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Chapter 7 Processes, Organizations, and Information Systems
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Customer
Order
Check
Out of Stock Inventory

Order in Stock
Credit Rejected Check Customer
Credit
Order in Stock
Special Terms Credit Approved
Rejected
Or Approve Special
Terms
Figure 7-1 Approved Order
Business Process with
Three Activities To Order Fulfillment Process

How Do Structured Processes Differ from Dynamic Processes?

Businesses have dozens, hundreds, even thousands of different processes. Some processes are
stable, almost fixed sequences of activities and data flows. For example, the process of a sales-
clerk accepting a return at Nordstrom, or other quality retail stores, is fixed. If the customer has
a receipt, take these steps . . . if the customer has no receipt, take these other steps. That process
needs to be standardized so that customers are treated consistently and correctly, so that returned
goods are accounted for appropriately, and so that sales commissions are reduced in a way that is
fair to the sales staff.
Other processes are less structured, less rigid, and often creative. For example, how does
Nordstrom’s management decide what women’s clothes to carry next spring? Managers can look
at past sales, consider current economic conditions, and make assessments about women’s accep-
tance of new styles at recent fashion shows, but the process for combining all those factors into
orders of specific garments in specific quantities and colors is not nearly as structured as that for
accepting returns.
In this text, we divide processes into two broad categories. Structured processes are for-
mally defined, standardized processes that involve day-to-day operations: accepting a return,
placing an order, purchasing raw materials, and so forth. They have the characteristics summa-
rized in the left-hand column of Figure 7-2.
Dynamic processes are flexible, informal, and adaptive processes that normally involve stra-
tegic and less structured managerial decisions and activities. Deciding whether to open a new store
location and how best to solve the problem of excessive product returns are examples, as is using
Twitter to generate buzz about next season’s product line. Dynamic processes usually require human
judgment. The right-hand column of Figure 7-2 shows characteristics of dynamic processes.
We will discuss structured processes and information systems that support them in this
chapter. We have already discussed one dynamic process, collaboration, in Chapter 2, and we will
discuss another, social media, in Chapter 8. Some aspects of business intelligence, in Chapter 9,
are also dynamic processes.
For the balance of this chapter, we will use the term process to mean structured process.

How Do Processes Vary by Organizational Scope?

Processes are used at three levels of organizational scope: workgroup, enterprise, and inter-
enterprise. In general, the wider the scope of the process, the more challenging the process is
to manage. For example, processes that support a single workgroup function, say, accounts