For CIOs

January 4, 2008
Applying Lean Thinking To IT
CIOs Must Change IT’s Workaround Culture To Stimulate Innovation
This is the third document in the “Fixing IT Complexity” series.
by Alexander Peters, Ph.D.
with Alex Cullen and Tim DeGennaro

EXECUT I V E S U M MA RY
Lean thinking is a powerful methodology that can help IT maximize the real value from technology
spending. Lean is both a process improvement tool and a means to transition an IT culture from one
of workaround and ambiguity to one of continuous improvement, leading to disciplined innovation.
However, Lean thinking requires a formalized approach to governance based on detailed, specified,
and synchronized processes and resources and a culture stimulating experimentation, rapid change,
collaboration, and learning. CIOs looking to achieve lasting performance improvements in their
organizations should consider Lean.

LEAN THINKING HELPS ORGANIZATIONS FOCUS ON VALUE

Many firms are performing strategic IT consolidations to cut complexity and reduce the overhead
and friction that destroys value in their IT operations.1 While very effective against the symptoms
of duplication and management ambiguity, consolidations rarely address their root causes — poorly
designed processes and organization structures, overloaded staff, and IT’s traditional workaround
culture.2 IT executives must replace these legacies with a new management system to create an
environment where continuous improvements take place naturally as a result of the staff ’s daily work
and experience on the operational side of the business, thereby positioning IT for more sustainable
contributions to business productivity and innovation.

Lean thinking is a powerful management methodology, which has helped many organizations make the
transition from workaround cultures and practices to continuous process improvement and disciplined
innovation. The roots of lean thinking are in manufacturing, but the universality of its principles have
spread it quickly to other sectors such as logistics, military, services, and more recently to software
development.

Lean Increases Value Through Elimination Waste Of All Types

Lean thinking focuses the whole organization on the elimination of waste from its value chain, where
waste can take one of the following three forms (see Figure 1):

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Applying Lean Thinking To IT 2
For CIOs

Figure 1 Lean Focuses On The Elimination Of Three Categories Of Waste

Waste category Caused by Example 1 Example 2

Unreasonable work
Unreliable,
non-synchronized work
Non-value-added work
Poor planning Requirements are Duplicate functionality
continuously modified. is accepted.
• Poor planning Development is late; Extra synchronization
• Process immaturity tests are skipped. effort
• Poor planning Bug fixing and rework Extra resources for
• Operations errors during production operations
• Process immaturity

44006 Source: Forrester Research, Inc.

· Unreasonable work. When the management pushes the performance of people, processes,
and machines beyond their natural capacities, the consequences are improvisations and
ill-considered decisions. Organizations with weak architecture, planning, and product
management functions are highly exposed to this category of waste, as customers and
developers are changing requirements while products and services are developed; standards
ignored; and existing systems, assets, and functions carelessly duplicated.

· Unreliable non-synchronized work. When processes are not integrated, the result is delays
and unnecessary steps, resources, and space. Organizations with incomplete processes struggle
with this category of waste, for example when system component deliveries are not coordinated,
incidents are not correlated when closed, and products and services are not delivered in time
due to lack of plan synchronization.

· Non-value-added work. Incomplete information, lack of skills, or lack of attention results in

“scrap,” i.e., rework, unnecessary changes, or actions that do not add any value to products and
services. Common examples of this kind of waste are fixing errors repeatedly during production
and delivery or synchronizing tasks on duplicate system instances and functions.

Lean Is A Tool, A Strategy — And A Culture Change Methodology

Firms have applied Lean thinking and related methodologies with very different scopes — from
solving specific problems to transforming organization culture:

· Lean as a process improvement tool. The “Kaizen Blitz” is Lean’s tool for process improvement.
It is similar to other process improvement methodologies such as Just-In-Time (JIT), Six Sigma,
or Total Quality Management (TQM). Executives use this tool to uncover and implement
opportunities to improve lead times, cut waste, and optimize development and provisioning
processes. Some firms have even combined Lean with other methodologies for optimal results.3

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Applying Lean Thinking To IT 3
For CIOs

For example, Xerox reported using Lean Six Sigma to get help desk service levels at a lower
cost and with faster turnaround and to reduce the infrastructure costs per phone call while
improving the level of service to its sales organization.4

· Lean as the basis for organization strategy. In the “full implementation” of Lean, the organization
is viewed as a system to deliver value to customers. The zero-defects, JIT, no-waste goal is core to
the system’s strategy and is articulated by a set of strategic principles, unambiguously positioning
it relative to its customers. The principles guide the analysis of the provisioning-consumption
processes — highlighting the changes required to streamline the relationship between customers
and suppliers and maximize the value of products (see Figure 2).5 Industry leaders such as Alcoa,
Southwest Airlines, or Vanguard have demonstrated that, by applying such principles, it is possible
to steadily optimize the contribution of a large number of individuals and teams and deliver far
more value than their competitors.

