Embrace Lean thinking to enable innovation #BTF09

The morning finished with a panel moderated by Dave West of Forrester, and including Kevin Haynes of Dell and Dave Smoley of Flextronics. West started out talking about the inertia within IT: more than 60% of IT is spent just keeping the lights on, legacy systems inhibit change and vendors are slow to change. There is, however, a wave of change coming, with Agile adoption at 36% and rising, 80% of developers using open source and new software development up by 9%.

Smoley told about their experiences at Flextronics, where Lean has spilled over from manufacturing to IT, allowing them to reduce their IT costs to less than 1% of revenue. They were able to reduce their IT costs by 36%, all while performing some major projects such as a new supply chain management system, a global HR system, a WAN refresh, a data center refresh and implementing a global service desk. He credits Lean with being able to determine what technology is important and what is unimportant to the business, allowing them to cut or rework the areas of waste. Their strategy includes a “just enough” mentality, putting the customer first, trying out hardware and software before they buy it, maximizing asset utilization, consolidating wherever possible, and enabling global collaboration. Projects are prioritized by ROI, and business alignment is done at multiple levels. They avoid single source, aren’t afraid to renegotiate maintenance contracts, and use open source and open standards where possible. They also bite the bullet and actually throw stuff out if it no longer is the best thing for them, which often requires putting people’s egos aside if they were involved in the original development or acquisition of a system that is being decommissioned.

Haynes related what they’ve done at Dell, which has been focused on keeping the lights on rather than innovation, but maintaining the important operations and customer service levels while spending less. Their strategy is focused on decreasing variability, focusing on projects that reduce costs while driving service excellence, and consolidation through virtualization and techniques such as reducing to three standard desktop images. All of this is not just about exciting new innovation, either: it’s just as necessary to focus on better ways to handle the steady-state maintenance projects as well, and automate them where possible to free up resources.

The discussion ranged across both strategic and operational aspects of how Lean is helping both organizations to reduce their IT costs, and way too much information for me to capture, especially since West seems to have ADD when it comes to handing the remote control to advance slides :)  There were some good takeaways about Lean, such as transparent reporting on value and waste, establishing the right team culture around a problem-solving approach, creating structure around value chains, and frequent delivery to allow for constant fine-tuning of the business value.

The power of Lean IT #BTF09

John Swainson, CEO of CA, gave a presentation on how Lean can help companies built long-term competitive advantage during tough economic times in industries as diverse as manufacturing, healthcare, retail and IT, and how Lean IT – or what he referred to as the industrialization of IT – can deliver greater value at lower cost. As he pointed out, it’s about time that we applied some discipline to IT, and we can learn from how Lean helped other types of organizations to create just-in-time IT that deploys the right solutions at the right time.

Lean IT is about a “sense and respond” philosophy that has IT paying attention to what’s happening in the business and manage variable volumes, prioritize and create new business services, and ensure ongoing quality levels.

CA commissioned a study on waste, and found that 96% of IT executives agree that there is significant waste in their organization, primarily due to inefficient processes, duplication of effort, redundant applications, and underutilized assets; Swainson sees that the keys to resolving these issues is to analyze, automate, integrate and optimize (respectively).

He was then joined on stage by John Parkinson, CTO of TransUnion. As a credit rating/tracking service that tracks individual consumer credit ratings around the world, IT is absolutely central and critical to their operations, not just a support function. As the recession approached in 2007, however, they had to consider how to grow new sources of revenue and increase operating margins in order to decrease their dependency on the failing consumer credit market. Lean was part of their strategy, helping them to pinpoint the wasted effort and other waste, and allowing them to optimize their operations. With their corporate culture, they needed this to have this be more of a grassroots initiative that made sense to people: adopting Lean since it helped them to do their job better, not because of a corporate mandate. There is, however, monitoring and measurement in place, and performance and compensation are tied to improvements: the ultimate incentive. Their idea is to instill these Lean ideas into their culture, so that these good habits learned in tough times would serve them well when times improve.

