Lean IT
Encyclopedia
Lean IT is the extension of lean manufacturing
and lean services
principles to the development and management of information technology
(IT) products and services. Its central concern, applied in the context of IT, is the elimination of waste, where waste is work that adds no value to a product or service.
Although lean principles are generally well established and have broad applicability, their extension from manufacturing to IT is only just emerging. Indeed, Lean IT poses significant challenges for practitioners while raising the promise of no less significant benefits. And whereas Lean IT initiatives can be limited in scope and deliver results quickly, implementing Lean IT is a continuing and long-term process that may take years before lean principles become intrinsic to an organization’s culture
.
Moreover, the migration by businesses across virtually every industry sector towards greater use of online
or e-business services suggests a likely intensified interest in Lean IT as the IT function becomes intrinsic to businesses’ primary activities of delivering value to their customers. Already, even today, IT’s role in business is substantial, often providing services that enable customers to discover, order, pay, and receive support. IT also provides enhanced employee productivity through software and communications technologies and allows suppliers to collaborate, deliver, and receive payment.
Consultants and evangelists for Lean IT identify an abundance of waste across the business service “production line”, including legacy infrastructure and fractured processes. By reducing waste through application of lean Enterprise IT Management
(EITM) strategies, CIOs
and CTOs in companies such as Tesco
, Fujitsu Services
, and TransUnion
are driving IT from the confines of a back-office support function to a central role in delivering customer value.
Whereas each element in the table can be a significant source of waste in itself, linkages between elements sometimes create a cascade of waste (the so-called domino effect
). For example, a faulty load balancer (waste element: Defects) that increases web server
response time may cause a lengthy wait for users of a web application (waste element: Waiting), resulting in excessive demand on the customer support call center (waste element: Excess Motion) and, potentially, subsequent visits by account representatives to key customers’ sites to quell concerns about the service availability (waste element: Transportation). In the meantime, the company’s most likely responses to this problem — for example, introducing additional server capacity and/or redundant load balancing software), and hiring extra customer support agents — may contribute yet more waste elements (Overprovisioning and Excess Inventory).
Examples: point-of-sale transaction processing
, ecommerce, and supply chain optimization
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.
— diagramming and analyzing services (value streams) into their component process steps and eliminating any steps (or even entire value streams) that don’t deliver value.
. 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.
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.
Table 2 suggests that the Executive Vice President (EVP) of Store Operations
is ultimately responsible for the point-of-sale business service, and he/she assesses the value of this service using metrics such as CAPEX
, OPEX
, and check-out speed. The demand pulls or purposes for which the EVP may seek these metrics might be to conduct a budget review or undertake a store redesign. Formal service-level agreements (SLAs) for provision of the business service may monitor transaction speed, service continuity, and implementation speed. The table further illustrates how other users of the point-of-sale service — notably, cashiers and shoppers — may be concerned with other value metrics, demand pulls, and SLAs.
Having identified and described a value stream, implementation usually proceeds with construction of a value stream map — a pictorial representation of the flow of information, beginning with an initial demand request or pull and progressing up the value stream. Although value streams are not as readily visualizable as their counterparts in lean manufacturing, where the flow of materials is more tangible, systems engineers and IT consultants are practiced in the construction of schematics to represent information flow through an IT service. To this end, they may use productivity software such as Microsoft Visio
and computer-aided design (CAD) tools. However, alternatives to these off-the-shelf
applications may be more efficient (and less wasteful) in the mapping process.
One alternative is use of a configuration management database
(CMDB), which describes the authorized configuration of the significant components of an IT environment. Workload automation software, which helps IT organizations optimize real-time performance of complex business workloads across diverse IT infrastructures, and other application dependency mapping tools can be an additional help in value stream mapping.
