Lean into it

3 Jan 2009

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Lean business principles championed by Toyota, Ryanair and Intel are finding their way into the IT world as essential tools firms can use to survive the economic storm.

The adoption of ‘Lean’ principles of reducing waste and cutting out time from projects by drilling down and analysing them so you perform the process better the next time – and the next time again – could very well be the answer to many CIOs’ prayers over the difficult months ahead.

The latest management thinking believes Lean principles from the manufacturing world can be applied to areas such as services, healthcare, aviation and the public sector. More recently still, the discussion has turned to IT. Joe Aherne, CEO of the Cork-based consultancy Leading Edge Group, says Lean is starting to be applied across functions in organisations. “All departments have business processes, and the core processes of an IT department might be software development, to operate business systems, to manage the IT architecture or to provide technical helpdesk support,” he says.

So far, Lean’s advance into IT has made most progress in software development. The seven wastes that programming expert and author Mary Poppendieck has identified owe much to Toyota’s guiding rules for eliminating waste from manufacturing. Value stream mapping can be used to analyse the flow of the process, in the same way that Toyota maps materials and information flow. Once the service is identified, the current- state value stream map would show the current steps in the process and where delays occur. From this, the flow of the process becomes apparent, and it’s possible to then identify areas where wasted steps can be eliminated: this becomes the future state value stream map.

Aherne says this Lean technique is very good at uncovering ways for organisations to improve. “You’ve quite a few end-to-end value streams within an IT department,” he says. “We would develop current state and future state value stream maps for the department. For example, if it’s doing development, there can be quite a lot of hidden waste. We would find in those processes that extra features would have been built into the solution which, if you look at them, are a complete waste.”

The large IT analyst firms are starting to pay close attention to Lean. Forrester Research has done much work in addressing the unnecessary complexity in information technology. Earlier this year it published a paper, Applying Lean Thinking to IT. “IT executives who want to position IT for more sustainable contributions to business productivity should use Lean thinking as a strategy enabling their organisations to progress from ‘getting by’ to continuous improvement,” wrote Alexander Peters PhD of Forrester Research. He advised CIOs to direct their staff and use Lean to achieve three main goals: to improve the efficiency of IT delivery; to simplify and formalise IT management oversight; and to educate the IT organisation continuously.

Aherne expands on these points, identifying several areas where Lean can be applied to IT departments. “There are opportunities to reduce downtime, have a greater adherence to service-level agreements and shorten lead times of projects from inception. On-time delivery is always an issue. It seems to be the biggest gripe within an IT department,” he says.

Going Lean is not a panacea administered by an external consultant who identifies areas of waste, recommends a process for their removal and then disappears with all the knowledge about how this is achieved. Some outside involvement is needed at the start of the Lean journey, to transfer the necessary skills, but the idea is that all members of the team or company learn how to identify wasteful steps in a process and work together to eliminate them. This may be driven by senior management, such as a CIO, but crucially it involves – indeed, it requires – the support of all staff in order to be successful.

Moreover, going Lean is not a finite project with an end, but a process of continuous improvement, or kaizen in Toyota-speak. “It’s a way of life,” says Dee Carri, founder and director of the business process management training consultancy Torque Management. “People run process improvement projects themselves. To me, the ideal is you have upfront training and you have a sensei – a leader who dips in and out at certain times. You are building internal capability, as opposed to relying on an external consultant. It can be a very long process, but it shouldn’t be a very long process with the consultants. Once the principles are understood, and you’ve been through a pilot programme, you should then be able to run it yourself.”

Leading Edge Group says support for the initiative at all levels of the organisation is vital, and there must be a clear understanding of what’s being embarked on before the journey begins. Management and staff need to become familiar with all aspects of the 5S methodology (see panel on page 38) before committing fully to the concept. All relevant staff should receive appropriate training in the 5S aims, stages and implementation methods before commencing any pilot programme. Although a successful Lean programme requires the involvement of management at the highest levels of an organisation, it differs from other management frameworks by not being purely a diktat driven from above. “From a bottom-up perspective, you empower people and explain to them about the advantages and the benefits of Lean,” says Aherne.

