An inevitable reaction to the lean economic climate includes discussions around "leaning" costs and staff. But best-practice executives view lean as a performance-improvement approach and management framework, rather than merely a cost-cutting exercise.
A recent Forrester survey of 94 IT companies shows that 68 per cent have performed major organisational restructuring during the last three years. Remarkably, the main purpose for reorganisation was to improve business orientation rather than reduce costs (join the CIO UK debate on business process management to see the views of leading CIOs). The research also shows IT executives perform these improvement initiatives in lean-style at different levels of the enterprise:
• Improving IT processes. IT processes supported by well-defined workflows, such as incident management, have been a common target for lean-style improvement initiatives. Fujitsu Services, for example, provided a highly publicised example of applying lean to analyse the help desk process from the perspective of its customer, the check-in staff of British Midland Airways.
• Improving IT's overall efficiency through consolidation. Call it "lean" or not, but well-managed IT organisations have always sought to eliminate waste in the form of redundant processes, resources, and legacies through consolidation. IBM pioneered the concept in the 1990s by performing a highly spectacular and successful consolidation of its 128 BU -CIOs to one and its myriad mainframe locations into three global data centers.
• Improving the business-IT relationship. To optimise this complex relationship from a business perspective, a large automotive company has "c-leaned" its organisational set-up. It implemented a hybrid structure consisting of process information offices focused on the core business processes and created one common organisation provisioning shared services across the firm.
• Developing and deploying business processes. At Fairchild Semiconductor, the CIO helped reengineer the product information management process by identifying process gaps and pointing out organisational disconnects. And at Sloan Valve, a US based manufacturer, the CIO helped the business view something that was hard to see without a digital analysis: the order-to-cash process.
• Leading global process-improvement projects. The executive in charge of HR systems at a federated global company employed a customised reengineering approach combined with supply-chain-style process redesign to track and improve staff's utilisation globally.
Lean-style Performance Improvement Initiatives Are Based On A Few Essential Practices
IT executives who decide to implement performance improvement initiatives in Lean-style should consider a few essential practices:
• Practice No. 1: Specify value from a business perspective.
The five principles of lean thinking, as articulated by Jim Womack and Dan Jones, set the foundation for Lean (see Figure 1). In all examples, the IT executives were able to bring significant improvements when they approached the optimisation outside-in, from a business perspective.
• Practice No. 2: Define improvement goals top-down.
Successful lean-style initiatives focus on end-to-end processes and goals. They define their targets top-down in terms of:
1) Delivering services and products customers ask for, when and where they need them;
2) Managing life-cycle costs; and
3) Boosting quality by innovating the products and services - instead of waiting for the existing functions to break down and costs to explode.
• Practice No. 3: Implement improvements bottom-up.
At the implementation level, lean operates with tools and methods for the elimination of three categories of waste:
1) Unnecessary work that does not add value to customers;
2) Unevenness that is waste resulting from time, quality, and demand variation; and
3) Overburdened staff that results from inadequate planning. The executives in all presented examples addressed waste through consolidation and deliberate planning actions.
• Practice No. 4: Synchronise the top-down and bottom-up levels.
For sustainability, CIOs need to approach the top-down and bottom-up levels of lean through a coherent and consistent strategy. The IT executives in the presented examples have:
1) Defined and communicated clear change goals and strategies;
2) Identified processes, structures, and tools for reaching the goals;
3) adapted these capabilities to their specific needs; and
4) Employed change best practices to avoid undesired disruptions and trained and directed the staff throughout the implementation.
What it means
The real-life implementation of lean-style performance improvement initiatives is not a matter of merely talking lean jargon, training black belts, or hiring consultants to organise Kaizen weeks. The critical success factors are rather:
1) Developing better concepts of customers;
2) Focusing on end-to-end process improvements and life-cycle costs;
3) Eliminating existing and anticipated waste through consolidation and planning; and
4) Stimulating and sustaining a culture of continuous improvement.
Figure 1: The principals of lean thinking (click on image to expand to full screen):