After mapping one or more value streams, engineers and consultants analyze the stream(s) for sources of waste. The analysis may adapt and apply traditional efficiency techniques such as time-and-motion studies as well as more recent lean techniques developed for the Toyota Production System and its derivatives. Among likely outcomes are methods such as process redesign
, the establishment of “load-balanced” workgroups (for example, cross-training of software developers to work on diverse projects according to changing business needs), and the development of performance management “dashboards” to track project and business performance and highlight trouble spots.
in December 2007 was marked by a decrease in individuals’ willingness to pay for goods and services — especially in face of uncertainty about their own economic futures. Meanwhile, tighter business and consumer credit, a steep decline in the housing market, higher taxes, massive lay-offs, and diminished returns in the money and bond markets 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. In-keeping with this tendency, recessions initially provoke aggressive (and somes 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. 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.
s, decrease costs, improve efficiency, and increase access to customers, partners, and employees.
The prevalence of web-based transactions is driving a convergence of IT and business. 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.
is one part of this broad movement.
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. In this way, identification and streamlining of IT value streams supports the measurement and improvement of carbon footprint
s and other green metrics. For instance, implementation of Lean IT initiatives is likely to save energy through adoption of virtualization technology and data center consolidation.
(BA), 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. However, the opening was marred by baggage handling backlogs, staff parking problems, and cancelled flights.
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.
Opportunity to apply Lean IT exists in multiple other areas of IT besides ADM. For example, service catalog management is a Lean IT approach to provisioning IT services. When, say, a new employee joins a company, the employee’s manager can log into a web-based catalog and select the services needed. This particular employee may need a CAD workstation as well as standard office productivity software and limited access to the company’s extranet
. On submitting this request, provisioning of all hardware and software requirements would then be automatic through a lean value stream. In another example, a Lean IT approach to application performance monitoring would automatically detect performance issues at the customer experience level as well as triage, notify support personnel, and collect data to assist in root-cause analysis. Research suggests that IT departments may achieve sizable returns
from investing in these and other areas of the IT function.
Among notable corporate examples of Lean IT adopters is UK-based grocer Tesco, which has entered into strategic partnerships with many of its suppliers, including Procter & Gamble
, Unilever
, and Coca-Cola
, eventually succeeding in replacing weekly shipments with continuous deliveries throughout the day. By moving to eliminate stock from either the back of the store or in high-bay storage, Tesco has gotten markedly closer to a just-in-time pull system (see Pull/Demand System).
Lean IT is also attracting public-sector interest, in-keeping with the waste-reduction aims of the Lean Government
movement. One example is the City of Cape Coral, Florida, where several departments have deployed Lean IT. The city’s police records department, for instance, reviewed its processing of some 20,000 traffic ticket
s written by police officers each year, halving the time for an officer to write a ticket and saving $2 million. Comparable benefits have been achieved in other departments such as public works, finance, fire, and parks and recreation.
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.
focuses on removing the causes of defects (errors) and the variation (inconsistency) in manufacturing and business processes using quality management and, especially, statistical methods. 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.
(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. 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.
— a series of books published by the United Kingdom’s Office of Government Commerce — 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 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 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.
— 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). 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.
Lean manufacturing
Lean manufacturing, lean enterprise, or lean production, often simply, "Lean," is a production practice that considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for elimination...
and lean services
Lean services
Lean services is the application of the lean manufacturing concept to service operations. It is distinct in that Lean services are not concerned with the making of ‘hard’ products....
principles to the development and management of information technology
Information technology
Information technology is the acquisition, processing, storage and dissemination of vocal, pictorial, textual and numerical information by a microelectronics-based combination of computing and telecommunications...
(IT) products and services. Its central concern, applied in the context of IT, is the elimination of waste, where waste is work that adds no value to a product or service.
Although lean principles are generally well established and have broad applicability, their extension from manufacturing to IT is only just emerging. Indeed, Lean IT poses significant challenges for practitioners while raising the promise of no less significant benefits. And whereas Lean IT initiatives can be limited in scope and deliver results quickly, implementing Lean IT is a continuing and long-term process that may take years before lean principles become intrinsic to an organization’s culture
Organizational culture
Organizational culture is defined as “A pattern of shared basic assumptions invented, discovered, or developed by a given group as it learns to cope with its problems of external adaptation and internal integration" that have worked well enough to be considered valid and therefore, to be taught to...
.
