IT operations – Is it really a “Pipe” dream? – An integrated approach To Theory of constraints

In today’s dynamic world, competition, global regulations, and corporate vigilance have forced leaders to think outside the box. Corporate performance must be monitored and managed in order to improve cost efficiency, to ensure productivity gains, and to increase the value of the company. This particular mandate has led executives to investigate a variety of frameworks to explore the benefits of planning, resulting in improved visibility, speed, accuracy, and better information.
In order to achieve strong results, executives must adopt a strategy or framework. The enterprise must understand corporate management, why it is important, and how to make it work in the real world. Irrespective of their choice of framework, enterprise leaders have to take a systematic approach to managing the enterprise’s infrastructure and resources in order to achieve its objectives. This puts a lot of pressure on IT organizations, particularly on CIO to deliver more and to meet business objectives amidst cost-cutting measures, the streamlining of processes, and other challenges.
“In the end, all business operations can be reduced to three words: people, product and profits. Unless you’ve got a good team, you can’t do much with the other two” (Lee Iacocca). As per this, quote, in order to meet business-level objectives and service-level agreements, IT executives are forced to invest heavily in resources, tools and people in order to respond to the pressure. Without the support of IT, multiple other departments cannot meet their objectives.
In his book The Goal, Eli Goldratt presented the Theory of Constraints (TOC introducing primary measurements for the analysis of systems based on productivity and, ultimately, profit. The core of this concept is that every system or process has at least one constraint or bottleneck, and that the identification of this constraint should be the focus of any improvement activity. The principle advocates that organizations should take a three-dimensional view of three core business concepts: Inventory, Operating Expense, and Throughput. To relate these operational terms to IT, one needs to expand their definitions beyond the traditional concepts. By taking a multi-dimensional view, which includes business metrics and user experience measurements, along with technology or operations metrics, it is possible to measure and effectively prioritize the improvement of IT service delivery from the user’s perspective. In short, a system or process cannot be more efficient than its limiting factor.
Even though I don’t agree with Donald Rumsfeld (Ex-US Secretary of Defense) in general, I do agree with this quote in regard to operations: “Think ahead. Don’t let day-to-day operations drive out planning.” In reality, IT organizations spend untold hours every year splicing together reports from disparate systems in order to develop a cohesive report on critical aspects of IT operations. No one likes performing these tasks, and even once they’re done there can be doubt regarding the accuracy of the information.
In order to break free from the traditional approach to IT operations and cost control, IT professionals must redefine some processes and collect sufficient information in order to help ensure continuous IT infrastructure optimization, reliability, and performance. The deepening of global trade, capital, and information flows, enabled by a “flat world,” is changing where and how business value is created. This is driven by the core principle of integration. When everything is connected, work flows. Where it flows and how it is integrated is shaped by three forces:
  1. Economics – profit potential, including labor markets.
  2. Talent – access to expertise, ideas, and innovation.
  3. Open trade – the degree of openness of systems, standards, and approaches.
In order to apply the design principles we need to challenge the traditional thought. The principal characteristics are as follows that falls under IT operations as well:
§         Control
§         Customer satisfaction
§         Simplicity
§         Participation
§         Prompt action
Robust IT processes demonstrate these characteristics, achieved by applying general process design principles. The challenge is in determining when the principles are relevant, and the level of investment required applying the principles. It must also be borne in mind that when the IT process is redesigned and boundaries are crossed, the general tendency is to lose sight of time, information, money, customer focus, and accuracy. Traditional thinking often impedes companies from making the leap to becoming world class in the future. When faced with resistance due to traditional thinking, it is important to ask why after each of the principles above. This will help to eliminate traditional concerns rooted in an old paradigm. The five basic design principles in traditional operations can be transferred into IT operations in order to enhance service delivery:
  1. Waste Elimination
  2. Organize around outcomes
  3. