Lean IT Services by Operational Excellence Consulting

© Operational Excellence Consulting. All rights reserved.
Lean IT
Transforming Delivery Excellence

© Operational Excellence Consulting. All rights reserved. 2
Learning Objectives
1. Understand the principles and key concepts of
Lean IT.
2. Acquire knowledge on the key Lean methods and
tools and their applications to improve productivity,
optimize resources, eliminate waste and improve
customer value.
3. Identify ways to develop “Kaizen eyes” to look for
improvement opportunities.
4. Describe the various Lean roles.
Copyrights of all the pictures used in this presentation are held by their respective owners

Outline
1. Introduction to Lean IT
2. Key Concepts & Principles of Lean
3. Common Lean Methods & Tools
4. Ways to develop “Kaizen Eyes”
5. Lean Roles
6. Sustaining a Lean Culture
NOTE: This is a PARTIAL PREVIEW. To
download the complete presentation, please visit:
http://www.oeconsulting.com.sg

IT Imperatives
 Rising customer expectations
 Increasing total cost of ownership
 Difficulty in managing complex IT infrastructures
 Optimizing resource management
 Reducing staff frustration
 Improving customer satisfaction
 Improving employee satisfaction

Lean has been adopted in many different
environments since its creation
Toyota
Automotive
Industrial products
High fashion
Medical
devices
Consumer
products
Aerospace
Shipbuilding
Pharma
Food
production
Pulp
and paper
Chemicals
Airlines
Railways
Naval operations &
maintenance
Hospital
Insurance
Banking
Retail Store
Upstream E&P
High Tech
Consulting
Law Firms
Hospitality
ITO/BPO
Services
Process
industries
Manufacturing
Time
Complexity
Source: McKinsey Research

What is Lean?
• Value streams or processes
• Focused on improving process performance
• Clear view of end state
• Lean techniques and tools are available
• Employee involvement
• Learn-by-doing approach
• Culture of continuous improvement
• Lean is a management philosophy based on the
Toyota Production System (TPS)
• Eliminate everything that does not add value
(waste) in the customer’s eyes
Objective
Focus and
scope
Approach
and tools

Lean Principles
1. Specify value from the customer’s perspective
2. Map the value stream to identify waste
3. Create flow by reducing waste from processes
4. Create pull by delivering only what the
customer has ordered
5. Seek perfection by continuous elimination of
waste
Source: Adapted from Lean Thinking by James P. Womack and Daniel T. Jones

What Lean IS NOT
 Lean is not about cutting jobs
 Outsourcing or offshoring
 Applies only to manufacturing companies
 Delivering less or working harder
 Automation or implementing an IT system
 Narrow focus on cost cutting
 Another “extracurricular activities”

Lean Facilitates a Culture Change
Work Systems
& Processes
Behavior
Attitude
Culture
The way we act
The way we think
Waste elimination

Lean Management Framework
(a.k.a. Toyota Production System)
Source: Adapted from Toyota Production System
Stability
Heijunka Standardized Work Kaizen
Just-In-Time
• Continuous flow
• Takt time
• Pull system
• Flexible workforce
Jidoka
• Separate man &
machine work
• Abnormality
Identification
• Poka yoke
Goals:
highest quality,
lowest cost, shortest lead times
Involvement
Stability
Standardization
Just-In-Time
Jidoka
Involvement
1
2
3
4
5
1
2
3 4
5
Focuses on
Quantity and
“Flow”
Focuses on
Quality and
Prevention

Why Lean IT?
 Put the customer first
 Define value in terms of the customer
 Learn to see the 8 wastes of IT
 Make “less is more” the way to do things
 Improve overall customer experience
 Employee frustration and retention
 Inexpensive approach to improve service
delivery

Value
 Value Added
− It is an activity
− It is requested by or important to the customer (i.e.
something the customer is willing to pay for)
− It changes the thing being processed
− It is done right the first time (i.e. without any rework or
waste)

Waste Typically Makes Up a Significant
Portion of Total Time
EXAMPLE
15%
25%60%
System Administrator Tasks
The goal is to
reduce non-value
added time
• Software implementation
• System configuration
• Writing scripts
• Problem resolution
• Patch/Upgrades
• SME consultancy
Core (value-added) – 60%
• Chase ups on Problem / Change records
• Meetings outside of scope / non-related work
• Access restrictions (e.g., can’t get to server to
apply patch, don’t have user access)
• Lack of documentation or quality of info
• Ad-hoc education for others (e.g. project
managers, new hirers)
• Non-related emails, IM, calls, etc.
• Unrelated (mandatory) training / meetings
Non-Value (Frustration) – 25%
• Validating and discussing issues with
app support
• Documentation updates
• Performance & Capacity reviews
• Bridge / War room calls for issues
• Team meetings
• Change / RFS meetings
• Infrastructure training (e.g. Notes)
Incidental (non-value added) – 15%

