This Blog will contain a series of articles that will provide tips, techniques, and strategies for improving the effectiveness of your Information Technology (IT) organization using “Lean” principles. “Lean” principles focus on the identification and elimination of waste which consists of work that adds no value to a product or service.
Lean concepts have been successfully applied to manufacturing and have resulted in increased quality, greater efficiencies, and reduced cost which is the same outcome we hope to achieve in IT. As you will see, identifying waste in a manufacturing process can be much easier than IT services because inspecting the process and the final product is much easier.
Why is this discussion necessary? Since the early days of computers, Technology spending was always viewed as an investment and IT organizations did not have to prove their value. Today, the trade magazines are full of articles and advertisements discussing improved linkage to the business, proving IT value, and reducing costs.
IT has become a commodity! How did IT become a cost to be reduced instead of an investment?
The following chart summarizes the results of the Chaos reports by the Standish Group. The Chaos report surveys large numbers of IT organizations to collect information about project success rates.
Some people look at this chart and conclude that IT project success rates are improving. Let’s face it, a 32% success rate means that two-thirds of all projects are challenged or fail outright. Additionally, application support consumes a larger percentage of the IT budget today and support is not included in these project metrics.
In the last 50 years, the price-performance of computer hardware has improved exponentially. Today, you can buy a memory stick that can store gigabytes of data for less than 10 dollars. This same storage capacity would have cost millions of dollars in the 1960’s.
Because of the high cost of hardware, early computer applications automated processing of high volumes of simple transactions where the cost-benefit was obvious. Waste could not be tolerated because of the high cost of computers. Early applications were less complex and easy to build and test. Limited processing capability prevented the introduction of complexity. The salary cost of IT professionals was a small percentage of the budget compared to the cost of hardware. It was cost-justifiable to have IT professionals spend extra time to improve processing efficiency and avoid hardware upgrades.
The precipitous decline in hardware prices has resulted in fundamental changes in expectations regarding the benefits and deployment of technology. The following list highlights some of these changes:
- Salaries of IT professionals have replaced hardware as the greatest IT cost for many organizations (hence the desire to use cheaper off-shore resources).
- Low-cost hardware has justified the automation of complex business processes which increases application complexity and also requires the IT staff to have a greater understanding of business processes. Complex applications are more time-consuming and expensive to develop/support and problems are more difficult to resolve.
- There has been a growing proliferation of applications with overlapping or redundant functionality. New applications are developed while older applications are never de-commissioned. The low cost hardware makes this acceptable but the effort required to operate and support redundant applications adds cost and can be viewed as waste.
- Software development tools leverage the increased price/performance of the hardware and provide the capability to create complex and highly functional applications. Unfortunately, the complexity and variety of the tools requires increased specialization that actually slows the development process, complicates support and increases costs.
- Lower cost hardware provides processing capacity to enable the automation of complex business processes and decision logic. Complex applications are more time-consuming and expensive to develop/support. Problems are difficult to diagnose and business organizations are increasingly dependant on IT staff to research applications to explain their results. This increases the support costs and requires IT staff to know the technology, applications, and business processes.
- IT organizations have become highly reactive. Since they no longer limit the processing capacity to high-value applications (as was done did in the past), IT reacts to the increasing demands from the business. Frequently, the requests are not logged and there is minimal understanding of the purpose or benefit of the request.
- The purchase or development of IT management solutions has received a lower priority than business management solutions. As a result, the evolution of IT processes and tools has not kept pace with the evolution of technology and the ever-increasing demands of the business.
- Finally, the lack of mature IT management processes has also resulted in ambiguous role definitions and career paths within the IT profession. Good developers or team leaders become Project Managers with minimal management training or management experience. Business Analysts are supposed to understand technology and business processes but very few people have the combination of skills required to perform this role effectively. The biggest gap is the lack of a career path leading to a CIO position. As a result, the role of CIO’s varies widely. Many CIO’s have Infrastructure experience and no applications experience while others were business executives with limited knowledge of technology.
Applying Lean Concepts
How do we apply lean principles to address these issues? As previously mentioned, “Lean” principles focus on eliminating waste. Examples of waste in IT include:
- Rework resulting from poorly or partially defined requirements or lack of business participation
- Defect correction
- Scheduling gaps and under-utilized resources because of a lack of diverse skills
- Excess effort/cost resulting from lack of models or templates, lack of automation, or lack of knowledge
- Operating and supporting multiple technology platforms
- Operating and supporting redundant applications
In a manufacturing process waste is easier to identify. The lack of mature IT processes and tools means that we do not have the visibility and control required to identify easily identify waste within IT. Examples of Lean Principles applied to IT include the following recommendations:
- Improve requirements management to eliminate rework
- Improve Quality and Testing processes to eliminate defects. If a defect occurs, implement a permanent resolution instead of a temporary work-around.
- Consolidate technology platforms and eliminate obsolete technologies
- Retire redundant applications
Implementing these principles requires commitment and ownership. Waste must be defined which implicitly requires a definition of value. The organization’s culture must encourage the identification waste through a corporate continuous improvement program. Suggestions must be evaluated and a strategy to eliminate waste must be defined. Finally, the management processes and tools must provide the visibility and control required to identify and eliminate waste.