number of certifications in this method. However, even these certifications have their own emphases and structure.

Which Is Best – Lean, Six Sigma, or Lean Six Sigma?

Each approach has its pros, cons and use cases – we cannot say that one is “better” than any other. Instead, every business should define its own goals, values, and culture, then choose a system that aligns with those.

For instance, a company that is very data-driven and methodical may prefer Six Sigma.

A company, on the other hand, that wants a minimal system built around continual improvement may prefer lean.

A company that wants the best of both worlds may choose Lean Six Sigma.

Finally, a company that wants yet another approach may choose something else entirely.

Agile vs. Lean vs. Six Sigma

Lean and Six Sigma generate positive outcomes for the most part. Yet they are not without criticism. 

One common criticism of process improvement methodologies such as these is that they are too narrow. Six Sigma, For instance, focuses exclusively on reducing variation. It cannot therefore be useful for innovation or adaptation.

For that, a different approach is needed.

Agile is not a methodology.

Instead, it is a set of values. 

Those values revolve around:

• Responsiveness and adaptability
• Continual collaboration with stakeholders
• Functionality over static processes and documentation

While lean and Six Sigma remain focused on improving processes, agile focuses on adaptation, change, change management, and staying nimble in the face of disruption.

For example, during the COVID-19 pandemic, agile businesses were willing to restructure, build new processes in order to stay relevant and effective. This contrasts with the two approaches covered above, which focus on a continual gradual optimization rather than rapid change and adaptation.

Despite the differences between agile and the other systems covered above, these systems are not mutually exclusive. 

In fact, one could adopt all of these approaches – lean, six sigma, and agile.

This would result in what is also called a hybrid approach, often used in software development. In this approach, businesses will selectively adopt and combine principles to form an approach that is part agile and part linear. The same tactic can be used to combine lean with agile or any of the other methods mentioned above.

Final Thoughts

Process improvement methodologies have become normal in today’s business environment, and for good reason. They can be used to increase a number of business metrics, from costs to customer satisfaction.

Without being said, every business methodology has its own area of focus. It cannot therefore be relied upon to improve areas outside that scope.

To overcome these deficiencies, it is often best to survey a number of business methodologies and process improvement methodologies, then adopt a process that combines elements from each.

The post Lean vs. Six Sigma vs. Agile – Is There a “Best” Method? appeared first on Digital Adoption.

In this post, we’ll explore the differences between these two terms, then we’ll learn why “quality management system” is the preferred term.

What Is Total Quality Management?

Total quality management (TQM) is a business framework designed to improve quality across an organization. 

The focus of this approach is on areas such as:

• Customer satisfaction
• Creating cultures and disciplines that emphasize quality
• Employee involvement 
• Continuous improvement
• Decision-making based on facts 

TQM was the culmination of many decades of research and development by statisticians, engineers, and other business professionals in a range of fields. 

W. Edward Deming is widely credited with the creation of TQM in its current form, however, and he was instrumental in its popularization around the world. Deming implemented his ideas in post-WWII Japan, which significantly influenced their manufacturing practices.

TQM since became so influential that many organizations encoded its very principles into their operating models and their business models. 

Why Use Total Quality Management?

Since TQM is aimed at improving quality across the organization, the business benefits are virtually limitless. 

First and foremost, TQM focuses on maximizing customer success and satisfaction – the main benefit, therefore, would revolve around the customer experience, customer value, and other customer-centered metrics.

Yet TQM can deliver benefits across a wide range of other business areas.

A few examples include:

• Improved business efficiency
• Cost savings
• Greater organizational effectiveness
• An improved work environment
• A better organizational culture

In short, the proper application of TQM can positively affect the organization from top to bottom. 

From Total Quality Management to Quality Management System

Over time, the business world has changed and so too have the needs of quality management systems. While TQM has undoubtedly been one of the most influential approaches to quality management in the world, other terms and concepts have taken the forefront.

Today, quality management systems (QMSs) have become standard and have often replaced TQM.

A QMS refers to the system itself that is used to define and achieve quality objectives. Like TQM, a QMS is typically built around concepts such as:

• Delivering on customer expectations
• Improving the customer experiences
• Increasing efficiency in business processes
• Reducing waste and mistakes
• Providing a systematic method of governing processes
• Aligning organizational operations with its objectives

A QMS, in other words, aims to achieve the same objectives as a TQM.

Yet unlike TQM, the details of a QMS differ.