Eight Types of Waste in IT Services
Over-production
Producing more than what
the customer needs
Inventory
Building and storing extra
services/products the
customer has not ordered
Transportation
Moving product from
one place to another
Rework
Reprocessing, or
correcting work
Over-processing
Adding excess value
when the customer
does not require it
Motion
Extra physical/mental
motion that doesn’t add
value
Intellect
Not using employees full
intellectual contribution
Waiting
Employees waiting for
another process or
equipment
Waste

Types of Waste
• Routinely exceed customer
needs (“gold-plating”)
• Exceeding scope of contract
• Providing extra features
• Creating reports that no one needs
or making extra copies
• Excess emails messages
• Performing unrequested work
• Purchasing items before they are
needed
Over-Production

Types of Waste
• Idle time during automated program
runs
• Waiting for information, instructions,
approvals or decisions
• Waiting between assignments or
projects
• Long setup time for tasks
• Seeking clarifications (due to unclear
communications)
• Equipment/System downtime
Waiting

Types of Waste
Defects • Inadequate testing before
production
• Architecture group designs system
specifications without checking for
implementability
• Data entry errors, mistakes or rework
• Missing information, missed
specifications, or lost records
• Managing subcontractors to correct
mistakes
• Incorrect schedules and information

Value-Added Activities in IT Services
(System Administrator)
 Software implementation
 System configuration
 Writing scripts
 Problem resolution
 Patch/Upgrades
 SME consultancy

Lean Levers Can Be Applied to Eliminate IT
Waste
Segmenting complexity
Redistribute activities
Flexible manpower systems
Reduce incoming work
Reduce NVA work
Standardize operations
Form separate channels for complicated tasks so that simple
ones are not held up
Align activities with appropriate skill set and group
Balance processing capacity with the ongoing demand by
moving people to where the work activity is
Eliminate tasks from a person by reducing the actual work
activity arising
Eliminate work that does not directly add value to the end
customer
Establish best practices to execute a task
1
2
4
5
6
7
Pool resources Utilize existing skills and resources to reach economies of
scale
3

What is 5S?
Principles General Description
1S Sort
Remove what is not needed and keep
what is needed
2S Set in Order
Arrange essential items in order for
easy access
3S Shine
Keep things clean and tidy; no trash or
dirt in the workplace
4S Standardize
Establish standards and guidelines to
maintain a clean workplace
5S Sustain
Make 5S a habit and teach others to
adhere to established standards

Example – Sorting by Complexity of
Ticket
• Ticket sorted or segmented by complexity
• Each SA processes only one type of ticket
• Complexity segmentation allows SA to build rhythm and increases productivity
• Each SA works on all types of cases
• Frequent mix in complexity of tickets does not allow SA to build a rhythm
s s s s s
SA
c s s c c s s s
c c c SA
Situation before 5S sort
s s s s s
SA
SA
SA
SA
c s s c c s s s
Queue of tickets
Situation after 5S sort
s
c Complex case
Simple case
SA

Office Desk – Before & After 5S
An office desk before and after conducting 5S Sort, Set In
Order and Shine. Clutter and unused items have been
removed leaving only what is needed.
Before After

3 Types of Visual Management
• Label to make it perfectly clear
where things belong and what the
procedures are
Visual
Display
• Quantify the path to targets for
success
• Graphs and Pareto charts
Visual
Metrics
• Create an error-proofed
environment to promote easy
adherence to standards
Visual
Controls

Stories To Do In Progress Testing Done
Human
Resource
Management
System (HRMS)
Business
Excellence
Framework
Human
Resource
Planning
Performance
Management
System
Compensation
& Benefits
Learning
Management
System
Innovation
Framework
Project
Repository
Project
Toolkit
This is a
sample text.
Competency
Management
Benchmarking
Projects
Training
Records
Operator
Timesheet
Employee
Records
Training
Enrolment
Leave
Management
Audits &
Assessment
Records
Audit &
Assessment
Schedule
Project
Portfolio
Employee
Suggestion
System
ISO 9001
Quality
Management
System
Human
Resource
Balance
Scorecard
Visual Management - Scrum Task Board

Daily Management Meetings
Agenda
• Yesterday’s issues
• Lessons learned
• Manpower status
• Update from top management
• 5S & Kaizen activities
• Today’s target & actions

• Creates an end-to-end view of the system
• Demonstrates interaction between material/work and information flow
• Provides a common visual language for understanding a complex system
Supplier/
Customer Management
Control
Customer
Work & Information Flow
Information flow
Value stream mapping provides an overview
of the end-to-end business process

Example: Lack of standardized procedures
at helpdesk leads to longer calls
~85
<5 min
~15
≥5 min
Percent of observed calls
Collect user info
~80
<1 min
~20
≥1 min
Clarify, analyze, answer
Examples of longer calls
Long conversation with
caller about local weather
When agent was baffled,
waited a long time for
response to IM to colleague
High proportion
of agents (~15-
20%) take an
excessive amount
of time to complete
on and off-call
tasks due to
absence of
standardized
proceduresAfter call work
~80
<1.75 min
~20
≥1.75 min
Agent writes detailed
paragraph on solution using
complete sentences,
covering details