Extension of Lean to IT
As lean manufacturing has become more widely implemented, the extension of lean principles is beginning to spread to IT (and other service industries). Industry analysts have identified many similarities or analogues between IT and manufacturing. For example, whereas the manufacturing function manufactures goods of value to customers, the IT function “manufactures” business services of value to the parent organization and its customers. Similar to manufacturing, the development of business services entails resource management, demand management, quality control, security issues, and so on.Moreover, the migration by businesses across virtually every industry sector towards greater use of online
ONLINE
ONLINE is a magazine for information systems first published in 1977. The publisher Online, Inc. was founded the year before. In May 2002, Information Today, Inc. acquired the assets of Online Inc....
or e-business services suggests a likely intensified interest in Lean IT as the IT function becomes intrinsic to businesses’ primary activities of delivering value to their customers. Already, even today, IT’s role in business is substantial, often providing services that enable customers to discover, order, pay, and receive support. IT also provides enhanced employee productivity through software and communications technologies and allows suppliers to collaborate, deliver, and receive payment.
Consultants and evangelists for Lean IT identify an abundance of waste across the business service “production line”, including legacy infrastructure and fractured processes. By reducing waste through application of lean Enterprise IT Management
Enterprise IT Management
Enterprise IT Management is a strategy conceived and developed by CA, Inc. which details how organizations can transform the management of IT in order to maximize business value....
(EITM) strategies, CIOs
Chief information officer
Chief information officer , or information technology director, is a job title commonly given to the most senior executive in an enterprise responsible for the information technology and computer systems that support enterprise goals...
and CTOs in companies such as Tesco
Tesco
Tesco plc is a global grocery and general merchandise retailer headquartered in Cheshunt, United Kingdom. It is the third-largest retailer in the world measured by revenues and the second-largest measured by profits...
, Fujitsu Services
Fujitsu
is a Japanese multinational information technology equipment and services company headquartered in Tokyo, Japan. It is the world's third-largest IT services provider measured by revenues....
, and TransUnion
TransUnion
TransUnion is the third largest credit bureau in the United States, which offers credit-related information to potential creditors. Like major competitors Equifax and Experian, TransUnion markets credit reports directly to consumers.- History :...
are driving IT from the confines of a back-office support function to a central role in delivering customer value.
Types of Waste in Lean IT
Lean IT promises to identify and eradicate waste that otherwise contributes to poor customer service, lost business, higher than necessary business costs, and lost employee productivity. To these ends, Lean IT targets eight elements within IT operations that add no value to the finished product or service or to the parent organization (see Table 1).| Waste Element | Examples | Business Outcome |
|---|---|---|
| Defects |
|
Poor customer service, increased costs. |
| Overproduction (Overprovisioning) |
|
Business and IT misalignment, Increased costs and overheads: energy, data center space, maintenance. |
| Waiting |
|
Lost revenue, poor customer service, reduced productivity. |
| Non-Value Added Processing |
|
Miscommunication. |
| Transportation |
|
Higher capital and operational expenses. |
| Inventory (Excess) |
|
Increased costs: data center, energy; lost productivity. |
| Motion (Excess) |
|
Lost productivity. |
| Employee Knowledge (Unused) |
|
Talent leakage, low job satisfaction, increased support and maintenance costs. |
Whereas each element in the table can be a significant source of waste in itself, linkages between elements sometimes create a cascade of waste (the so-called domino effect
Domino effect
The domino effect is a chain reaction that occurs when a small change causes a similar change nearby, which then will cause another similar change, and so on in linear sequence. The term is best known as a mechanical effect, and is used as an analogy to a falling row of dominoes...
). For example, a faulty load balancer (waste element: Defects) that increases web server
Web server
Web server can refer to either the hardware or the software that helps to deliver content that can be accessed through the Internet....
response time may cause a lengthy wait for users of a web application (waste element: Waiting), resulting in excessive demand on the customer support call center (waste element: Excess Motion) and, potentially, subsequent visits by account representatives to key customers’ sites to quell concerns about the service availability (waste element: Transportation). In the meantime, the company’s most likely responses to this problem — for example, introducing additional server capacity and/or redundant load balancing software), and hiring extra customer support agents — may contribute yet more waste elements (Overprovisioning and Excess Inventory).
Value Streams
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
Transaction processing
In computer science, transaction processing is information processing that is divided into individual, indivisible operations, called transactions. Each transaction must succeed or fail as a complete unit; it cannot remain in an intermediate state...