For instance:

• A QMS will not necessarily be built upon the same principles that TQM was built upon
• Modern organizations have different needs than those of the past, so modern QMSs will emphasize newer principles, such as organizational agility and transparency
• A QMS can differ in terms of content and be designed around the needs of the business

The exact structure of a QMS may differ from organization to organization. However, to qualify as a QMS, certain standards must be met.

ISO 9001:2015 defines those standards and specifies what should be documented when creating a QMS.

To adhere to these guidelines, a QMS should include items such as:

• A quality manual
• The organization’s quality policy and objectives
• Procedures
• Instructions
• Business processes

Ultimately, a QMS should be built upon principles of quality management that include relationship management, leadership management, customer-centrism, and improvement.

Quality Management in the Digital Workplace

As mentioned, changing business needs have driven the transition from TQM to more modern QMSs. Another trend that has contributed to the evolution of quality management is software.

Today, software and digital tools are affecting every aspect of the business, so it should come as no surprise that quality management professionals also use QMS software. 

When discussing QMS-related software, the terms “eQMS” or simply “QMS” are frequently used – according to some, the distinction is that an eQMS stores documents digitally, while a QMS stores them physically. 

In either case, these programs are designed to store internal quality policies, procedures, objectives, and other documentation.

How to Create a QMS

Creating a QMS requires, among other things, an understanding of several things:

• What a QMS is
• The ISO 9001:2015 guidelines
• Commitment and change management sponsorship from business leadership
• A reason for designing or redesigning a QMS

Developing a QMS is a significant undertaking, so it is necessary to enlist the help of those with expertise. That being said, with the right preparation and knowledge, it is possible to create a QMS that aligns with your organizational objectives and your customers’ needs.

Here are a few points to keep in mind when designing a QMS:

• Modeling the QMS on the Plan-Do-Check-Act (PDCA) cycle is a good way to embed continuous improvement into the process
• Start with the organization’s vision, its mission, and its priorities
• Design and map the business’s processes
• Link those processes to roles within the organization
• Document the most critical aspects of the QMS
• Adopt software, such as an eQMS system, to streamline the development and maintenance of the QMS
• Adjust the QMS as needed

Finally, as we have seen, TQM was the precursor to the modern QMS. While TQM may no longer be used in that specific form, many of its principles are still valid. Understanding those principles, therefore, can be a good starting place for anyone who wants to design their own QMS.

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Below, we’ll learn what this theory is, how it’s applied in business, and similar ideas that can boost business efficiency.

A General Overview of the Theory of Constraints

The theory of constraints, originally developed by Dr. Eliyahu Goldratt in order to help organizations achieve their aims, has become very popular among business professionals around the world. 

The theory proposes that a single limitation stands in the way of any business process or function. Reducing or removing the primary constraint to a process, the theory claims, is the best and the fastest way to improve the performance of a goal-oriented system – namely, a business.

It suggests that the best route to improvement is by:

• Identifying the predominant constraint
• Decide how to exploit the constraints
• Subordinate everything else to the decisions made above
• Alleviate constraints
• Repeat the process

These are the five core steps involved in removing constraints. 

In addition to these five steps, the theory of constraints makes several assumptions:

• There are three main measures that affect organizational performance: throughput, operational expenses, and inventory
• A chain is no longer than its weakest link – i.e., its constraint
• Profit is usually an organization’s primary goal

To better understand how this theory is applied in the business world, let’s look at the definitions of these terms in detail.

Theory of Constraints: Key Definitions

Here are more detailed definitions of the core concepts outlined above.

• A goal represents the objective of a system, which, in the case of a business, is usually profit
• A goal-oriented system is what the theory of constraints attempts to improve
• A constraint is the limitation on a business or system, which can include physical constraints, market constraints, policy constraints, and more
• Throughput, in business, represents the speed at which cash is generated through sales
• Throughput accounting is a type of accounting that emphasizes the importance of throughput, rather than items prioritized by typical accounting practices
• Operational expense is the organization’s overhead
• Inventory is the capital spent on operational expenses, such as equipment
• The process of ongoing improvement emphasizes the importance of the continual removal of constraints
• Thinking processes are clearly-defined tools that assist with analysis, dialogue, conflict resolution, and decision-making, among other things

These definitions can help us gain a top-down grasp of what the theory of constraints is and how it compares to other process improvement methodologies, quality management systems, and similar business frameworks.