Parkinson pointed out specifically that Lean sets you up for taking advantage of cloud computing, and Swainson took over to talk about the opportunities and challenge of working in the cloud. It’s pretty hard to embrace Lean without at least taking a look at using the cloud, where you can provision the right resources at the right time, rather than having a lot of excess capacity sitting around in your data center. Consider non-production environments such as test labs, for example: being able to create test environments as required – either through internal virtualization (which I don’t really consider to be cloud) or in an environment such as Amazon EC2 – rather than having them pre-installed and ready long before required, and sized for peak rather than actual load. Considering that test environments can be 2/3 or more of the server footprint, this is huge.

Mike Gilpin joined them for a discussion, which briefly continued on the topic of using virtualized or cloud test environments, but also covered the issues of how well contract IT employees can adapt to Lean cultures (if they don’t, then find someone else), using other techniques such as Six Sigma together with Lean (they’re all tools focused on process optimization, pick and choose what works for you), and the security challenges of using cloud infrastructure.

George Colony on the CEO’s brain #BTF09

We had a brief address from George Colony, CEO of Forrester, on changing from IT to BT, with one key message: if your CEO doesn’t understand what you’re talking about, then you’re probably not using “BT speak”.

The CEO is focused on two things: higher profits, and revenue growth, and you need to translate your projects and technology strategy into those terms, or risk being marginalized within the organization.

A brief 10-minute address, but a good message.

Lean and the CIO #BTF09

Tom Hughes, currently with CSC but formerly the CIO of the US Social Security Administration, spoke to us about Lean and the CIO. The imperative here is driven by surveys that show that (to paraphrase) business thinks that IT is important, but that they’re doing a crappy job. He believes that CIOs need to break out of the technology pack and focus on business outcomes (e.g., market share) rather than outputs (e.g., number of workstations): exactly the same message as Connie Moore gave us in the opening keynote. CIOs needs to be valid members of the executive team, reporting to the board rather than the COO, HR, general counsel or any of a number of other non-effective reporting structures.

He believes that the CIO of the future must:

  • Be a strategic thinker, not an IT techie
  • Be at the table of chief executives
  • Partner in agency or business transformation
  • Have broad experience

The CIOs focus needs to be on four things: strategy, budget, architecture and security. Delivery and maintenance, on the other hand, are operational issues, and should be handled below the CIO level, even directly in the business units by promoting cross-functional ownership. The CIO needs to be forward-thinking and set strategy for new technologies such as cloud computing and unified communications, but doesn’t need to be responsible for delivering all of it: for things that the business can handle on their own, such as business process analysis, let the business take the lead, even if it means acquiring and deploying some form of technology on their own.

He concluded with the statements that the CIO needs to work with the CEO and develop a collaborative operational model, be at the table with other senior executives, and get other executives to take accountability for how technology impacts their business area. The CIO needs to be seen by the CEO as a partner in business transformation, not the guy fixing his Blackberry.

Questions from the audience included how to transition the current technology-focused IT teams to have more of a business focus: Hughes’s response is that some of them will never change, and won’t make the cut; others can benefit by being seconded to the business for a while.

On a side note, I like the format of the keynotes: Mike Gilpin pops up on stage at the end of each one, he and the speaker move to a couple of comfy chairs at center stage, and he asks some questions to continue the conversation. Questions from the audience are collected on cards and vetted by Forrester analysts, who then distill them into a few key questions to ask.

There’s still a bit of confusion over the Twitter hashtag: the website says #BTF09, then Gilpin announced in the opening address that it is #FBTF09, but then @forrester DM’ed me that it is actually #BTF09 and that Gilpin will correct this, although that hasn’t happened yet.