, ecommerce, and supply chain optimization
Supply chain optimization
Supply chain optimization is the application of processes and tools to ensure the optimal operation of a manufacturing and distribution supply chain. This includes the optimal placement of inventory within the supply chain, minimizing operating costs...
- IT services (secondary value streams)
Examples: application performance management
Application Performance Management
Application performance management, or APM, refers to the discipline within systems management that focuses on monitoring and managing the performance and service availability of software applications....
, data backup
Backup
In information technology, a backup or the process of backing up is making copies of data which may be used to restore the original after a data loss event. The verb form is back up in two words, whereas the noun is 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.
Value-Stream Mapping
Lean IT, like its lean manufacturing counterpart, involves a methodology of value-stream mappingValue Stream Mapping
Value stream mapping is a lean manufacturing technique used to analyze and design the flow of materials and information required to bring a product or service to a consumer. At Toyota, where the technique originated, it is known as "material and information flow mapping"...
— diagramming and analyzing services (value streams) into their component process steps and eliminating any steps (or even entire value streams) that don’t deliver value.
Flow
Flow relates to one of the fundamental concepts of Lean as formulated within the Toyota Production System — namely, muraMura (Japanese term)
Mura is traditional general Japanese term for unevenness, irregularity or inconsistency in physical matter or human spiritual condition. It is also a key concept in performance improvement systems such as the Toyota Production System. Mura is one of the three types of waste . Waste reduction is an...
. 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/Demand System
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 managementSupply chain management
Supply chain management is the management of a network of interconnected businesses involved in the ultimate provision of product and service packages required by end customers...
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.
Implementation of Lean IT
Implementation begins with identification and description of one or more IT value streams. For example, aided by use of interviews and questionnaires, the value stream for a primary value stream such as a point-of-sale business service may be described as shown in Table 2.| Value Metrics | Demand Pulls | SLAs Service Level Agreement A service-level agreement is a part of a service contract where the level of service is formally defined. In practice, the term SLA is sometimes used to refer to the contracted delivery time or performance... |
||
|---|---|---|---|---|
| “Owner” of Business Result | EVP of Store Operations |
|
|
|
| End Customer | Cashier Cashier Cashier is an occupation focused on the handling of cash money.- Retail :In a shop, a cashier is a person who scans the goods through a machine called a cash register that the consumer wishes to purchase at the retail store. After all of the goods have been scanned, the cashier then collects... s |
|
|
|
| End Customer | Shoppers |
|
|
|
Table 2 suggests that the Executive Vice President (EVP) of Store Operations
Vice president
A vice president is an officer in government or business who is below a president in rank. The name comes from the Latin vice meaning 'in place of'. In some countries, the vice president is called the deputy president...
is ultimately responsible for the point-of-sale business service, and he/she assesses the value of this service using metrics such as CAPEX
CAPEX
CAPEX, also known as the Kerala State Cashew Workers Apex Industrial Co-operative Society, is an organization managed by the government of Kerala to promote the cashew industry and especially the export market for cashews.-Organization:...
, OPEX
Operating expense
An operating expense, operating expenditure, operational expense, operational expenditure or OPEX is an ongoing cost for running a product, business, or system . Its counterpart, a capital expenditure , is the cost of developing or providing non-consumable parts for the product or system...
, and check-out speed. The demand pulls or purposes for which the EVP may seek these metrics might be to conduct a budget review or undertake a store redesign. Formal service-level agreements (SLAs) for provision of the business service may monitor transaction speed, service continuity, and implementation speed. The table further illustrates how other users of the point-of-sale service — notably, cashiers and shoppers — may be concerned with other value metrics, demand pulls, and SLAs.