Is the Theory of Constraints Useful for Your Business?

The theory of constraints has received both praise and criticism. 

Those in favor of the system, for instance, have pointed out that:

• The theory of constraints makes it easy to prioritize business problems, since the focus is always on the biggest limitation
• It focuses on what matters most in business, such as achieving goals, maximizing throughput, and increasing profits, which can eliminate unnecessary distractions and reduce waste
• Applying the theory of constraints often generates increased capacity and capabilities across the organization

On the other hand, according to critics, the theory of constraints:

• Fails to focus enough on other factors that impact the business, such as employee productivity
• Lacks sufficient real-world case studies to demonstrate its value
• Borrowed heavily from decades of other scientific research, without acknowledging that debt

It is useful to remember that the theory of constraints is, like any other tool, designed with a specific purpose in mind – maximizing throughput and capacity by minimizing limitations. 

Other tools, however, have different objectives, so they will naturally generate different benefits, as we’ll see below.

Beyond the Theory of Constraints

Organizations often have other aims besides maximizing throughput and output, such as:

• Increasing agility
• Decreasing waste
• Fueling innovation

To achieve objectives such as these, other types of business frameworks are needed.

For instance:

• Agile principles can improve workforce agility, organizational agility, innovation, and more
• Quality management systems are designed to enhance the entire organization’s operations by improving quality across multiple aspects of the company
• Lean methods are designed to reduce waste and production timelines, while increasing customer satisfaction

In addition to these rather “general” frameworks, there are also plenty of frameworks dedicated to specific business functions. 

A few examples include

• Change management models, which provide step-by-step frameworks for leading organizational change
• Project management frameworks, which include the tools and processes used to execute and manage a project
• IT governance frameworks, which are designed to align IT with the organization’s goals

The narrower a framework is, the more it focuses on achieving specific types of benefits. A change management framework, for example, is far narrower than more general frameworks, such as quality management systems. 

Is the Theory of Constraints Useful?

Understanding the purpose of a framework is a prerequisite for choosing the right one, and it can help us better understand how to use the theory of constraints. 

For instance, one could argue that the theory of constraints falls somewhere between manufacturing and quality management – after all, it revolves around concepts such as profitability, throughput, inventory, and operational expenses.

But does that make it a useful tool?

The answer to that question depends on your needs and what the framework will be used for.

Those interested in using methods such as the theory of constraints should perhaps study several such methods, then customize and combine them as needed in order to achieve one’s own personal goals.

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In this post, we’ll learn the basics of frameworks such as these, how they can be useful, what their pros and cons are, and which ones to apply in which circumstances.

What Are Business Frameworks?

In business, frameworks are everywhere – especially in large enterprises.

Frameworks, regardless of their purpose, tend to serve one common aim: to simplify complex business processes into models that can be easily grasped and applied.

There are frameworks for about every business discipline, department, and function.

For instance:

• There are frameworks that describe the theories of change management and turn them into step-by-step action plans
• Digital maturity models describe the maturity of an organization’s digital capabilities
• Marketing frameworks outline key processes within marketing, such as the customer journey, market sophistication, and more

Each framework has its own use case and its own place in the organization, as we can see from this brief list.

Also, each framework has pros, cons, and considerations that should be taken into account.

For instance:

• Most frameworks have very specific scopes and can only be used to accomplish certain goals
• Some frameworks are incompatible with one another
• Other frameworks haven’t been modernized and are considered out-of-date, if not obsolete

In short, it is important to evaluate one’s own situation and needs before actually applying a framework.

3 Use Cases for IT Frameworks

As hinted at above, IT frameworks can perform several functions – and this makes sense, since IT is so central to the modern organization. 

Digital strategies, for example, play a role in nearly every area of the business, from finance to marketing to customer service.

For that reason, IT frameworks cover territory that includes:

• IT governance. IT governance refers to the alignment of IT with business goals. When IT doesn’t sync up with business activities, inefficiencies and problems can quickly crop up. IT governance frameworks, such as those covered later, help to streamline this process and make it easier for IT leaders to do their job.
• IT service management (ITSM). ITSM is a key function within IT departments. It refers to the maintenance and management of IT operations. Since IT service delivery directly impacts key areas, such as the customer experience, it is important to optimize IT operations as much as possible.
• Enterprise architecture. Enterprise architecture overlaps with IT governance. While both tend to focus on IT’s role in the business, enterprise architecture takes a broader perspective. Among other things, it encompasses areas such as people, data, and technology. 