Why Lean is the new business technology imperative #BTF09

I’ve moved from the Gartner BPM summit in Orlando to Forrester’s Business Technology Forum in Chicago, where the focus is on Lean as the new business imperative: how to use Lean concepts and methods to address the overly complex things in our business environment.

Mike Gilpin opened the conference with a short address on how our businesses and systems got to be so bloated that lean has become such an imperative, then Connie Moore took over for the keynote. From the keynote’s description on the event agenda site:

Lean is not a new business concept — but it is enduring. By embracing Lean years ago, Toyota reached No. 1, while rivals GM and Chrysler collapsed into wards of the state. In its broadest sense, Lean seeks to better satisfy customer needs, improve process and information flows, support continuous improvement, and reduce waste. Today’s recession is a clarion call for businesses and government to reexamine and reapply Lean thinking across people, processes, and technology. When maintenance eats 80% to 90% of IT budgets, it’s beyond time to examine Lean approaches — like process frameworks, cloud computing, SaaS, Agile methodologies, open source, or other fresh ideas. And when the sheer complexity of technology overwhelms information workers, it’s time to simplify and understand what workers really need to get their jobs done. And by focusing on Lean now, your organization will be positioned to power out of the recession and move quickly into the next new era of IT: business technology — where business is technology and technology is business.

She started with discussions about how Lean started in manufacturing, and you can see the obvious parallels in information technology. In Lean manufacturing, the focus is on eliminating waste, and everyone owns quality and problems are fixed at the source. Lean software isn’t a completely new idea either, but Forrester is pushing that further to change “information technology” to “business technology”.

Lean is not just operational, however, it’s also strategic, with a focus on understanding value. However, it’s usually easier to get started on it at the operational level, where it’s focused on eliminating waste through improving quality, eliminating non-productive time, and other factors. Lean can be counterintuitive, especially if you’ve been indoctrinated with an assembly line mentality: it can be much more efficient, for example, for individuals or small teams to complete an entire complex task from start to finish, rather than have each person or team perform only a single step in that task.

Moving on to the concepts of Lean software, she started with the results of a recent Forrester survey that showed that 92% think that enterprise software has an excessive cost of ownership (although personally, I’m not sure why they bothered to take a survey on something so incredibly obvious 🙂 ), and discussed some of the alternatives: SaaS such as Google Apps, open source or free software and other lighter weight tools that can be deployed at much less cost, both in licensing costs and internal resource usage. Like Goldilocks, we need to all start buying what’s just right: not too much or too little, in spite of all those licenses that the vendor wants to unload at a discount before quarter-end.

Looking at the third part of their trifecta, there’s a need to change IT to BT (business technology). That’s mostly about governance – who has responsibility for the technology that is deployed – and turning technology back into a tool that services the business rather than some separate entity off doing technology for its own sake. What this looks like in practice is that the CIO is most likely now focused on business process improvement, with success being measured in business terms (like customer retention) rather than IT terms (like completing that ERP upgrade on time, not that that ever happens). Stop leading with technology solutions, and focus on value, flexibility and eliminating waste. You can’t do this just by having a mandate for business-IT alignment: you need to actually fuse business and IT, and radically change behaviors and reporting structures. We’re stuck in a lot of old models, both in terms of business processes and organizational models, and these are unsustainable practices in the new world order.

There were some good questions from the audience on how this works in practice: whether IT can be Lean even if this isn’t practiced elsewhere in the organization (yes, but with less of an effect), what this means for IT staff (they need to become much more business focused, or even move to business areas), and how to apply Lean in a highly regulated environment (don’t consider required compliance as waste, but consider how to have less assembly-line business processes and look for waste within automated parts of processes).

The five dysfunctions of a team #GartnerBPM

Jeff Gibson of the Table Group gave the morning keynote based on some of the concepts in his colleague’s book, The Five Dysfunctions of a Team: A Leadership Fable.

