In most organisations IT is a central function. It started off as the experts who ran large mainframes with huge tapes. Weird science to many of the day. Even Tom Watson of IBM predicted there would probably only be need for 5 of these things in the world. How wrong he was. IT then became the place that looked after all the computers on our desks. Growing to the hundreds and thousands. It grew to a department looking after e-mail, and a PC and handheld device for every employee. We’re now talking hundreds of thousands of devices within a major enterprise. Then IT started looking after the company website, and the infrastructure that manages all of our enterprise applications. All the while they were probably dealing with the telephone systems too. Basically, anything Technology related. Along the way it also picked up other disciplines: software engineers and solution designers and enterprise architects and service managers and user experience experts and project managers and testers. All this seems an eclectic mix of responsibilities, and it seems odd to lump all of these under one umbrella called the IT function. I wonder why we did. Was it because it was still weird science for the masses. It was only the technically minded folks who really got it, and it wasn’t really what the business was about.
Unfortunately, for most companies now, IT is the business. Our products are IT based. Our service is IT based. Our processes are enshrined in what IT can do, and our people are only as good as our IT systems allows us to be. Our customers are tech savvy and they engage with us in new ways. No longer can an IT service manager really be separate from ‘the business’. If IT doesn’t work our business does not work. A software engineer who develops the core user experience, operational experience, process experience is the front-line of the brand and the customer experience. We need a new approach for IT.
Lean IT is a set of concepts that has been gaining much traction over the last decade. It has started to look at how we can bring in some of the lean manufacturing concepts into the IT world. It started by looking back at the toyota production system, and what made them produce great products that conquered the US car market. But, today people are scrutinising the Toyota Product Development System in more detail because they realise that innovation and creativity is not so much about removing waste and variation out of repeatable manufacturing processes, but developing compelling products and services that require pushing boundaries, exploring solutions and working with customers more closely. It is inherently about more agile ways of working. It is about Lean Software Development and Lean Product Development. It is about a philosophy of collaboration, learning and creating feedback and empowering people to deliver what is right and in the right way. It represents the world of strategy promoted by Henry Mintzberg or Gary Hamel with their focus on learning, innovation and creative strategy in shaping and creating new markets. This is not so much about doing what we’ve always done more efficiently. It is about creating customer experiences and products that are loved and sought after.
The Lean IT movement looks how you might enable and sustain a lean transformation that enables you to be more customer focused, and how the culture of the organisation needs to develop to embrace collaboration, and working across boundaries to deliver an outstanding service for customers. This is in direct contrast to how most businesses set themselves up. Functional silos are normal. There is a belief that economies come from scale by bringing together functional expertise. This is not untrue for some things. It comes at a cost though, so shouldn’t be considered a general rule of thumb in environments where innovation and creativity are being sought, and where speed is essential. The cost is that these functions and departments are focused on their bit and not the end-to-end flow of value from a customer standpoint.
Bringing new products and services to market is a value stream known as Concept-to-market. This includes creative input from all functions across a business. Doing it fast will require us to focus on the value stream goal and not the functional goals. The same can be said for another key value stream that exists in most organisations, Order-to-Cash. Sales and Delivery need to work in tandem. The IT supporting these functions needs to work.
There are some elements of the central IT function that can and should remain central, but much doesn’t or shouldn’t have to be. How might you decide? Put simply, does pulling people into a silo slow down delivery in the eyes of the market in a way that might hamper our competitiveness? If yes, you should consider focusing on the value stream. If no, you might consider developing it as a function. If it isn’t on the critical path then it might be better value to consider economies of scale.
I prefer to consider things from the customers’ perspective first. After all, there is no value stream without them. We can’t make something more cost effective without first satisfying our customers to the extent that they are prepared to pay for the product or service. We actually cannot remove waste from a value stream without their being value first. So, what does the customer think about our organisation design and the place IT has in it? Not a lot, but they might feel the consequences of our choices. What do they think about the service they receive? Do they care how we set ourselves up? The person I use as my benchmark on this thinking is my wife, Helen. She always has great suggestions on how service can improve from the companies she deals with. She couldn’t care less about the organisational structure and decisions going on behind the corporate walls on how we manage ourselves and set goals. Her suggestions always make me smile as I then start thinking about how the organisation will be set up and why her suggestion will be a nightmare to implement because there will be no direct line of sight between the backlog of work for the specific system or process that will need to be changed and the customer experience being felt by the paying customer. There will be many layers between the person who wants something (Helen) and the person who can do something about it (a software developer or some other creative engineer who knows how things work).
The ‘Order-to-Cash‘ lifecycle is a great place for organisations to start when examining their focus. It exists for most (if not all) profit making enterprises on earth. It might look different in different industries and organisations, but at the highest abstraction everyone has one. Think Amazon and buying a book. Think ordering broadband. Think getting a new credit card (maybe the cash is going in the opposite direction for this one). All of these will have many different computer systems supporting the process. That could be the telephones, the e-mail, a website, the Customer Relationship Management system, the Billing Engine, the Workflow Engine, the Service Management systems, the Inventory Control systems. All of them will have a part to play in any fulfillment journey. For some forward thinking companies this might also include an interaction on facebook. Another one through twitter. These all play a part on the experience of interacting with the company. Each interaction gives us an opportunity to delight or disappoint. From a customer’s perspective, if one of these elements is not functioning then it isn’t working. It doesn’t matter if our CRM system has a 99% Service Level Guarantee from supplier X if the billing engine can’t allow us to complete an order. The customer doesn’t care about our CRM or our billing engine. If the Website is down, the service is down. It doesn’t matter if we cannot complete an order because of an out-of-memory error within our workflow engine that passes jobs and tasks around our enterprise. The customer just doesn’t care.
If every system has a target of 99% uptime and there are 10 systems in a customer journey then the actual uptime ‘target’ is now less than 90%. 1 in 10 times a customer might come along and something not be right. That is a big deal. Imagine now 20 systems. We have sub-optimised the whole system from the customer perspective, but we’ve probably made sensible organisational design decisions and the targets we’ve given our staff are probably okay, right? Wrong.
This becomes worse when we consider how my wife’s improvement idea might make its way into the future service. This is the intersection between the Order-to-Cash processes and the Concept-to-Market process. If each system has a queue of work that they are crunching through in some arbitrary order, or if a critical transformation project is hogging all of the delivery capacity of our business, then it might take years for any idea to filter through our Concept-to-Market process to be implemented. We might be slowly losing our customers because we are focusing on our own internal transformations. Our functional decomposition seemed a good idea to group people together into logical departments of like-minded people who all have the same goals of CRM or Billing, but they do make our ability to respond to the people who make us money (customers) in a really terrible way.
The concepts behind Lean IT teaches us to think differently. We need to focus on the Value for our customers. We need to focus on the Flow of our improvements and new features of their service, and how we interact with our customers to find out how we are doing. And we need to focus on the quality that they receive from our service. Every IT interaction is a Moment of Truth.
I know we need to consider our IT strategy in terms of how we might share data across different products and services, and how we might re-use capabilities in order to help us launch future products more quickly, but this does not necessarily mean we need to bring everyone together into functional silos. The customer experience is what attracts our paying customers. It is what will keep our paying customers. It is also, if we don’t get it right, the reason why people will leave.
We need to get the tension right between the customer experience and the architectural purity of our systems and organisational design.
Our first goal is to look through the eyes of the people that create value, and then figure out the grouping, management and scaling problems that all enterprises have. We need to encourage customer perspective in every job.