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256 Chapter 7 Processes, Organizations, and Information Systems

can produce the same order approvals/rejections (output) for less cost or produce more approv-
als/rejections for the same cost, it is more efficient.
Process effectiveness is a measure of how well a process achieves organizational strat-
egy. If an organization differentiates itself on quality customer service, and if the process in
Figure 7-1 requires 5 days to respond to an order request, then that process is ineffective.
AllRoad Parts, which wants to differentiate itself based on the size of its inventory items,
is investigating processes for helping customers use 3D printing to manufacture their own
parts. The new processes are effective to the extent they help AllRoad expand its parts
availability.
How Can Processes Be Improved?

Organizations can improve the quality (efficiency and/or effectiveness) of a process in one of
three ways:
• Change the process structure.
• Change the process resources.
• Change both process structure and resources.

Change the Process Structure

In some cases, process quality can be changed just by reorganizing the process. The order ap-
proval process in Figure 7-1 might be made more efficient if customer credit was done first and
inventory was checked second. This change might be more efficient because it would save the
cost of checking inventory for customers whose credit will be denied. However, that change
would also mean that the organization would pay for a credit check on customers for which it
did not have appropriate inventory. We will investigate such changes further in Chapter 10. For
now, just note that process structure has a strong bearing on process efficiency.
Changing process structure can also increase process effectiveness. If an organization
chooses a cost-leader strategy, then that strategy might mean that no special terms should
ever be approved. If the process in Figure 7-1 results in the authorization of orders with special
terms, then eliminating the third activity will make it more effective (most likely it will save on
operational costs as well).

Change Process Resources

Business process activities are accomplished by humans and information systems. One way
to improve process quality is to change the allocation of those resources. For example, if
the process in Figure 7-1 is not effective because it takes too long, one way to make it more
effective is to identify the source of delays and then to add more resources. If delays are
caused by the check customer credit activity, one way to increase process effectiveness is to
add more people to that activity. Adding people should decrease delays, but it will also add
cost, so the organization needs to find the appropriate balance between effectiveness and
efficiency.
Another way to shorten the credit check process would be to use an information system to
perform the customer credit checks. Depending on the development and operational costs of
the new system, that change might also be less costly and therefore more efficient.

Change Both Process Structure and Process Resources

Of course, it is possible to improve process quality by changing both the process’s structure and
resources. In fact, unless a structure change is only a simple reordering of tasks, changing the
structure of a process almost always involves a change in resources as well.