Many of the specialists in this field say Lean IT has yet to become well established in Ireland. However, all agree that it can be applied in many cases. “You see it in manufacturing in Ireland, but do you see it in IT, finance or HR? No, and it’s crazy,” says Aherne. “Lean is not well understood in terms of its application to IT,” adds Carri, who says she tends to find some IT people are aware of the 5S concept. “People need to get into it in a very systematic way,” she adds. “You need a vision of where you want your IT processes to be and perform a gap analysis.”

Carri points to her own background with the IT department at Elan Corporation, and her involvement in the group’s efforts in reaching the ISO 9000 standard. “It lacked some flexibility and the ability to continuously improve,” she recalls. “You can achieve ISO 9000 by reaching a standard, but philosophically, you should really be looking to continuously improve,” she says.

Seen-it-all cynics may be inclined to dismiss Lean as just another management fad. Those of a more generous disposition may simply ask how it’s different from the many other IT process frameworks now in vogue, such as Six Sigma or the IT Infrastructure Library. “Lean is a philosophy and is bottom-up. Six Sigma tends to be very specialist and quite expensive. When you want to see all boats rise without huge expense, Lean is the one to go for,” Carri advises. “From an IT point of view, there are lots of other IT frameworks. They’re not in competition with Lean, but people can confuse them. Business process management is the process they should be addressing, and Lean has the tools to help those initiatives. Kaizen sits neatly, regardless of what you’re trying to achieve,” she adds.

To illustrate her point, she says Torque Management delivers a course in association with UCD Michael Smurfit Graduate Business School called Business Process Optimisation, which incorporates best-practice thinking and methodologies from several disciplines, including Lean and Six Sigma.

Martin Curley, global director of IT innovation with Intel and professor of technology and business innovation at National University of Ireland (NUI), Maynooth, believes Lean can make a difference to organisations both within and beyond the IT department. “There’s a real competency that can be led from the IT department,” he says. IT is “a natural” for the role “because IT has full process visibility across the organisation,” he points out. “You can see the opportunities in the value chain for applying Lean.” Aherne concurs, saying that an IT department’s Lean project must be seen as part of a wider effort. “Everything is tied back into the overall strategy of an organisation,” he says. “Where a lot of Lean projects fail is when they are not aligned with the whole business strategy, and also if there’s no proper governance structure to manage Lean across the organisation. The managers for the core functions should be an integral part of the Lean initiative. What we’ve seen in the past is that sometimes Lean is used as a fashion accessory.”

Before IT can talk the talk, it must walk the walk, says Curley. “The prerequisite before IT can be a leader is that it has to be credible.” The Innovation Value Institute (IVI) at NUI Maynooth has a five-stage measurement called the IT Capability Maturity Framework (ITCMF), and Curley recommends an IT department should be at least at level three. “IT needs to have the respect of the business to go beyond its core mandate,” he insists.

Encouragingly, Aherne notes that sometimes in US organisations, the Lean champion comes from the IT department. “You’d never see that in western Europe, where they tend to come from the quality or the engineering department. But IT people are extremely logical; the skills are there from an IT perspective,” he points out. Curley agrees, citing surveys conducted by the IVI, which show the average maturity of European organisations on the ITCMF lags slightly behind US organisations. He suggests a two-step approach to remedy this: the first is to build the capability in IT, and secondly, to the organisation as a whole. “IT is typically 1-5pc of a company’s revenue: the real impact [of Lean] is applying it to the core business processes.”

Forrester Research points out the challenges that await, noting that Lean involves both system and cultural change. “Quite often, the biggest barrier to adopting Lean thinking is the lack of understanding of its fundamentals,” it warns. “As with consolidation, Lean practices aimed at flawed processes or functions rarely yield lasting results, unless they eliminate their root causes as well. Organisations in pursuit of continuous improvements must apply Lean thinking as a system, rather than a collection of methods implemented piecemeal.”