These are only three of many examples of how IT frameworks can simplify and improve IT managerial tasks. 

Next, let’s look at three key examples of these frameworks.

TOGAF, ITIL, and COBIT, a Quick Rundown

TOGAF, ITIL, and COBIT are, as mentioned, three of the most well-known IT frameworks. 

Let’s look at each one in detail to see how they can be applied:

TOGAF

TOGAF is short for The Open Group Architecture Framework.

It is a top-down framework that helps to:

• Align IT goals with business goals
• Help organizations adopt products and software more efficiently
• Simplify development
• Improve collaboration between IT and other departments

As the acronym suggests, “architecture” is a key focus of this framework, and it focuses on several areas, each with architecture at its center:

• Business architecture
• Applications architecture
• Data architecture
• Technical architecture
• Architecture development model
• Enterprise continuum

Each of these components, in turn, has its own subset of processes, practices, and methods.

Since TOGAF is one of the most influential and popular IT frameworks, those interested in learning more about IT tools should investigate this one closely.

Another important one to look at is ITIL, which we’ll cover next.

ITIL

ITIL stands for the IT Infrastructure Library.

This framework focuses on IT service management (ITSM) and provides an in-depth framework that is especially useful for growing or large enterprises.

ITIL’s life cycle has five stages:

• Service Strategy
• Service Design
• Service Transition
• Service Operations
• Continual Service Improvement

Like TOGAF, ITIL’s top-level stages can be further broken down into sub-components, processes, terms, and definitions. 

In all likelihood, any IT director is familiar with this framework, if they don’t apply it already.

COBIT

COBIT is short for Control Objectives for Information and Related Technology.

The aim of this framework is to assist with IT governance by managing:

• Business requirements and metrics, such as reliability, effectiveness, and compliance
• IT resources, such as people and infrastucture
• IT processes, which are separated into domain processes

Since COBIT is an IT governance framework, its aim is to, as mentioned above, ensure that IT supports and delivers on the organization’s business needs.

COBIT and the other IT frameworks covered here are three of the most common and most useful ones, both for managing IT and for connecting IT to the rest of the business. There is no such thing as a “best” framework, however – each one should be evaluated according to one’s own needs.

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The bad effect most likely happens because of the belonging to the ever-present trends of modification itself. Hence, this explains why so many corporations continually concentrate on change management as the focus toward convincing their particular workers that although modification is inescapable.

Employee Self-assurance

Unless you find that there is a tactical conversation plan for changing change through the group, and except if employees offer the information they must understand to adjust, the base staffs can easily suffer from the low comfort.

Even communicating in a skepticism way might encourage some staff, this still alleviates a number of the angst some may feel by simply being eliminated from negotiations about the direction belonging to the firm.

To receive the change, in the event the rumor generator suggests approaching layoffs, although there is no interaction about the issues so why the rumor prevails or perhaps in the event that is the case, the fear of job secureness could reason mass exodus or perhaps lack of productivity.

Whilst both of these situations might arise simultaneously, both ones have a big negative effect on the worker. Moreover, it will turn to the company’s main issue in the long run.

Buyers

Besides the tangible costs as a bad effect of modification management, the intangible expense of poorly maintained change pursuits is diminishing the business’ popularity. Customers may well interpret the change being a sign of insecurity or perhaps questionable management.

Nevertheless, unless modify administration attempts to communicate effectively over the employee platform and the consumer’s bottom, the effects could be devastating.

Staid Command

Support right from authority trickles down to rank-and-file employees. This defines as a large number of to people who listen with encouraging key phrases from higher management in regard to the proper direction of this company.

Since they often generally overlooked inside the development of the organization’s software path, they are to management to notify them within the quest, aims, and eyesight.

When command does not adopt change or perhaps does not work on transformation management pursuits, they get out of the vibrant and great aspect of the company change.

If the leadership workforce does a bit of result change management from a good stance, they are able to send staff seems the unwanted effects.

Change Is Not Just Inevitable, It Is High A Price Task

Low staff ideal is expensive, and when you add to it all the expense of employee leaving, the effect is definitely certainly not only a negative deadly work environment.

The perceptible expense of employee spirits attributable to modification administration is up to $300 million due to negative productivity, insufficient staff diamond, on-the-job accidents, absenteeism and general discomfort, comfortableness within just the work area regarding the work alone.

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