lean information technology service management: bottom-up process improvement that addresses the bottom line BY jack white and scott chaiken 22 Contract Management May 2008
By implementing this approach, both government and industry can better address the pain points involved in their processes and positively affect their bottom line. Contract Management May 2008 23
lean information technology service management Federal agencies are continually asked to do more with less. They are asked to do more research, help more people, and support more infrastructure all with marginally increased or altogether flat budgets. This is particularly true for providing information technology (IT) services and managing IT infrastructure in the public sector. Each year, the business of government becomes more dependent on IT services and support, but the government needs help to reduce the total cost of managing these critical services. Otherwise, the cost of IT services can impact an agency s ability to complete its original mission. In order to bring greater efficiency to IT service management, both industry and government must find a way to combine the strengths of continuous process improvement and its focus on reducing cost and eliminating waste and variance with the wisdom embodied in industry best practices. Unfortunately, the processes du jour don t always offer the best ways to make the IT function both more efficient and more effective from a bottom-line perspective. Today s Information Technology Process Tools Two of the hottest process buzzwords in the IT world today are Lean a process improvement discipline and the Information Technology Infrastructure Library (ITIL) a process improvement framework. Applying either of these process improvement tools individually can help the federal government with managing the drain on key resources by IT services, but only up to a point. Lean In the manufacturing world, Lean thinking is a predominant approach to evaluating and eliminating waste in operations; a tool for improving the efficiency of existing processes. Lean identifies time spent on non-value-added activities and time spent between value-added activities. However, federal agencies have found that Lean s concepts apply to non-manufacturing processes especially the service and support processes common to the IT function very well. The misuse or abuse of time is the principal source of waste in these processes, just as in the manufacturing context. Lean can address a wide range of sources of waste in end-to-end manual or systemized transactional processes including: Overproduction too many transactions in the process; Overprocessing too much nonvalue-added activity; Waiting too much time between value-added activities; Ownership issues usually, too many owners complicating the decisionmaking process; Unnecessary movement too much movement between value-added activities; and Underutilization of human resources the skill set deployed is too narrow. Because Lean requires little training and a lot of action, small teams can realize quick and visible results armed only with a simple set of tools. Simplified and more consistent IT services management processes result in lower operating costs, smaller physical (and virtual) footprints, and reduced operating risks associated with more reliable IT infrastructure oversight. ITIL ITIL presents a complementary framework of best-practice approaches intended to facilitate the delivery of high quality IT services. ITIL outlines an extensive set of management procedures intended to support an agency in achieving both quality and value in IT operations. The latest iteration, ITIL Version 3, emphasizes the management of the life cycle of services provided by IT and sharpens the focus on strategic alignment and return on investment. ITIL s strengths include its focus on service to the customer, process, and continuous improvement. On the downside, however, ITIL alone may present significant implementation challenges, including potentially significant time consumption. ITIL does not provide insight into gaining efficiencies, nor does it address the leadership issues of organizational change. Furthermore, the launch of an ITIL initiative can seem cumbersome and complex. At its most basic level, ITIL presents a box of best practices, or the characteristics of past successful processes. ITIL is also a top-down approach: the boss announces an organizationwide reengineering of processes, and then every person in that organization must put in a lot of extra time working in various groups to redesign and redeploy all of their processes. This is why ITIL has a bad reputation in some circles. Simplified and more consistent IT services management processes result in lower operating costs, smaller physical (and virtual) footprints, and reduced operating risks associated with more reliable IT infrastructure oversight. 24 Contract Management May 2008
lean information technology service management Lean Information Technology Service Management: Glossary of Terms Lean Information Technology Service Management (Lean ITSM), a bottom-up approach to IT process improvement, incorporates terms and processes that may sound familiar to proponents of the Lean and ITIL disciplines, plus a few unique terms of its own. Lean ITSM: Provides enterprise business services and capabilities, aligned with the strategic objectives of the enterprise, reliably and at a low cost. Value Stream Mapping: A technique used to identify material and information flow through a supply chain or through a sequence of activities. Non-value-added time stands out in Value Stream Mapping, thus providing a clear view of opportunities for process improvement and transformation. Value Stream Map: The transformed end-toend process. Action Plan: Describes how and when improvements are realized through the application of hybridized Lean problem-solving tools. Over time, the steps in the Action Plan become the basis for continuous process improvements. Lean: A framework of best-practice approaches for evaluating and eliminating waste in operations. Information Technology Infrastructure Library (ITIL): A framework of best-practice approaches intended to facilitate the delivery of high-quality IT services; outlines an extensive set of management procedures that are intended to support businesses in achieving both high financial quality and value in IT operations. A Different Path: Lean IT Service Management Lean and ITIL share a common goal: improvement of the processes involved in developing and providing IT services within an organization. A lofty intent, to be sure, but this is not enough for an organization that seeks to truly improve the IT services function as a means of supporting the overall mission. The ultimate process goal must be to lower the costs of managing the infrastructure. The IT services function within an organization can get very, very expensive, usurping financial resources that could otherwise be put to use in more direct ways to accomplish the mission. The National Institutes of Health, for example, can devote more dollars to public health if they can cut the cost of their IT