Forrester Research advises IT executives to design their organisation as a system embodying Lean principles, such as the absolute elimination of waste. “They must understand, synchronise and measure the output of the entire value chain, from sales to IT operations and from GUI to back-end system, not of individual capabilities,” the firm says. This calls for broad communication not just with IT staff, but also customers and suppliers.

Curley points out that technology itself can be applied to make an IT process Lean. Intel has integrated a feature into PCs that allows them to be controlled remotely, reducing the number of support calls where a technician is required to be physically at the desktop; this accounts for 50pc of the cost of providing support. Similarly, many Irish organisations, without realising it, may already be part of the way towards becoming Lean. Two of the seven original wastes, as defined by Toyota, are waiting and transportation; it could be argued that any company that has replaced the process of visiting every desktop to update software patches with central control from a management console has put in place some Lean processes.

Aherne is bullish about Lean’s prospects, and he sees an eagerness to learn among Irish Lean disciples. Green Belt accreditation courses run by the Leading Edge Group have a 99.5pc pass rate. However, this road less travelled is a long one, he warns. “It is a continuous process; you have to improve on an ongoing basis. It’s not a quick win, I’m afraid. The principles are easy to learn. To get people empowered and to change takes a lot longer.”

While Lean calls for an organisational architecture that lays the foundation for continuous improvements, Forrester Research says a true Lean culture derives from innovation that comes from the individuals and functions that contribute to the IT value chain. “IT executives must develop the structure and the culture supporting the behavioural elements of Lean thinking such as experimentation and rapid change, collaboration and continuous learning about the business processes they support,” it says.

In short, driving a Lean programme within an organisation isn’t just about following a series of tools or procedures. It calls for strong leadership, and that’s where the CIO can play a key role. A word of warning, though – going Lean is not easy. Estimates vary, but around 60pc of such initiatives are thought to fail. Kurt Woolley, a strategic programme manager with Intel, believes the single overriding factor explaining this high statistic is a lack of leadership. “If you don’t have the CIO, it’ll probably fail,” says Carri.

That said, an IT department that embraces Lean thinking will go a long way to making a real value-added contribution to the business – and with an uncertain economic future ahead, it could become a case of survival of the Leanest.

Ferrari drives towards IT agility 

Lean’s principles may owe their origins to the factory floor at Toyota, but that hasn’t stopped other car makers from applying them to their own operations. At Ferrari Gestione Sportiva, IT is not merely supportive but strategic to the company, says head of IT Piergiorgio Grossi. “At Ferrari, IT has a big role; we are in the briefings where the team meets at the end of every race, talking about engine dynamics obviously, but also IT.”

The competitive, high-profile world of Formula 1 racing is demanding, and this pressure shapes Ferrari’s approach to IT. Grossi is a self-professed disciple of removing waste from as many processes as possible, and has implemented agile computing methods for the extensive application development the team needs in developing the cars ahead of each Grand Prix day. This is no small task: the software changes significantly from race to race, depending on the prevailing conditions at each track. “In software development, we can say that all the projects are run in an agile way,” Grossi says. “We have a race every two weeks, and we have to release software and applications, so we have to find a way. We use a little bit of scramble, XP and Lean.”

Referring to the wider delivery of IT services to the team, Grossi admits this is still a work in progress. “I cannot say we use a Lean approach, but some of the principles are very, very important for us.” He says the IT crew strives to eliminate as many points of failure from its systems in order to help the team perform. “We have checklists, procedures and controls for everything,” says Grossi.

The philosophy of eliminating errors is central to the culture of the team and the company as a whole. Founder Enzo Ferrari’s original studio, now preserved at the car-maker’s headquarters in Maranello, has shelves filled with die-cast models of cars his company built. The ones he chose to  keep are not the successes but the ones with flaws, as a reminder to constantly improve. Asked frequently what his best car was, Ferrari would usually reply: “The next one.”

 

By Gordon Smith

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