Having identified and described a value stream, implementation usually proceeds with construction of a value stream map — a pictorial representation of the flow of information, beginning with an initial demand request or pull and progressing up the value stream. Although value streams are not as readily visualizable as their counterparts in lean manufacturing, where the flow of materials is more tangible, systems engineers and IT consultants are practiced in the construction of schematics to represent information flow through an IT service. To this end, they may use productivity software such as Microsoft Visio
Microsoft Visio
Microsoft Visio , formerly known as Microsoft Office Visio, is a commercial diagramming program for Microsoft Windows that uses vector graphics to create diagrams.- Features :...
and computer-aided design (CAD) tools. However, alternatives to these off-the-shelf
Commercial off-the-shelf
In the United States, Commercially available Off-The-Shelf is a Federal Acquisition Regulation term defining a nondevelopmental item of supply that is both commercial and sold in substantial quantities in the commercial marketplace, and that can be procured or utilized under government contract...
applications may be more efficient (and less wasteful) in the mapping process.
One alternative is use of a configuration management database
CMDB
A configuration management database is a repository of information related to all the components of an information system. It contains the details of the configuration items in the IT infrastructure. Although repositories similar to CMDBs have been used by IT departments for many years, the term...
(CMDB), which describes the authorized configuration of the significant components of an IT environment. Workload automation software, which helps IT organizations optimize real-time performance of complex business workloads across diverse IT infrastructures, and other application dependency mapping tools can be an additional help in value stream mapping.
After mapping one or more value streams, engineers and consultants analyze the stream(s) for sources of waste. The analysis may adapt and apply traditional efficiency techniques such as time-and-motion studies as well as more recent lean techniques developed for the Toyota Production System and its derivatives. Among likely outcomes are methods such as process redesign
Business process reengineering
Business process re-engineering is the analysis and design of workflows and processes within an organization.According to Davenport a business process is a set of logically related tasks performed to achieve a defined business outcome....
, the establishment of “load-balanced” workgroups (for example, cross-training of software developers to work on diverse projects according to changing business needs), and the development of performance management “dashboards” to track project and business performance and highlight trouble spots.
Recessionary Pressure to Reduce Costs
The onset of economic recessionRecession
In economics, a recession is a business cycle contraction, a general slowdown in economic activity. During recessions, many macroeconomic indicators vary in a similar way...
in December 2007 was marked by a decrease in individuals’ willingness to pay for goods and services — especially in face of uncertainty about their own economic futures. Meanwhile, tighter business and consumer credit, a steep decline in the housing market, higher taxes, massive lay-offs, and diminished returns in the money and bond markets have further limited demand for goods and services.
When an economy
Economy
An economy consists of the economic system of a country or other area; the labor, capital and land resources; and the manufacturing, trade, distribution, and consumption of goods and services of that area...
is strong, most business leaders focus on revenue
Revenue
In business, revenue is income that a company receives from its normal business activities, usually from the sale of goods and services to customers. In many countries, such as the United Kingdom, revenue is referred to as turnover....
growth. During periods of weakness, when demand for good and services is curbed, the focus shifts to cost-cutting. In-keeping with this tendency, recessions initially provoke aggressive (and somes 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. 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.
Proliferation of Online Transactions
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. This migration is likely to accelerate still further as companies seek to leverage investments in service-oriented architectureService-oriented architecture
In software engineering, a Service-Oriented Architecture is a set of principles and methodologies for designing and developing software in the form of interoperable services. These services are well-defined business functionalities that are built as software components that can be reused for...
s, decrease costs, improve efficiency, and increase access to customers, partners, and employees.
The prevalence of web-based transactions is driving a convergence of IT and business. 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.
Green IT
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 ITGreen computing
Green computing or green IT, refers to environmentally sustainable computing or IT. In the article Harnessing Green IT: Principles and Practices, San Murugesan defines the field of green computing as "the study and practice of designing, manufacturing, using, and disposing of computers, servers,...
is one part of this broad movement.
Waste reduction directly correlates with reduced energy consumption and carbon generation. Indeed, IBM
IBM
International Business Machines Corporation or IBM is an American multinational technology and consulting corporation headquartered in Armonk, New York, United States. IBM manufactures and sells computer hardware and software, and it offers infrastructure, hosting and consulting services in areas...
asserts that IT and energy costs can account for up to 60% of an organization's capital expenditures and 75% of operational expenditures. In this way, identification and streamlining of IT value streams supports the measurement and improvement of carbon footprint
Carbon footprint
A carbon footprint has historically been defined as "the total set of greenhouse gas emissions caused by an organization, event, product or person.". However, calculating a carbon footprint which conforms to this definition is often impracticable due to the large amount of data required, which is...
s and other green metrics. For instance, implementation of Lean IT initiatives is likely to save energy through adoption of virtualization technology and data center consolidation.
