Lean IT as a Factory?

By Steve Bell and Mike Orzen

The global consulting firm McKinsey & Company recently published an article
titled “Reshaping IT management for turbulent times,” where they explore the
implications of lean management techniques applied to IT services. In a survey
of 864 executives, McKinsey reports 64% are currently deploying Lean IT (Lean
techniques applied to information and information systems) in some manner.

Is this a realistic figure? Perhaps, when you consider the wide-spread adoption of
Agile Software Development during the past decade. And beyond Agile, there
are other aspects of IT services (such as infrastructure and support services) that
are now discovering the benefits of Lean discipline as well.

But when we read the study, we asked ourselves, “Does the 64% figure simply
reflect the implementation of Agile, ITIL’s Service Management Framework, and
other IT methodologies that have been influenced by Lean? Or do these results
indicate an authentic transformation of Lean thinking and management behavior,
where the business and IT actively collaborate to deliver value to customers
across all enterprise value streams? We suspect mostly the former. Our
experience suggests that most IT organizations are just beginning to realize and
internalize the fundamental Lean principles, supported by the familiar systems
and tools.

In this article, McKinsey distinguishes two categories of Lean IT:

 “Enabling IT” embeds flexible IT workgroups directly into the business to
support experimentation, collaboration, and data mining in order to propel
innovation and competitive advantage

 “Factory IT” couples lean management techniques and process

improvements with advances in cloud computing and software
development to simplify the operating environment and improve
productivity and cost performance

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This is a direct parallel to the structure we present in our book Lean IT where we
explore “Outward facing” IT services to enable the business and its customers,
supported by “Inward facing” IT operational excellence – including Lean Software
Development, Lean Service Management, and Lean Project Management.
We are particularly interested in McKinsey’s use of the term “Factory IT”, and in
response we submit three (hopefully) thought-provoking questions for reflection:

1. Will the term “Factory IT” resonate with IT professionals?

In the Lean IT workshop we are careful to emphasize IT stories, examples
and exercises. In our experience, presenting a manufacturing oriented
Value-Stream Mapping exercise to an IT crowd floats like a lead balloon.
While Lean principles remain constant, we find the application of the
techniques must be framed in an appropriate context for IT professionals
to understand, accept and internalize them.

2. Why use the word “Factory” as a metaphor for IT operational

excellence?
Perhaps it’s because IT has the historical reputation of being costly, risky,
and unmanageable, and so by presenting IT in a manufacturing context,
we hope that it will become more reliable and cost effective? Without a
deliberate transformation effort, however, a superficial approach to Lean
will fall short and may even be counterproductive.

3. What kind of Factory do we want IT to become?

Do we want a traditional mass production operation that focuses on low
cost, repetitive delivery? Or do we want a Lean, mass customization
operation that delivers fast, high quality, scalable, configurable services to
their customers on demand? The latter is a value delivery proposition,
rather than the former which is a traditional cost reduction proposition.

If we’re not careful, C-level executives may grab the term “Factory IT” and run
with it towards cloud computing and outsourcing, with the primary goal of cost
reduction. While a singular focus on cost reduction is a common trap for all
applications of Lean, it is especially perilous for IT. Why? Our opinion is that IT is
often misunderstood, and perhaps even feared, by many executives. When
confronted with difficulties (complexity, inflexibility, failed projects, cost overruns,
etc.) the instinctive reaction is to cut costs and/or outsource.

While cost reduction is a natural by-product of Lean, it should not be the primary
goal. Lean encourages a relentless focus on value creation, quality and speed,
through rapid, iterative cycles of learning (PDCA). When an organization
assimilates Lean Thinking into their daily behavior and culture, they naturally
become more responsive and competitive – delivering more value for a lower
total cost.

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As we conclude in our chapter on cloud computing while the cloud may change
the cost structure of IT services, competitive advantage will still go to those who
are able to use IT effectively to support the business. And the key to this? IT
process leadership, supporting the continuous improvement and innovation of
business processes - Lean IT.

For more information:

 Read excerpts from the book Lean IT
 Learn more about the Lean IT workshop, including curriculum, schedule,
and registration information.

About the Authors

Steve Bell and Mike Orzen are the authors of Lean IT: Enabling and Sustaining
Your Lean Transformation. They are co-founders of the management consulting
firm
Steady Improvement, Inc. (www.steadyimprovement.com ), and are on the
faculty of the Lean Enterprise Institute (www.lean.org).

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