By Steve Ranger, 22 July 2009 12:28
NEWS
CIOs hoping to slash their costs by adopting process improvement methods such as 'Lean' and 'Agile' may find they are already too late to generate the savings they hope for.
Such development approaches can reduce waste in IT systems and software development but they won't offer the rapid efficiency gains that finance directors are demanding from their CIOs because the implementation takes too long and is too resource-intensive, according to analyst house Ovum.
With IT budgets tight this year CIOs are looking for any opportunities to cut costs. While there are many different Agile development methods, most emphasise reduced upfront planning, small teams and projects broken up into smaller elements in order to speed up development. Lean methodologies, in contrast, are aimed at identifying and eliminating any inefficiencies and waste in projects.
"A lot of CFOs have heard that process improvement can cut the cost of IT processes, and in the current economic environment, that's very appealing," Dr Alexander Simkin, senior analyst and process improvement specialist in Ovum's IT Services practice, said in a statement.
But what they don't realise is becoming Agile or Lean takes time and requires major change management, according to Simkin.
"If you're starting from a base of traditional processes, these approaches won't provide rapid cost reduction. The efficiency of your processes may even get worse before they get better. CFOs need to know that and it's a CIO's job to educate them," he added.
Organisations that already have an established process improvement programme aimed at waste reduction in IT have a competitive advantage in the current economic situation.
But when the economy eventually improves, the cost-cutting agenda will wane and other priorities such as improving the quality of processes will come to the fore.
"Organisations that are only now seeking to improve their IT processes should consider methods that are optimum now and beyond the recession, that is, that both cut costs and improve quality. Lean Six Sigma is a good choice," Simkin said.
Methods that audit and certify the maturity of an organisation's IT processes such as the Capability Maturity Model Interactive (CMMI) and the International Organisation for Standardisation's ISO 20000 are also attracting renewed interest in the recession, said Ovum, because they provide CIOs with evidence to C-level colleagues that investments in process improvements are providing returns.
Comments
There are 6 comments. Join the discussion
1. Neil Pearce
Agree that Lean Six Sigma is the way to go. However I see no reason why making processes lean has to take huge amounts of time and change. Particularly at the beginning of the journey you can find opportunities to make improvements in days that can save significant amounts of money without a big investment. This has certainly been my experience.
2. Andreas Rindler
This article seems a bit too much FUD (fear, uncertainty, doubt) about what is a proven approach that has worked many times. We have recently completed a 6 month assignment for an agile transformation with a large media client. Driving changes in people, process and technology we were able to reduce defect rates by more than 70% within 2 releases (one per month); and improve performance by more than 25% and reprioritise delivery of new functionality according to business impact with a bottom line impact within 6 releases. This is one case study out of many.
3. Dinesh
Business Process Management(BPM) is one of the right things that will work very well in this economic climate, where it gives you a perfect process governance by introducing real agility and flexibility to business processes. Not to say about ROI it is much quicker and time implement is less .
4. Grant (PG) Rule
While lean is about removing waste, it is more about effective delivery of value. Identifying value and removing waste can start immediately, and deliver immediate benefits in reduced costs and improved customer experience. There is no real need for massive initial time-consuming preparation. In fact, such an approach is itself antithetical to lean systems thinking.
Any CIO or CFO that would like to discuss the opportunity to improve effectiveness & the value delivered, while reducing waste (cost) & duration is welcome to contact me for a chat. Whether in the context of an in-house IT group or an outsourced supplier.
Best regards,
Grant (PG) Rule
MD, Software Measurement Services Ltd.
5. Richard Parker
Lean Six Sigma (LSS) combines the best of both worlds and as in any programme, there is the low hanging fruit and the high stuff. With LSS its best to get some 'quick wins' as this proves the process to the wider team so that they can maintain the effort to achieve even greater savings and process improvements.
6. drew stephenson
There do seem to be an awful lot of people who don't understand the difference between Lean and Agile, similarly there are an awful lot of management types who see these as must-do techniques to cut costs.
In reality they are tools to be used as appropriate to the business need and the first task when considering either of these approaches is making sure that everyone knows exactly what they're talking about.