functions without sacrificing quality and effectiveness. The future of effective IT management lies in a deliberate combination of process refinement approaches that unites the strengths of Lean and ITIL while taking into consideration whether the right portfolio of services is offered. This Lean IT Service Management (Lean ITSM) represents an important step toward the future of IT services. Lean ITSM applies the efficiencies of Lean to the principles of ITIL-based service management practices to improve and streamline all processes and to reduce the costs associated with the IT function. The days of trading mission success for IT support will soon be history. Lean ITSM frees up a larger portion of the government s overall budget for higher-end-services dollars that can ultimately go to support mission goals. Implementation of Lean ITSM involves four key steps: 1 Team interviews and cost/time assessments to identify targets for improvement; 2 Value stream mapping and Six Sigma analysis to identify areas for improvement; 3 ITIL best practices to develop standard work processes; and 4 Rapid improvement events to implement and test changes. The benefits of Lean ITSM include: Fast transition of existing IT service management processes; Focus on the most critical and/or costly processes; Early, demonstrable benefits realization; and Creation of a continuous process improvement culture a cultural change in the workplace. Perhaps the most distinctive characteristic of Lean ITSM is its bottom-up approach to process improvement. While Lean ITSM is indeed championed from the top, the work is accomplished by a rapid improvement team made up of the personnel who actually do the work. For example, Lean ITSM would be applied to a help desk scenario by working with the people who answer help desk calls to identify the key points of pain in the process, and then designing small change projects to resolve them. Improvements are made quickly with almost immediate results, and the rest of the organization can clearly see the benefit of Lean ITSM. After continuous improvement processes have been perfected, Lean ITSM moves into a deployment phase, using communication and training to help the rest of the organization adopt those processes. Lean ITSM makes the process more efficient, removing waste from the process and, ultimately, requiring fewer financial resources to maintain the improved IT function. The impact of Lean ITSM on the bottom line can be significant, freeing precious budget resources that can then be applied to the agency s critical missions. 26 Contract Management May 2008
lean information technology service management The Human Element: Why Lean ITSM Works Simply put, Lean ITSM is a continuous process improvement model that becomes a self-fulfilling entity. (See the figure below.) Lean ITSM empowers personnel to improve their work, see the visible benefits of improved processes, and learn more about their work and use that knowledge to make it even better. From the employee s perspective, this noticeable improvement means that the work environment improves consistently. This improvement encourages the employee to learn more about process improvement and brings everything full circle. This is the beauty of the bottom-up approach of Lean ITSM. Another added benefit to the Lean ITSM model is knowledge management a looming issue for federal agencies faced with a workforce poised to retire in record numbers over the next few years. Lean ITSM helps to formalize knowledge that, more often than not, resides solely in the heads of key personnel. No matter how complete an organization believes its knowledge base to be, a significant portion of this critical information is not written down or recorded in any way. Checklists and process instructions typically do not include the more significant rules of thumb or detail nuances of how things really get done. Employees tend to pass on this type of knowledge through mentoring and coaching. A byproduct of the Lean ITSM process is the increased formalization of knowledge into a body of standard work. As with the rest of Lean ITSM, this knowledge capture and management is not a single event, but an ongoing, continuous process of renewal and learning. Dramatic Improvements and Outrageous Savings The truth of the matter is that IT only enables other things to happen; it rarely accomplishes anything on its own. The Lean ITSM approach unites the strengths of Lean and ITIL as part of an examination that identifies and addresses the pain points within the agency s most expensive processes. ITIL s strengths include its focus on service to the customer, process, and continuous improvement. The added focus on resource utilization to identify opportunities to improve process efficiencies and reduce costs ultimately frees up precious financial resources that can be applied directly to the agency s primary mission which should be the ultimate goal of every function within the agency. Lean ITSM's Continuous Process Improvement Model Knowledge Every day, people learn about how to improve their work. Lean Promise Benefits Every day, people see the benefits of improved processes. Process Improvement Every day, things get better. Government agencies need to realize that every IT contract presents an opportunity to leverage the expertise of industry partners for ways to implement Lean ITSM into their key processes; a golden opportunity to achieve dramatic process improvements and outrageous savings at the same time. Federal IT contracting officials should look for IT contractors with an appreciation for the potential of an approach such as Lean ITSM, which translates into a commitment to bringing value to the project that helps achieve the agency s overall mission goals while reducing the burden of the IT infrastructure. By the same token, industry has a responsibility to help government make the most of its resources and Lean ITSM is the perfect vehicle for this kind of continuous, meaningful improvement in the public sector. CM About the Authors JOHN F. WHITE is vice president for solutions development for TechTeam Government Solutions, Inc. Mr. White is responsible for identifying trends in the federal government and in the logistics/supply chain market and works with TechTeam research staff to develop new strategic approaches to customer issues, ensuring that its customers stay agile. Mr. White has more than 25 years' experience in the design and implementation of computerbased manufacturing systems. SCOTT CHAIKEN is a senior analyst for NewVectors, a division of TechTeam Government Solutions, Inc. He has been involved in business process engineering and change management for more than 20 years and currently provides strategy and leadership to the Department of Defense in Lean and Six Sigma programs. As the chief information officer for several supply chain start-ups, Mr. Chaiken has spent much of his consulting career in managing the IT technical resource. He is a certified Six Sigma Black Belt with Arizona State University and a Lean instructor for the U.S. Air Force. Send comments about this article to cm@ncmahq.org. 28 Contract Management May 2008