In this, the first of a five part series, LEI faculty member Steve Bell begins with the importance of lean business-IT integration. Part Two offers help with the common obstacles to a lean IT transformation. Part Three examines how to integrate the various IT communities. Part Four addresses the management and governance of this new approach. And Part Five explains how to measure business-IT value.
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 the founder of Lean IT Strategies, a lean leadership coaching firm.
Lean Business-IT Integration, Part One: Who Wants to Go Talk to IT About This One?
One of the many challenges of an enterprise transformation is the tension between the continuous improvement of business processes and the lack of agility of supporting information systems. As kaizen teams overcome one problem after another, they often hit exasperating technology roadblocks. Each time the team stops, bewildered, looking to each other asking, “Who wants to go talk to IT about this one?”
Today, nearly every business process relies on quality information and effective information systems. And many, if not most products and services they deliver have a technology component which cannot be separated from the customer’s value proposition. Yet in most enterprises—even those that are aligned along value streams—IT specialists remain functionally organized, and in some cases, not even housed in the same physical location as their business counterparts.
In survey after survey, the majority of businesspeople report that IT does not understand their business, and does not deliver value. But in today’s technology enabled marketplace, IT must deliver value; the enterprise must leverage the extensive capabilities that software and internet technologies offer if it is to successfully compete. And IT organizations must continuously improve, investing in operational excellence, reducing costs and overhead burden, in order to dedicate more investment and energy towards growth, innovation, and transformation.
IT’s Misguided Mission
This is not a sad story of IT failure, but a hopeful one of IT potential. In fact, the MIT Sloan Center for Information Systems Research reports that “those companies that have effectively digitized their core processes have higher profitability, experience faster time to market, and get more value from their IT investments – yet have 25% lower IT costs.”
For decades, IT has been on a mission to “align with the business,” and to “deliver value to the business.” That mission is now over. In fact, it was misguided from the very start. IT and the business are one. Period. “Alignment” entails bringing distinct entities or objects into a line. In this view, IT and other departments within the enterprise are viewed as separate. To achieve and leverage full value-stream orientation, what we seek is not alignment, but integration, where IT is a part of—not separate from the business value streams.
To achieve and leverage full value-stream orientation, what we seek is not alignment, but integration, where IT is a part of—not separate from the business value streams.
From this perspective we must also recognize that IT is not homogenous. In fact, there are many IT communities that tend to see themselves as separate specialized disciplines: application development and maintenance, IT services such as infrastructure and operations (which often includes outsourced service providers), enterprise architecture, business process management, ERP and other packaged application management, data and integration management, security, and business intelligence, to name a few. So as we seek to integrate IT into the business value streams, we must also address how these distinct and sometimes competing communities complement and align with each other.
What Is the Problem?
In this five part series, we’ll explore a leadership framework for shifting from alignment to lean business-IT integration. Part One (which you’re reading now) introduces the importance of lean business-IT integration. Part Two will discuss common obstacles encountered during an IT transformation. Part Three will discuss integrating the various IT communities together within enterprise value streams. Part Four will address the management and governance of this new approach. And Part Five will examine how to measure business-IT value, in order to sustain a culture of accountability and value stream performance.
So to begin, let’s explore how an enterprise often stumbles with integration of the IT function into the business.
Consider the role of IT specialists in value-stream improvement. Kaizen teams are usually comprised of members representing each step in the flow of value — but quite often, IT is not represented. If the team is unaware of the technology complexities hidden from view, how can they make well-informed technology improvement decisions? In many cases, the team approaches IT with a “solution” (the classic “toss the request over the wall to IT”) without really understanding the problem. In this way, misguided continuous improvement efforts add more layers of scar tissue to an overly-complex system, requiring even more IT effort just to keep it running.
Also, without awareness of emerging IT capabilities, how can a kaizen team consider potential value enhancing features? Enlightened business-IT teams bring a fresh perspective on how to drive innovation and create value—new ways for the customer to communicate to the enterprise what they want, new ways for the customer to engage in self-service, new ways for the enterprise to deliver what the customer values faster, with better quality, and at a lower cost, creating real competitive advantage.
How big an advantage can this be, you ask? Consider many internet-based enterprises that have achieved true business-IT integration— Amazon, Google, eBay, Expedia, Netflix, Skype, and many others. By incorporating technology enabled products and services into their fundamental customer value propositions, they have disrupted their respective industries. But this strategy isn’t limited to the new companies alone, many traditional enterprises such as CapitalOne, Dell, General Electric, and Southwest Airlines (to name just a few) have also made this shift.
The future is bright for innovation; with all its inherent challenges, skillful application of IT enabled products and services is vital to the modern enterprise. And the adoption of these principles: respect for people, quality at the source, voice of the customer, flow of value, and others, help to create an agile, adaptive, learning organization.
In Part Two, appearing next month, we’ll explore common obstacles encountered during an IT transformation, and strategies to overcome them.
Links to articles in this series
- Lean Business-IT Integration, Part Two: Obstacles to Value-Stream Transformation
- Lean business-IT integration, Part Three: What is an integrated business-IT Value Stream?
- Lean Business-IT Integration, Part Four: The Lean Learning Leader
- Lean Business-IT Integration, Part Five: Measurement – Finding Our True North