Sustainable Operational Excellence

In the current industry scenario Superior performance, differentiated products & services, and focusing in a niche area, are the three key parameters that help a company grow. The concept of Operational Excellence addresses the first two aspects.

The Wikipedia defines Operational Excellence as a philosophy of leadership, teamwork and problem solving resulting in continuous improvement throughout the organization by focusing on the needs of the customer, empowering employees, and optimizing existing activities in the process. From a practical perspective Operational Excellence involves continuous improvement and demonstrated, quantifiable, sustained improvement in all areas and functions of work in an  organization leading to continuous improvement in all business parameters, organization growth, customer delight and best in class benchmarking.

As per the business excellence models, Operational excellence is typically demonstrated by results that reflect (1) sustained improvement over time, (2) improvement in all areas of importance (both performance areas and segments within each area), and (3) performance at a level that is at, or superior to, ‘best in class’ organizations.

Traditionally IT companies, have in the initial stages focused on process improvement initiatives in specific areas, leading to silos of improvement not integrated with other functions and hence there is no sustainability. However several organizations have transcended that stage and have started adopting integrated approaches that include all functions and are part of the management strategy for organization growth and development. This means that there are initiatives that lead to continuous, sustained improvement in processes and results across functions. In this issue of CSI Communications we feature articles that depict some concepts and initiatives and the associated benefits and results that organizations have seen. Operational excellence is built on a model that incorporates the following key features – ƒ Process driven approach where processes are well defined and adhered to and are integrated for cross-functional efficiencies.

Operations are standardized and well controlled ƒƒ Effective use of automation and proper tools for all areas of work. Management and leadership system provides good governance and focuses on facilitating ‘faster and better’ work practices, ensuring standardization and process discipline, and building a culture of excellence ƒƒ Data driven approach to decision making, use of key performance indicators, metrics and analysis of data for decision making. The article Information Technology Decisions- Practitioner’s Perspectives on Sustaining Operational Innovation highlights some aspects.

ƒƒA culture that rewards waste elimination and increased efficiency, motivates and encourages excellence, ensures discipline and decisiveness Several improvement methods, models, frameworks are currently in use in organizations that have taken up operations excellence initiatives. In the IT organization context these include ISO 9001 that address overall organization processes; ISO 27001 to address Information Security Management; CMMI to address software development and project management aspects; People CMM for improving the people processes; Agile methodologies, XP, Scrum and others to address IT Engineering; ITIL to address IT Service Management; Six Sigma, Kaizen, TOC and Lean for focused improvements in specific areas; Business excellence models like the RBNQA and Rajiv Gandhi Award for overall enterprise process improvement, TRIZ for encouraging innovation. Operational Excellence requires combining Process excellence tools and methodologies, use of metrics, a leadership system, and building a culture of excellence to achieve Operations excellence. Any operations excellence initiative normally includes well coordinated improvement programs in all areas and functions in the organization. Care has to be taken to ensure that such improvements are well integrated and are designed to ensure continuous improvement. Improvement of processes; introduction of automation, tools and techniques; building a culture that supports excellence should all go hand in hand.

Several organizations have done this successfully. The article Creating and Sustaining process excellence highlights some initiatives. Organizations have initiated people development processes as part of the operational excellence program. The article Operational Excellence through effective people practices highlights some initiatives. Organizations have institutionalized several best practices that drive overall operational excellence in an organization. Examples of some best practices that have resulted in improvement in On time delivery index, Project Health, reduction in defects, improved quality are detailed in the article titled Key Best practices @ Polaris Software driving Process Excellence.

These initiatives/programs follow the time tested method –

• Define what you want to do and strategize
• Measure where you are and what level of improvements you desire to achieve
• Analyze processes, systems, quality, employees, culture etc.
• Improve, optimize, transform through business re-engineering
• Control and ensure continuous improvement.
• The benefits of operational excellence include.
• Business benefits – increased revenue, increased profits, decreased cost of operation, increased productivity
• Improvement in ability to solve problems
• Improved customer experience
• Consistently exceeding customer expectations and benefits
• Increased instances of doing it right the first time
• Improved data collection and analysis techniques

Cranfield University, University of Cambridge and others have come up with a course on ‘Operational excellence’ that address the need of developing managers in manufacturing industry and several leading organizations like Toyota have contributed in designing this course. It would be truly worthwhile for academia and IT industry in India to get together to design a similar course addressing the specific needs of the IT industry.

As already mentioned above some key aspects of sustaining Operational excellence have been brought out in the following articles in this issue –ƒƒCreating and Sustaining process excellence by Mr. Kannan Veeraraghavan, Vice President, Qualityhead, Quality group and Mrs. Sridevi Sundararajan, Senior manager, Quality of HCL Technologies highlights some initiatives taken by their organization. ƒƒ Operational Excellence through effective people practices by Sankaran Venkataramani, Associate Director- KPMG highlights some initiatives relating to people development taken by organizations.ƒƒKey Best practices @ Polaris Software driving Process Excellence by Quality team, Polaris Software Labs highlights some best practices that drive operational excellence in their organization. Information Technology Decisions– Practitioner’s Perspectives on Sustaining Operational Innovation by Navneet Bhushan, Craffitti.com highlights some aspects of data driven approach to decision making.