Standard Work
Make it the only way:
• No alternatives left
Warning:
• Warns for abnormalities
Showing:
• One-point-lesson
• Visual information
Reading:
• Manuals
• Procedures
• instructions
Fail-safe
Visual
control tools
Visual
aids
Procedures, Instructions
and Manuals
The Compliance Pyramid

Example: Mismatch of Capacity to Demand
Creates Waste in Staffing
0%
50%
100%
150%
200%
07:00 08:00 09:00 10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00
Percent of average
Company A
Hour of day
• Improving baseline
scheduling could better
match supply to demand
• Real-time labor
management can enable
aggressive matching of
schedule to forecast
• Eliminating overstaffing
and understaffing could
result in 15-25% cost
reduction
Overstaffing
Understaffing
Supply Demand
Opportunity to
improve staffing

Example: Flexing Manpower During a Shift
to Reduce Waste ILLUSTRATIVE
If maximum control
level is passed, add 1
person for additional
hour until queues fall
below maximum
control level
6:30 7:30 8:30 9:30 10:30 11:30 12:30 13:30 14:30 15:30 16:30 17:30 18:30
If queue level falls
below minimum
control, take 1 person
away from additional
hour until queues go
above minimum
control level
Queue size
Number of tickets
Maximum control
level = 36
Minimum control
level = 6
Monitoring queue levels on visual board enables real time decision-making
and the ability to flex manpower as required Target queue level
for 2-person operation*
* 2 people are operators and
1 person is the central
coordinator (triage)

Examples of Poka Yoke (1)
Kitting
An example of kitting is do-it-
yourself furniture, for which
buyers are given the appropriate
number of screws, parts and even
tools to assemble the furniture. A
packaged kit of everything
needed for your child’s lunch is
another example.
5S workplace organization
By applying the principles of 5S to
an area, clutter and waste can be
removed, leading to fewer
mistakes. For example, in grocery
stores, perishable products are
constantly purged of old
inventory, arranged by first in-first
out, and kept fresh with sprinklers
and chillers. Labels and bins
prevent products from becoming
disorganized.
Space separation
A common problem in waiting
lines is having customers
accidentally or deliberately
cutting into the queue. To
prevent this problem and have
better control of physical space,
barriers are erected to guide
customers to enter from the end
of the line to approach the
serving area.

Example: Kaizen Summary
Project type: 5S Area: Sales & Marketing Office Team Leader: John Smith
Before After
Reasons project chosen:
• Difficult to move around a cluttered
office
• Difficult to find information and
supplies
Tools used on project:
• Cleaning equipment and tools
• 5S principles
Results:
• Unwanted materials were discarded
• Less waste – e.g. transportation,
motion, waiting, etc.
• Improved staff morale
Next steps:
• Conduct monthly 5S audits
• 5S for other common areas

Example of 5 Whys
Why? Because…
1 Why is Tom injured? …he had a fall
2 Why did he fall? …the floor was wet
3 Why was the floor wet? …there was a leaking valve
4 Why was the valve leaking? …there was a seal failure
5 Why did the seal fail? …it was not maintained
1 3 4 52
A continuum of causes

A Simple Lean Implementation Roadmap
Create
Awareness
Build
Capability
Operations
Management
&
Improvement
Lean Thinking
Training
Lean
Leadership
Training
Build Lean
Activity Board
Kaizen #1:
5S
Kaizen #2:
Waste
Elimination
Value Stream
Mapping for Key
Processes
Train-the-
Trainer
Training
Information Sessions
for Whole Organization
Senior
Management
Awareness
Kaizen #3:
Standardization
Month 1
Lean Methods &
Tools Training
Month 3Month 2
Daily Management Meeting
Lean Update in
Monthly
Newsletter &
Intranet

Understanding Responses to Change
Critical Mass Direction of Enrollment
Middle
Enrollers
Late
Enrollers
Early
Enrollers
Initiators
Slugs
Die
Hards
5% 15% 30% 30% 15% 5%
Source: The Atlanta Consulting Group, Inc.
Enrollment Curve
It is key to understand and leverage is the rate and pace at which
people adapt to change
It is key to understand and leverage is the rate and pace at which
people adapt to change
Enrollment Curve
Start by focusing
time and effort on
the middle/late
enrollers

About
Operational Excellence
Consulting

About Operational Excellence
Consulting
 Operational Excellence Consulting is a management
training and consulting firm that assists organizations in
improving business performance and effectiveness.
 The firm’s mission is to create business value for
organizations through innovative operational excellence
management training and consulting solutions.
 OEC takes a unique “beyond the tools” approach to enable
clients develop internal capabilities and cultural
transformation to achieve sustainable world-class excellence
and competitive advantage. For more information, please visit
www.oeconsulting.com.sg

END OF PREVIEW
To download this presentation,
please visit:
www.oeconsulting.com.sg

Lean IT Services by Operational Excellence Consulting

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