· Lean as culture transformation. By making the elimination of waste in all its forms a top
priority for their staff, organizations create a culture of continuous improvement and innovation.
Lean’s most famous implementation, the Toyota Production System (TPS), has grown naturally
out of the rigorous implementation of a culture focusing on learning and the elimination
of waste at all levels of its organization, not from the promotion of a command-and-control
environment.6 Several basic principles are guiding the staff ’s behavior, encouraging continuous
learning, and addressing ambiguities and deviations, as they occur (see Figure 3).

Figure 2 Examples Of Strategic Principles

Principle Rationale Implications

• Solve the customer’s problem • The provisioning of partial and/or
completely by ensuring that all defective solutions forces
parts of the provided service customers and suppliers to
work, and work together. engage in non-value-added work.
• Provide what’s wanted exactly • Services and products, which
where it’s wanted and when it’s nobody asks for, create waste for
wanted. customers and suppliers.
• Continually aggregate solutions • Reduce the waste in the supply
to reduce the customer’s time and chain by asking fewer suppliers
hassle. with deeper knowledge to solve
bigger problems on a continual
basis.
• Design the organization as a
system to deliver complete
defect-free solutions where and
when they are needed.
• Adopt an end-to-end approach to
process management, employing
a customer perspective.
• Make sure that the capabilities of
customer management, product
management, product
architecture, and service
management are properly
aligned, sourced, and focused.

44006 Source: Forrester Research, Inc.

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Applying Lean Thinking To IT 4
For CIOs

Figure 3 Examples Of Principles Guiding Continuous Improvement And Learning

Principle Rationale Implications

• All work is highly specified as to
content, sequence, timing, and
outcome.
• Every process consists of simple
and direct steps unambiguously
connecting functions through
clearly defined requests and
responses.
• Any improvement must be made
in accordance with the scientific
method, under the guidance of a
teacher, at the lowest possible
level of the organization.
• Determine the true skill and
performance level of the
functions participating in each
process and the actions for
improvement.
• Identify duplications and
ambiguity and learn the root
causes of unnecessary
complexity.
• Capture improvements, making
sure that their impact is well
understood and that they are
broadly and systematically
implemented.
Develop a culture of continuous
improvement.
Encourage:
• Experimentation and rapid
change
• Collaboration based on clearly
defined responsibilities
• Learning, stimulated through
coaching, mentoring, and training

44006 Source: Forrester Research, Inc.

CHANGE IT WITH LEAN THINKING

IT executives who want to position IT for more sustainable contributions to business productivity
should use Lean thinking as a strategy enabling their organizations to progress from “getting by” to
continuous improvement. CIOs should direct their staff and use Lean to:

· Improve the efficiency of IT delivery. IT management should train its staff in Lean tools such
as Kaizen Blitz and charge them to streamline and improve the performance of IT’s service
delivery value chain — from applications development to incident, problem, change, and
release management. Using the principles of Lean consumption, dedicated teams of six to 10
people (representing IT staff, customers, and one or more outsiders) analyze the process flows
between customers, the IT organization, and its suppliers, identifying waste and proposing
improvements. Execs must communicate in advance the Blitz’s intention to those affected, and
then the Blitz team coordinates the implementation of the proposed improvements in a fast and
pragmatic way.

· Simplify and formalize IT management oversight. Execs should target waste from disjoint
management processes such as enterprise architecture and planning, IT portfolio and financial
management, and value governance. Make these processes flow by examining them as a
system and clearly specifying their interfaces, functions, and decision rights. Formalized IT
governance frameworks, such as Val IT, simplify the synchronization of processes, and improve
the communication among stakeholders — customers, development, delivery and support
functions, and suppliers.7

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· Continuously educate the IT organization. IT leadership should make sure that the staff
shares the Lean thinking values and common priorities at all its levels. The larger and more
complex the IT organization, the more important it is that internal and external employees
make decisions consistent with the strategic direction of the company. Enable a culture of
openness by encouraging the staff to repeatedly assess the consumption-delivery processes and
life cycles, and address and resolve issues for optimal performance.

