BPI EFFICIENCY VS. EFFECTIVENESS
Peter Drucker once said, “Efficiency is doing things right; effectiveness is doing the right things.” This quote is particularly relevant when it comes to Business Process Improvement (BPI). Organizations cannot overlook the importance of efficiency and effectiveness in increasing productivity and improving customer service.
Although the terms “efficiency” and “effectiveness” are often used interchangeably, they have significant differences when it comes to process improvement.
In this article, we’ll distinguish between these two factors and explore their relevance to business process management (BPM) strategy and implementation.
Process Effectiveness
Process effectiveness measures how relevant the final output is to the BPI objectives. To be effective, a process must deliver the desired output while meeting the needs of customers in a satisfactory way. In other words, a truly effective process will provide customers with the right results at the right place, time, and cost, which will make them happy.
Achieving process effectiveness is a thorough procedure that primarily involves understanding the requirements and desires of customers, turning them into measurable targets and expectations, and making them a reality through proper data collection, measurement method drafting, and execution.
Once customer needs and expectations are defined and quantified clearly, it becomes easier to establish measurement criteria for delivering error-free, high-quality services with great customer experience through robust business process implementation steps. The following widely accepted parameters can help you analyze the effectiveness of your process:
- Feasibility of Solution
- Reliability of Solution
- Timeliness of Delivery
- Presentation of Outputs
- Accuracy of Outputs
- Responsiveness of Outputs
- Post-delivery customer service
Process Efficiency
Process efficiency is a measurable concept that plays a vital role in determining productivity. It is essentially the ratio of “useful output to total input,” which ensures resource (mainly cost and time) optimization along with maximum waste reduction. Efficiency is a term of paramount importance throughout the BPM lifecycle.
Every process ends up with some issues or gaps over time, which can negatively impact process efficiency. To get rid of them and be well-organized, a business process must be effective enough. An inefficient process can affect the entire BPI initiative both externally and internally.
While organizations mostly consider the experience of external customers for measuring their process efficiency, there are quite a few vital internal factors that should also be used as measures for this purpose, such as the proportion of non-value-added activities, extended delay time, underutilized or overutilized resources, and lack of skilled people.
Recognizing these factors makes the identification of inefficiencies easier, and companies can come up with a variety of resolutions, such as outcome-related improvements (like digitalization, harmonization, and separation of outcomes), activity-related improvements (like elimination, automation, parallel routing of activities), and resource-related improvements (like integration of activities and assignment of resources).
By doing so, a more manageable environment is created for the processes to run, and organizations gain better control over their businesses. As a result, operational inconsistencies are eliminated, and customers receive excellent services.
A Comparative Approach:
Both effectiveness and efficiency are essential for an organization to enjoy the benefits of BPM and improve the performance of the business as a whole. However, to get a clearer view, the terms must be put side by side. Firstly, process efficiency signifies an optimal (in most cases, the fastest or the cheapest) way of operating processes.
Conversely, process effectiveness implies executing the right processes and achieving the desired goals. Secondly, process efficiency is measured from the point of view of achieving the goal of optimal usage of resources (time, cost, and effort) in executing an organization’s processes.
On the contrary, process effectiveness is measured from the point of view of achieving the goal of customer satisfaction with regards to the accomplishment of the process objective. Apart from these disparities
