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Lean Business-IT Integration, Part Two: Obstacles to Value-Stream Transformation

Bell, Steve

Steve Bell is the author of Lean Enterprise Systems: Using IT for Continuous Improvement (Wiley, 2006) and co-author of Lean IT: Enabling and Sustaining Your Lean Transformation (Productivity Press, 2010) which received the 2011 Shingo Prize for Research and Professional Publication. He is preparing to publish his next book, Enterprise Agility: Integrating Lean Business-IT Value Streams (Productivity Press) in  2012. He is the founder of Lean IT Strategies, a lean leadership coaching firm.

In Part One of this series we explored the chronic challenge of Business-IT alignment, and pondered why most organizations have been unable to solve it. As I write Part Two, I’m on a flight returning from Paris France, from the first Lean IT Summit, hosted by the Institut Lean France, with support from the Lean Enterprise Institute and its Lean Global Network affiliates. Attendees from twenty countries came to learn from presenters, and from the case studies of Google, Wells Fargo Bank, Microsoft, the Nokia Siemens Network, IBM, BBC, SAP’s internal infrastructure organization supporting 30,000 developers worldwide, and more.

In the opening keynote, Dan Jones (co-author of Lean Thinking and other seminal lean texts) shared lessons learned from the introduction of lean into other industry sectors beyond manufacturing. In particular he addressed healthcare, and concluded that the only way to drive out waste and improve outcomes is to “see the whole,” looking at the broad patterns and relationships, emphasizing speed and flow through the entire system. Clearly the same approach is needed when addressing the challenges of IT, Jones concluded.

The challenges facing IT are not new, nor are they as unique as we may think. In fact, most CIOs will agree that this “aligning business and IT” conversation has been going on for their entire career. What we need is a holistic framework that addresses systemic and cultural transformation — guidance on how business and IT can align. That framework may be found within the principles of lean, which have proven effective across many industries.

To begin, we grasp the situation. For business leaders to sit down with their IT counterparts, it’s helpful to understand the obstacles from their point of view. So let’s consider, from the IT perspective, four fundamental factors that contribute to the chronic challenge of Business-IT alignment:

(1) waste (muda): Since IT is knowledge work, waste is not as tangible or visible as it is in a factory, but it is clearly pervasive, and it gets in the way of good people doing quality work. Many processes are simply “designed to fail,” and heroic  efforts only mitigate the short term consequences while creating long term fatigue. So we must enable our people to find and eliminate waste, thereby freeing up more time to do quality work and get closer to the customer.[1]

Most attention in lean literature is directed to eliminating waste. But leadership must address two higher order obstacles so that workers have an opportunity to invest in eliminating waste. These obstacles are unnecessary variation (mura) which leads to overburden (muri).

(2) Unnecessary Variation (mura): this is inconsistency in the flow of work, caused by changes in volume (uneven demand), mix (variation of work content), and quality. There is little IT workers can do about systemic variation (e.g. governance, portfolio management and prioritization, business case development and measurement, requirements definition, system configuration, enterprise architecture, development  tools and methodologies,  etc.) until leadership takes a firm position on the importance of consistency and standardization.
Note that I emphasize the term “unnecessary” variation, because a certain amount of variation is necessary and adds Value, providing customers with choices. However variable customer requirements can often be satisfied with modular and reusable elements that can be quickly configured to order. But when there is not a culture of standardization and reuse, every new task or project is a one-off. That creates an obstacle to the smooth and rapid flow of work, and creates an environment where people must work harder than necessary to deliver Value.

(3) Overburden (muri):  means placing unrealistic workloads on people and equipment, which leads to conflicting priorities, task-switching, delays, mistakes, rework, poor morale, fatigue and eventually burnout. Overburden is a chronic condition in most every IT organization.

At an intellectual level, we all agree (and this is proven by mathematical queuing theory and practice) that the more we burden a system with work in process, the less throughput it is capable of producing. Beyond just limiting work in process, lean practitioners have learned that they must deliberately create some slack capacity so workers can respond immediately to errors, preventing them from reappearing. If workers have no time to “stop the line”, then errors propagate, causing additional variation and overburden in a vicious cycle. So to increase velocity and agility we must reduce the burden of excess work in process, so workers have the time to remove the waste that impedes flow. As the old lean saying goes, first you must go slow in order to go fast.

Overburden has many causes, but it’s a fundamentally a mismatch between the rate and volume of demand and capacity. On the demand side, we tend to overload IT with too much work, and with conflicting and frequently changing priorities. 

On the supply side, simply determining capacity is a significant challenge. Flow of work is usually not linear in an IT organization, there are many interrelationships and interdependencies among various teams and shared services that must come together to deliver IT products and services. 

And the nature of IT work varies widely. Few things most IT organizations do are predictable or stable; there is constant change, experimentation, innovation and disruption in both the business and the technology worlds. Many implementation projects are actually learning experiments, more like research and development than production operations, yet IT is naturally held accountable to strict time, scope and cost constraints.  s a consequence of many factors, chronic overburden is a systemic condition in IT that must be managed proactively before continuous and sustained improvement can occur. This means rationalizing the workflow as best we can into Value streams, so that teams self-can manage them. 

(4) Local Optimization: Lean emphasizes the delivery of Value to the customer through Value streams, which optimize performance across the entire organization. This is contrary to the traditional silo approach where each function or department seeks to fully utilize its assets and optimize its own performance, often at the expense of the value stream, the enterprise, and the customer.

In the world of enterprise IT there are not one, but two, dimensions of such siloes. The first is the business vs. IT dichotomy, where IT is often seen (and perceives itself) as separate from the business. Secondly there are the internal siloes within IT, the various sub-communities and specialties that don’t always play well together. These communities include software development, IT operations and service management, packaged software maintenance, business intelligence, enterprise architecture, and so on. Often these communities are competing for scarce resources, rather than collaborating to optimize business outcomes. Until we are able to align IT with itself, how can we align IT with the business and the flow of value?

These four factors – waste, unnecessary variation, overburden, and localized optimization within IT invariably cause systemic failure in the flow of value to the customer. The magnitude of addressing these fundamental issues explains why the “alignment of business and IT” remains such an intractable problem for most. A few point kaizens, while effective at reducing localized waste, are not going to achieve such a systemic change.

Lean IT transformation and Business-IT alignment must be motivated and orchestrated at a much higher level than individual teams; this is a transformational leadership challenge for the entire enterprise. The mental models that we hold about organizations and their behavior, the IT function and its relation to the operating model of the enterprise, and the management, budgeting, portfolio management and governance systems, must all be reconsidered from the perspective of enterprise wide value streams.

In Part Three, we’ll explore what such integrated Business-IT value streams may look like. In Part Four we’ll address the management and governance of this new approach. And finally, in Part Five we’ll examine how to measure Lean Business-IT value to create a culture of accountability and sustain value stream performance. 

Links with useful information about lean information technology:

Lean IT Workshop - The Lean IT journey depends on continuously improving people, process, and technology, in that order.

Links to articles in this series

[1] For a list of information wastes see Appendix C of Lean IT, which you can download here

Lean IT
Steven C. Bell and Michael A. Orzen