Article was published in CSI India Newsletter - Jan 2010.

To access the newsletter, please click the link below.

http://www.csi-india.org/c/document_library/get_file?folderId=484168&name=DLFE-2840.pdf

Authors:

This article is a work product of combined effort by Ms. Sulochana Ganesan* and Chandrakumar Raman**

* A2C, Regal Palm Gardens, 10, Velachery Tambaram Main Road, Chennai - 600 042.Email: sulochana.ganesan@gmail.com

** Programme Manager - Quality, HP Enterprise Services, CITIUS-A, Olympia Technology Park,#1, SIDCO Industrial Estate, Guindy Chennai 600 032. Email: chandrakumar.r@hp.com

Why is Lean Principles gaining importance in Software industry?

The concept of Lean originated from the manufacturing industry as it focused on the theme of efficiency based on optimizing work flow. Lean principles evolved from Japanese manufacturing industry and the term was first coined by John Krafcik in a Fall 1988 article, "Triumph of the Lean Production System," published in the Sloan Management Review and based on his master's thesis at the MIT Sloan School of Management. Krafcik had been a quality engineer in the Toyota-GM NUMMI joint venture in California before coming to MIT for MBA studies. Krafcik's research was continued by the International Motor Vehicle Program (IMVP) at MIT, which produced the international best-seller book coauthored by Jim Womack, Daniel Jones, and Daniel Roos called The Machine That Changed the World.

The fundamental focus of Lean in working from the point of view of Customer Value has already shown very encouraging results. Starting from cycle time reduction to throughput improvement by focusing on eliminating/minimizing non-value adding activities, many software organizations have already crafted a software project planning and delivery process based only on customer value. These operational principles may not exactly match Toyata’s Lean success now, but are derived from successful and sometimes unsuccessful attempts in trying to apply them in the software world. The note describes these principles in brief and how these lenses have already yielded tools and techniques to improve operational efficiency manifold!

Principles of Lean

As given by the Lean organization, in simple terms for implementing the lean principles are as follows and depicted in fig 1.0:

1. Identify the value which a customer would derive out of the product or service.

2. Identify all the steps in the value stream for that product or service product, eliminating whenever

possible those steps that do not create value.

3. Ensure that the process flow is kept simple so that the work flow would be seamless.

4. As flow is introduced, let customers pull value from the next upstream activity.

5. As value is specified, value streams are identified, wasted steps are removed, and flow and pull are introduced, begin the process again and continue it until a state of perfection is reached in which perfect value is created with no waste.

Some of the important tenets used in Lean include
• Value stream mapping
• Pull
• 5 S
• Visual control
• Takt Analysis
• JIT
• Concurrent Engineering,
• Poka Yoke (Mistake proofing )

Lean principles primarily focus on eliminating 3Ms – Muda (Eliminate waste), Muri (Reduce Variability) and Mura (Overburden).

Mura

Mura, oftentimes referred to as unevenness, occurs whenever there is an interruption in the smooth and consistent flow of materials or information. In his book Gemba Kaizen, A Common Sense Approach to Management (McGraw-Hill, 1997), Masaaki Imai defines mura as "irregularity or variability." While muda is easy to see in the workplace, mura is much more difficult and can be seen only by following the rule of "genchi genbutsu," or "go and experience." In order to see the waste of mura or unevenness you must go to the actual place where the work or activity is occurring and experience the conditions for yourself. If you see one or more employees working very hard while others are not, you have mura. There is an imbalance or unevenness in the work that is causing one group of people - or machines - to have to work at a different pace than another. Oftentimes this happens when a lesser experienced employee is assigned a position for which he or she is inadequately prepared. This lack of preparation is entirely due to management's failure to provide proper instruction and skills development for that person. When this person's output takes more time than another's, the entire process inevitably slows down to the pace of the lesser experienced person.

Muri

Muri is defined by Imai as "strain or difficulty." Muri occurs whenever people or equipment are being overburdened or overstressed. Take the example of the lesser experienced worker; not only is he or she unable to keep up with the flow of work (mura) but he or she is probably stressing over that very fact (muri) and is more likely to become injured or make a mistake. None of these outcomes are acceptable, yet we set the stage for just such an occurrence each and every day that we assign people to tasks or jobs that they have not been adequately prepared to perform. They stress out when they fall behind, we stress out because they are falling behind, and the vicious circle goes round and round until something (or someone) breaks.

In conclusion proper management, matching the right skill set to job description and skill development are the three essential things that are required to bring down Mura and eliminate Muri.

Article was published in ICTACT's ICT Connect magazine in Jul 2011.

To access the newsletter, please click the link below.

http://www.ictact.in/upload/Images/ictconnect_issue4.pdf

My interview in Business Line - '60 Seconds Chief'

I had an opportunity to give an interview for the '60 Seconds Chief' feature! in Business line, which has been published on 13th June 2011.