Colocation centre
A colocation centre or colocation center , is a type of data centre where equipment space and bandwidth are available for rental to retail customers...
Value-Stream Visualization
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.Reference Implementations
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 London Heathrow Airport’s Terminal 5. British airports authority BAA and airline British AirwaysBritish Airways
British Airways is the flag carrier airline of the United Kingdom, based in Waterside, near its main hub at London Heathrow Airport. British Airways is the largest airline in the UK based on fleet size, international flights and international destinations...
(BA), 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. However, the opening was marred by baggage handling backlogs, staff parking problems, and cancelled flights.
Resistance to Change
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.
Fragmented IT Departments
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.Integration of Lean Production and Lean Consumption
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. 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.Deployment and Commercial Support
Deployment of Lean IT has been predominantly limited to application development and maintenance (ADM). This focus reflects the cost of ADM. Despite a trend towards increased ADM outsourcing to lower-wage economies, the cost of developing and maintaining applications can still consume more than half of the total IT budget. In this light, the potential of Lean IT to increase productivity by as much as 40% while improving the quality and speed of execution makes ADM a primary target (the “low-hanging fruit,” so to speak) within the IT department.Opportunity to apply Lean IT exists in multiple other areas of IT besides ADM. For example, service catalog management is a Lean IT approach to provisioning IT services. When, say, a new employee joins a company, the employee’s manager can log into a web-based catalog and select the services needed. This particular employee may need a CAD workstation as well as standard office productivity software and limited access to the company’s extranet
Extranet
An extranet is a computer network that allows controlled access from the outside, for specific business or educational purposes. An extranet can be viewed as an extension of a company's intranet that is extended to users outside the company, usually partners, vendors, and suppliers...
. On submitting this request, provisioning of all hardware and software requirements would then be automatic through a lean value stream. In another example, a Lean IT approach to application performance monitoring would automatically detect performance issues at the customer experience level as well as triage, notify support personnel, and collect data to assist in root-cause analysis. Research suggests that IT departments may achieve sizable returns
Rate of return
In finance, rate of return , also known as return on investment , rate of profit or sometimes just return, is the ratio of money gained or lost on an investment relative to the amount of money invested. The amount of money gained or lost may be referred to as interest, profit/loss, gain/loss, or...
from investing in these and other areas of the IT function.
Among notable corporate examples of Lean IT adopters is UK-based grocer Tesco, which has entered into strategic partnerships with many of its suppliers, including Procter & Gamble
Procter & Gamble
Procter & Gamble is a Fortune 500 American multinational corporation headquartered in downtown Cincinnati, Ohio and manufactures a wide range of consumer goods....
, Unilever
Unilever
Unilever is a British-Dutch multinational corporation that owns many of the world's consumer product brands in foods, beverages, cleaning agents and personal care products....
, and Coca-Cola
Coca-Cola
Coca-Cola is a carbonated soft drink sold in stores, restaurants, and vending machines in more than 200 countries. It is produced by The Coca-Cola Company of Atlanta, Georgia, and is often referred to simply as Coke...
, eventually succeeding in replacing weekly shipments with continuous deliveries throughout the day. By moving to eliminate stock from either the back of the store or in high-bay storage, Tesco has gotten markedly closer to a just-in-time pull system (see Pull/Demand System).
Lean IT is also attracting public-sector interest, in-keeping with the waste-reduction aims of the Lean Government
Lean Government
Lean Government refers to the application of Lean production principles and methods to identify and implement the most efficient and value added way to provide government services. Government agencies have found that Lean methods enable them to better understand how their processes work, to...
movement. One example is the City of Cape Coral, Florida, where several departments have deployed Lean IT. The city’s police records department, for instance, reviewed its processing of some 20,000 traffic ticket
Traffic ticket
A traffic ticket is a notice issued by a law enforcement official to a motorist or other road user, accusing violation of traffic laws. Traffic tickets generally come in two forms, citing a moving violation, such as exceeding the speed limit, or a non-moving violation, such as a parking violation,...
s written by police officers each year, halving the time for an officer to write a ticket and saving $2 million. Comparable benefits have been achieved in other departments such as public works, finance, fire, and parks and recreation.
