Implement a Methodology for Constant Improvement
Guiding pillar No. 3: Implement a methodology for constant improvement
Markets were created around software focused on measuring cost and quality, aligning resources, empowering workers and measuring team performance for manufacturing or corporations as a whole. IT needs data-driven processes and systems for intelligently and continuously reducing waste and increasing value. Lean IT will only meet its potential if there is a deep understanding of cost drivers, value chain and quality metrics, as well as a grassroots empowerment to act on that data.
Guiding pillar No. 4: Establish financial agility
A key component of lean is just-in-time (JIT) or flow. In the manufacturing industry, the net outcome is that "the factory" can adjust to business needs quickly in order to meet the changing needs of the customer. A lean IT department will be able to react to business fluctuations by reducing spending in down cycles, quickly ramping up in up cycles and rolling out new services quickly, as needed.
This requires a deep understanding of the cost structure, how those costs relate to business services and how those services are susceptible to business fluctuations. Such costs should be also broken down by fixed or variable, direct or indirect and CAPEX or OPEX. A lean, proactive IT department should plan for normal business cycle variances (that is, "What if business is down 10 percent this year? How is that going to affect IT and how can IT react? What if business grows by 15 percent over plan?").
Understanding these business cycle variances allows a company to achieve financial agility. IT leaders should create teams, processes and development methodologies that will enable IT to make quick shifts or improvements to service-or to roll out new services-in a time frame that optimizes value for the organization.
Achieving lean IT in three steps
To achieve lean IT, companies must focus on three key objectives: become a world-class service provider to the business, establish ongoing IT/business dialogue and optimize IT decisions. Let's take a closer look at each step: