Lean IT

In IT, value streams are the services provided by the IT function to the parent organization for use by customers, suppliers, employees, investors, regulators, the media, and any other stakeholders. These services may be further differentiated into:

• Business services (primary value streams). Examples: point-of-sale transaction processing, ecommerce, and supply chain optimization
• IT services (secondary value streams). Examples: application performance management, data backup, and service catalog

The distinction between primary and secondary value streams is meaningful. Given Lean IT's objective of reducing waste, where waste is work that adds no value to a product or service, IT services are secondary (i.e. subordinate or supportive) to business services. In this way, IT services are tributaries that feed and nourish the primary business service value streams. If an IT service is not contributing value to a business service, it is a source of waste. Such waste is typically exposed by value-stream mapping.

Lean IT, like its lean manufacturing counterpart, involves a methodology of value-stream mapping[7] — diagramming and analyzing services (value streams) into their component process steps and eliminating any steps (or even entire value streams) that do not deliver value.

Flow relates to one of the fundamental concepts of Lean as formulated within the Toyota Production System — namely, mura. A Japanese word that translates as “unevenness,” mura is eliminated through just-in-time systems that are tightly integrated. For example, a server provisioning process may carry little or no inventory (a waste element in Table 1 above) with labor and materials flowing smoothly into and through the value stream.

A focus on mura reduction and flow may bring benefits that would be otherwise missed by focus on muda (the Japanese word for waste) alone. The former necessitates a system-wide approach whereas the latter may produce suboptimal results and unintended consequences. For example, a software development team may produce code in a language familiar to its members and which is optimal for the team (zero muda). But if that language lacks an API standard by which business partners may access the code, a focus on mura will expose this otherwise hidden source of waste.

Pull (also known as demand) systems are themselves closely related to the aforementioned flow concept. They contrast with push or supply systems. In a pull system, a pull is a service request. The initial request is from the customer or consumer of the product or service. For example, a customer initiates an online purchase. That initial request in turn triggers a subsequent request (for example, a query to a database to confirm product availability), which in turn triggers additional requests (input of the customer's credit card information, credit verification, processing of the order by the accounts department, issuance of a shipping request, replenishment through the supply-chain management system, and so on).

Push systems differ markedly. Unlike the “bottom-up,” demand-driven, pull systems, they are “top-down,” supply-driven systems whereby the supplier plans or estimates demand. Push systems typically accumulate large inventory stockpiles in anticipation of customer need. In IT, push systems often introduce waste through an over-abundance of “just-in-case” inventory, incorrect product or service configuration, version control problems, and incipient quality issues.[5]

The onset of economic recession in December 2007[14] was marked by a decrease in individuals’ willingness to pay for goods and services[15] — especially in face of uncertainty about their own economic futures. Meanwhile, tighter business and consumer credit,[16] a steep decline in the housing market,[17] higher taxes,[18] massive lay-offs,[19] and diminished returns in the money and bond markets[20] have further limited demand for goods and services.

When an economy is strong, most business leaders focus on revenue growth. During periods of weakness, when demand for good and services is curbed, the focus shifts to cost-cutting.[6] In-keeping with this tendency, recessions initially provoke aggressive (and sometimes panic-ridden) actions such as deep discounting, fire sales of excess inventory, wage freezes, short-time working, and abandonment of former supplier relationships in favor of less costly supplies. Although such actions may be necessary and prudent, their impact may be short-lived.[15] Lean IT can expect to garner support during economic downturns as business leaders seek initiatives that deliver more enduring value than is achievable through reactive and generalized cost-cutting.[21]

IT has traditionally been a mere support function of business, in common with other support functions such as shipping and accounting. More recently, however, companies have moved many mission-critical business functions to the Web.[22] This migration is likely to accelerate still further as companies seek to leverage investments in service-oriented architectures, decrease costs, improve efficiency, and increase access to customers, partners, and employees.[23]

The prevalence of web-based transactions is driving a convergence of IT and business.[24] In other words, IT services are increasingly central to the mission of providing value to customers. Lean IT initiatives are accordingly becoming less of a peripheral interest and more of an interest that is intrinsic to the core business.

Though not born of the same motivations, lean IT initiatives are congruent with a broad movement towards conservation and waste reduction, often characterized as green policies and practices. Green IT is one part of this broad movement.[25]

Waste reduction directly correlates with reduced energy consumption and carbon generation. Indeed, IBM asserts that IT and energy costs can account for up to 60% of an organization's capital expenditures and 75% of operational expenditures.[26] In this way, identification and streamlining of IT value streams supports the measurement and improvement of carbon footprints and other green metrics.[27] For instance, implementation of Lean IT initiatives is likely to save energy through adoption of virtualization technology and data center consolidation.[28][29]

Unlike lean manufacturing, from which the principles and methods of Lean IT derive, Lean IT depends upon value streams that are digital and intangible rather than physical and tangible. This renders difficult the visualization of IT value streams and hence the application of Lean IT. Whereas practitioners of lean manufacturing can apply visual management systems such as the kanban cards used in the Toyota Production System, practitioners of Lean IT must use enterprise IT management tools to help visualize and analyze the more abstract context of IT value streams.[30]

As an emerging area in IT management (see Deployment and Commercial Support), lean IT has relatively few reference implementations. Moreover, whereas much of the supporting theory and methodology is grounded in the more established field of lean manufacturing, adaptation of such theory and methodology to the digital service-oriented process of IT is likewise only just beginning. This lack makes implementation challenging, as evidenced by the problems experienced with the March 2008 opening of Heathrow Terminal 5. British airports authority BAA and airline British Airways, which has exclusive use of the new terminal, used process methodologies adapted from the motor industry to speed development and achieve cost savings in developing and integrating systems at the new terminal.[31] However, the opening was marred by baggage handling backlogs, staff parking problems, and cancelled flights.[32]

The conclusions or recommendations of Lean IT initiatives are likely to demand organizational, operational, and/or behavioral changes that may meet with resistance from workers, managers, and even senior executives. Whether driven by a fear of job losses, a belief that existing work practices are superior, or some other concern, such changes may encounter resistance. For example, a lean IT recommendation to introduce flexible staffing whereby application development and maintenance managers share personnel is often met with resistance by individual managers who may have relied on certain people for many years. Also, existing incentives and metrics may not align with the proposed staff sharing.[3][33]

Even though business services and the ensuing flow of information may span multiple departments, IT organizations are commonly structured in a series of operational or technology-centric silos, each with its own management tools and methods to address perhaps just one particular aspect of waste. Unfortunately, fragmented efforts at Lean IT contribute little benefit because they lack the integration necessary to manage cumulative waste across the value chain.[5]

Related to the aforementioned issue of fragmented IT departments is the lack of integration across the entire supply chain, including not only all business partners but also consumers. To this end, lean IT consultants have recently proposed so-called lean consumption of products and services as a complement to lean production.[34] In this regard, the processes of provision and consumption are tightly integrated and streamlined to minimize total cost and waste and to create new sources of value.

Agile software development is a set of software development methods that originated as a response for the indiscriminated use of CMMI, RUP and PMBOK creating fat and slow software development processes that normally increased the lead time, the work in progress and non-value added/value added activities ratio on projects. Agile software development methods include XP, Scrum, FDD, AUP, DSDM, Crystal, and others.

Scrum is one of the more well known agile methods for project management, and has as one of its origins concepts from Lean Thinking. Scrum also organizes work in a cross-functional, multidisciplinary work cell. It uses some form of kanban system to visualize and limit work in progress, and follows the PDCA cycle, and continuous improvements, that is the base of Lean.

Whereas Lean IT focuses on customer satisfaction and reducing waste, Six Sigma focuses on removing the causes of defects (errors) and the variation (inconsistency) in manufacturing and business processes using quality management and, especially, statistical methods.[43] Six Sigma also differs from Lean methods by introducing a special infrastructure of personnel (e.g. so-called “Green Belts” and “ Black Belts”) in the organization. Six Sigma is more oriented around two particular methods (DMAIC and DMADV), whereas Lean IT employs a portfolio of tools and methods. These differences notwithstanding, Lean IT may be readily combined with Six Sigma such that the latter brings statistical rigor to measurement of the former's outcomes.[44]

The Capability Maturity Model Integration (CMMI) from the Software Engineering Institute of Carnegie Mellon University (Pittsburgh, Pennsylvania) is a process improvement approach applicable to a single project, a division, or an entire organization. It helps integrate traditionally separate organizational functions, set process improvement goals and priorities, provide guidance for quality processes, and provide a benchmark or point of reference for assessing current processes.[45] However, unlike Lean IT, CMMI (and other process models) doesn't directly address sources of waste such as a lack of alignment between business units and the IT function or unnecessary architectural complexity within a software application.[3]

ITIL contains concepts, policies, and recommended practices on a broad range of IT management topics. These are again entirely compatible with the objectives and methods of Lean IT. Indeed, as another best-practice framework, ITIL may be considered alongside the CMMI for process improvement and COBIT for IT governance.

The Universal Service Management Body of Knowledge (USMBOK) — is a single book published by Service Management 101 and endorsed by numerous professional trade associations as the definitive reference for service management. The USMBOK contains a detailed specification of a service system and organization and leverages the rich history of service management as defined within product management and marketing professions. The service organization specification describes seven key knowledge domains, equivalent to roles, and forty knowledge areas, representing areas of practice and skills. Amongst these, within the Service Value Management knowledge domain, are a number of Lean relevant skills, including Lean Thinking and Value Mapping. The USMBOK also provides detailed information on how problem management and lean thinking are combined with outside-in (customer centric) thinking, in the design of a continuous improvement program.

Control Objectives for Information and Related Technology – better known as COBIT – is a framework or set of best practices for IT management created by the Information Systems Audit and Control Association (ISACA), and the IT Governance Institute (ITGI).[46] It provides managers, auditors, and IT users a set of metrics, processes, and best practices to assist in maximizing the benefits derived through the use of IT, achieving compliance with regulations such as Sarbanes-Oxley, and aligning IT investments with business objectives. COBIT also aims to unify global IT standards, including ITIL, CMMI, and ISO 17799.[47]