He started with the idea that there are two requirements for a company’s success: it has to be smart (strategy, marketing, finance, technology) and it has to be healthy (minimal politics, minimal confusion, high morale, high productivity, low turnover). Although a lot of management courses are focused on the smart side, the healthy side is a multiplier of the smart side, boosting the success far beyond what you can do by being smart alone.

He then moved on to the five dysfunctions of a team:

  1. Absence of trust, specifically personal trust and exposing vulnerability to other team members. The role of the leader is to go first in order to show that it’s okay to make mistakes.
  2. Fear of conflict, which can lead to misunderstandings because people don’t speak their mind. The role of the leader is to search out conflict amongst team members, draw out the issues and wrestle with them.
  3. Lack of commitment, particularly to tough decisions. The role of the leader is to force clarity and closure on those decisions to ensure that everyone is committed to upholding them.
  4. Avoidance of accountability. The role of the leader is to confront difficult issues, such as problematic team behaviors.
  5. Inattention to results. The role of the leader is to focus on collective outcomes, not allowing a “superstar” on the team to make themselves look good to the detriment of the team result.

Usually I find these external keynotes that are unrelated to the conference subject to be so-so, but I really enjoyed this one, and could have used this advice when I was heading up a 40-person company. I’ll be checking out the book.

Advanced decisioning #GartnerBPM

I managed to get out of bed and down to the conference in time for James Taylor’s 7am presentation on advanced decisioning. If you’ve been reading here for a while, you know that I’m a big proponent of using decisioning in the context of processes, and James sums up the reasons why: it makes your processes simpler, smarter and more agile.

Simpler: If you build all of your rules and decisioning logic within your processes – essentially turning your process map into a decision tree – then your processes will very quickly become completely unreadable. Separating decisions from the process map, allowing them to become the driver for the process or available at specific points within the process, makes the process itself simpler

More agile: If you don’t put your decisioning in your processes, then you may have written it in code, either in legacy systems or in new code that you create just to support these decisions. In other words, you tried to write your own decisioning system in some format, but probably created something that’s much harder to change than if you’re using a rules management system to build your decisions. Furthermore, decisions typically change more frequently than processes; consider a process like insurance underwriting, where the basic flow rarely changes, but the rules that are applied and the decisions made at each step may change frequently due to company policy or regulatory changes. Using decision management not only allows for easier modification of the rules and decisions, it also allows these to be changed without changing the processes. This is key, since many BPMS don’t easily allow for processes that are already in progress to be easily changed: that nice graphical process modeler that they show you will make changes to the process model for process instances created after that point, but don’t impact in-flight instances. If a decision management system is called at specific points in a process, it will use the correct version of the rules and decisions at that point in time, not the point at which the process was instantiated.

Smarter: This is where analytics comes into play, with knowledge about processes fed into the decisioning in order to make better decisions in an automated fashion. Having more information about your processes increases the likelihood that you can implement straight-through processes with no human intervention. This is not just about automating decisions based on some initial data: it’s using the analytics that you continue to gather about the processes to feed into those decisions in order to constantly improve them. In other words, apply analytics to make decisions smarter and make more automated decisions.

To wrap up James’ five core principles of decisioning:

  • Identify, separate and manage decisions
  • Use business rules to define decisions
  • Analytics to make decisions smarter
  • No answer is static
  • Decision-making is a process

He then walked through the steps to apply advanced decisioning, starting with identifying and automating the current manual decisions in the process, then applying analytics to constantly optimize those decisions.

He closed with an action plan for moving to decisioning:

  • Identify your decisions
  • Adopt decisioning technology
  • Think about decisions and processes, and how those can be managed as separate entities.

Good presentation as always – well worth getting up early.

Using a center of excellence to deliver BPM #GartnerBPM

Michelle Lagna of JPMorgan Chase, a Pegasystems customer, gave a presentation on their CoE as one of the solution providers sessions. Their CoE focuses on the use of BPM tools (primarily Pegasystems) to support their 30+ active systems. It was instrumental in allowing them to break down the departmental silos within the organization, establishing standard governance models, standardizing training and contributing to reusable assets.