R E C O M M E N D AT I O N S

LEAN THINKING IS ABOUT SYSTEM AND CULTURAL CHANGE

Quite often, the biggest barrier to adopting Lean thinking is the lack of understanding of its
fundamentals. As with consolidation, Lean practices aimed at flawed processes or functions
rarely yield lasting results unless they eliminate their root causes as well. Organizations in pursuit
of continuous improvements must apply Lean thinking as a system, rather than a collection of
methods implemented piecemeal. IT execs should set their target to:

· Design their organization as a system embodying Lean principles. IT executives must

design their organization for the absolute elimination of waste, taking into account the
interaction between its capabilities and the situational condition of its business customers
and suppliers. They must understand, synchronize, and measure the output of the entire
value chain from sales to IT operations and from GUI to back-end system, not of individual
capabilities. These IT executives must communicate broadly, not only with the IT staff but
also with customers and suppliers.
· Develop the Lean culture. While the Lean organizational architecture lays the foundation
for the continuous improvements, innovation comes from the individuals and functions
contributing to the IT value chain. IT executives must develop the structure and the culture
supporting the behavioral elements of Lean thinking, such as experimentation and rapid
change, collaboration, and continuous learning about the business processes they support.

ENDNOTES
1
IT has a natural tendency toward adding unnecessary complexity in the form of duplicate assets, multiple
processes to achieve the same ends, or overlapping organizational responsibilities. Unnecessary complexity
adds to IT costs and risks and reduces its effectiveness. The only sustainable remedy against these failings is
to strategically apply disciplined consolidations, focusing on their business value and long-term impact on
IT. See the November 5, 2007, “Best Practices: Adopt The Discipline Of Consolidation” report.
2
CIOs who wish to position IT for more sustainable contributions to business productivity and innovation
must first address two problems that have consumed IT since the early days of client-server: 1) duplication
within IT assets and organizations, and 2) IT’s traditional workaround culture. These conditions sap IT
budgets and management’s attention — making focus on business outcomes elusive and fleeting. CIOs must

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regularly look for symptoms signaling a rise in duplication and organizational ambiguity on the strategies
and values that should guide IT efforts. See the July 13, 2007, “Position IT For Innovation By Fixing
Duplication And Ambiguity” report.
3
Traditionally, Lean and Six Sigma have been viewed and utilized as distinctly separate methodologies to
analyze and improve processes. Rather than employing them separately, many process gurus now advocate
a marriage of the two for more dramatic process improvement. While this approach is valid, project leaders
of process improvement efforts that forcibly combine the two methodologies without understanding what
they are trying to improve will achieve limited success. Process professionals must first understand their
level of process maturity to choose the appropriate blend of Lean and Six Sigma methods and tools. See
the November 21, 2007, “Making The Marriage Work: Lean, Six Sigma, And The Business Process Maturity
Model” report.
4
Source: Elizabeth Ferrarini, “Interview: Dave Rowlands — Author Tells How to Put IT Costs on a Diet
With Lean Six Sigma,” Enterpriseleadership.org, August 16, 2006 (http://enterpriseleadership.org/content.
php?cid=1442).
5
Source: James P. Womack and Daniel T. Jones, “Lean Consumption,” Harvard Business Review, March 2005.
6
Source: Steven Spear and H. Kent Bowen, “Decoding the DNA of the Toyota Production System,” Harvard
Business Review, September 1999.
7
An IT governance framework articulates decision rights with respect to IT investments to ensure that they
deliver the maximum business value at an acceptable level of risk. To do this, you must be able to measure
business value and also manage and communicate value delivery. IT value delivery is part of IT governance
— it answers the following questions: 1) Are we doing the right things? and 2) are we getting the benefits?
Building on COBIT, the IT Governance Institute has published Val IT as a framework for the governance
of IT investments. Organizations struggling to execute IT strategies that deliver business value and to
communicate this value to stakeholders should evaluate Val IT as a tool for improved value delivery. See the
June 22, 2007, “From IT Governance To Value Delivery” report.

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