Complementary Methodologies
Although Lean IT typically entails particular principles and methods such as value streams and value-stream mapping, Lean IT is, on a higher level, a philosophy rather than a prescribed metric or process methodology. In this way, Lean IT is pragmatic and not agnostic. It seeks incremental waste reduction and value enhancement, but it does not require a grand overhaul of an existing process, and is complementary rather than alternative to other methodologies.Agile, Scrum and Lean Software development
Agile 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 value/non value added activities ratio on projects and includes methods like 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
PDCA
PDCA is an iterative four-step management method used in business for the control and continuous improvement of processes and products...
cycle, and continuous improvements, that is the base of Lean.
Six Sigma
Whereas Lean IT focuses on customer satisfaction and reducing waste, Six SigmaSix Sigma
Six Sigma is a business management strategy originally developed by Motorola, USA in 1986. , it is widely used in many sectors of industry.Six Sigma seeks to improve the quality of process outputs by identifying and removing the causes of defects and minimizing variability in manufacturing and...
focuses on removing the causes of defects (errors) and the variation (inconsistency) in manufacturing and business processes using quality management and, especially, statistical methods. 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.
Capability Maturity Model Integration (CMMI)
The Capability Maturity Model IntegrationCapability Maturity Model Integration
Capability Maturity Model Integration is a process improvement approach whose goal is to help organizations improve their performance. CMMI can be used to guide process improvement across a project, a division, or an entire organization...
(CMMI) from the Software Engineering Institute
Software Engineering Institute
The Carnegie Mellon Software Engineering Institute is a federally funded research and development center headquartered on the campus of Carnegie Mellon University in Pittsburgh, Pennsylvania, United States. SEI also has offices in Arlington, Virginia, and Frankfurt, Germany. The SEI operates...
of Carnegie Mellon University
Carnegie Mellon University
Carnegie Mellon University is a private research university in Pittsburgh, Pennsylvania, United States....
(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
Benchmarking
Benchmarking is the process of comparing one's business processes and performance metrics to industry bests and/or best practices from other industries. Dimensions typically measured are quality, time and cost...
or point of reference for assessing current processes. 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.
Information Technology Infrastructure Library (ITIL)
The Information Technology Infrastructure Library (ITIL)Information Technology Infrastructure Library
The Information Technology Infrastructure Library , is a set of good practices for IT service management that focuses on aligning IT services with the needs of business. In its current form , ITIL is published in a series of five core publications, each of which covers an ITSM lifecycle stage...
— a series of books published by the United Kingdom’s Office of Government Commerce — 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
Capability Maturity Model Integration
Capability Maturity Model Integration is a process improvement approach whose goal is to help organizations improve their performance. CMMI can be used to guide process improvement across a project, a division, or an entire organization...
for process improvement and COBIT
COBIT
COBIT is a framework created by ISACA for information technology management and IT Governance. It is a supporting toolset that allows managers to bridge the gap between control requirements, technical issues and business risks.-Overview:...
for IT governance.
Universal Service Management Body of Knowledge (USMBOK)
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 managementService management
Service management is integrated into supply chain management as the joint between the actual sales and the customer. The aim of high performance service management is to optimize the service-intensive supply chains, which are usually more complex than the typical finished-goods supply chain...
. 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 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.
COBIT
Control Objectives for Information and related TechnologyCOBIT
COBIT is a framework created by ISACA for information technology management and IT Governance. It is a supporting toolset that allows managers to bridge the gap between control requirements, technical issues and business risks.-Overview:...
— 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). 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.
External links
- Lean Enterprise Institute
- Lean Enterprise Academy
- Lean Construction Institute
- Lean Software Institute
- Lean Leadership Institute
- Institute for Healthcare Improvement
- Lean IT Strategies
- Lean Service Management
- Certified Lean Service Professional Credential
- Green IT
- Ci&T Lean IT
- Fujitsu Lean IT Case Study
- North American Lean IT Summit