The CoE supports all lines of business in planning and implementing BPM initiatives:

  • Creating and maintaining architectural standards
  • Centralizing and formalizing the housing and reuse of business-configurable assets
  • Promoting standard methodologies, tools and education

They use the Agile development methodology (and promote and educate on Agile across the organization), and believe that it is instrumental to their success by reducing time to market and aligning business and IT. They’ve made a gradual transition from waterfall to Agile in order to ease into the new methodology.

They’ve developed a standard engagement model (unfortunately depicted on the presentation slide in micro-print and low contrast colors):

  • Operational walkthrough and end-to-end review, including identification of process improvements and ROI
  • Impact analysis review, identifying execution gaps and automated solutions, plus IT and business sizing
  • Project initiation training, including both BPM and Agile training
  • Application profile, high level use case requirements and reusable asset review
  • Project setup and design review, including identifying assets leveraged from other projects, functionality specifications and a design compliance review
  • Environment build-out, including generating a base framework
  • Bootstrap session, which equips the project team to complete use cases on their own
  • Direct capture of objectives to elaborate use cases, design specifications and traceability matrix; this is specifically assisted by the Pega project
  • Identification of reusable assets, then harvesting those assets and making them available for reuse by other projects

The CoE is heavily involved in the early phases, but by the time that they get halfway through the project, the project team is running on their own and the CoE is just checking in occasionally to make sure that things are proceeding as planned, and to help resolve any issues. They had to make some organizational changes to ensure that the CoE is engaged at the right time and that siloed solutions are avoided.

She presented some of the key benefits provided by the CoE:

  • Common class structure for reusability
  • Library of reusable assets with tools to track usage
  • Standardized engagement model, including a “Perfect Start” training and certification stage
  • Monthly educational webcast
  • Improved release planning process (which I’ve seen listed as a key benefit of a CoE at other customers that use other BPM products)
  • Allowing for faster changes to improve business agility

The CoE has been backed by senior executive sponsors within JPMC, which has been key to its acceptance. They are run (and funded) as a shared service, so there are normally no direct chargebacks to the projects unless the CoE team is required to be onsite for an extended period of time due to a rush or urgent situation. Interestingly, the CoE is not all co-located: there are five offshore development resources that handle harvesting the reusable assets, although they are managed from an onshore resource.

Great case study, and a lot of material that is of use regardless of which BPM product that you’re using.

No longer lost in translation

Thanks to Zoli, the 25% of my readers whose first language is probably not English (as indicated by the browser language setting) can now view this site in 50 other languages, thanks to a new widget in the sidebar.

If you read this through Google Reader, then you can set it to auto-translate there, instead: I do that for the few non-English BPM blogs that I follow, and it works like a charm.

See me at the Business Rules Forum, Las Vegas, November 1-5

I’ve been invited to speak at the Business Rules Forum, which is taking place at the Bellagio in Las Vegas on November 1-5. I’m actually doing two speaking gigs there:

  • A presentation on BPM, collaboration and social networking, which I’ve been presenting on for a few years and has lately become a hot topic of conversation. That’s on Tuesday, November 3rd.
  • On Thursday, November 5th, I’ll be facilitating a workshop session on BPM as a service, and the challenges and issues involved in deploying BPM in the cloud. If you’re at the conference, please come by and take part in the discussion – this is intended to gather everyone’s opinions, it’s not a prepared presentation.

If you haven’t signed up for the conference yet, you can get a 10% discount by using the code “9SPSK” when you register.

Lots of great speakers lined up, including keynotes by Jim Sinur of Gartner, Stephen Hendrick of IDC, and James Taylor of Decision Management Solutions. There’s also Fun Labs, where you have the opportunity to test-drive vendor products.