The Role of Business Processes in Electric Utilities

Use the words internal controls and you may lose your audience — eyes glaze over and the common response is "that's for auditors." But business processes are nothing more than another name for internal controls: how we get things done in our organization.

Tie this in with the concept of faith — confidence in what we hope for and assurance about what we do not see. Once we have designed and tested a business process and made it part of our official policies and procedures, we have faith that it will perform and deliver the results we hoped for without our constant review and oversight. But sometimes that faith in the process needs to be revisited to ensure processes are still working as designed.

The Process for Designing Business Processes

Designing a tight business process involves asking a lot of questions of process owners: "What do you do as part of your role in the process of XYZ?" Then documenting that process, dissecting it to determine whether it is effective, and making improvements. The overall workplan follows eight steps:

Step	Action	Purpose
1	Interview Process Owners	Gather firsthand knowledge of how the process is actually being performed — not just how it was designed
2	Document the Process	Capture detailed steps via narrative description or process mapping to create a clear, shareable baseline
3	Test the Process End-to-End	Walk through the process in action — from beginning to end — to confirm that process owners are doing what they described in the interview
4	Analyze for Inefficiencies	Work with the current process owner to identify inefficiencies, improvement opportunities, and whether the process needs reengineering
5	Make Recommendations	Develop specific, actionable recommendations for process changes — including a revised process map of the improved workflow
6	Train Process Owners	Train appropriate employees step-by-step in the new process before go-live — do not assume the documentation alone is sufficient
7	Perform Follow-Up Testing	After an interval for process owners to gain confidence, conduct a walk-through to confirm the new process is being performed as designed
8	Retrain and Retest as Needed	If the process is not yet running as designed, retrain and retest — repeat until the process is reliably on auto-pilot

Steps 3, 4, and 5 — testing, analysis, and recommendations — are where the most value is generated, and where the insights of the current process owner are most critical. The Step 4 analysis will be most effective when conducted with the process owner, not only to confirm what steps are being performed and why, but to capture their ideas for improvement.

Analyzing the Process: Does It Need Business Process Reengineering?

The distinction between how a process was designed and how it is actually being performed is important. Degradation of a well-designed process is common — policies and procedures can drift from actual practice over time, especially as software changes, staff turns over, or workarounds accumulate.

Contrarily, some processes that are being performed correctly simply need to be updated — the original design is no longer adequate given changes in technology or the business environment. Often, the current owner of a business process will have excellent ideas on how it can work most effectively. Capturing those insights is the heart of process improvement work.

Once the process has been defined and refined through Steps 3–5, a revised business process map should be prepared and approved before training begins.

Making Recommendations and Testing Processes

On approval of the redesigned process, train the appropriate employees step-by-step. After a reasonable interval for those process owners to gain confidence, internal audit or another independent tester should perform a walk-through to confirm the process is being performed as designed. If it is not, retrain and retest until the process is operating as intended.

Applying Business Process Improvement to the Whole Organization

The workplan described above is designed for one process or area. Applied systematically, this approach should cover all of the key processes in the organization — which is a vast but necessary undertaking. Developing workplans to revisit each area on a rotating schedule, or engaging outside internal audit assistance to supplement in-house capacity, should become part of the ongoing business process improvement culture of the organization.

For more on how to surface the internal process improvement expertise that already exists in your organization, see the companion article on Process Whisperers .

The material in this article is for informational purposes only and should not be taken as legal or accounting advice provided by Utility Accounting & Rates Specialists, LLC. You should seek formal advice on this topic from your accounting or legal advisor.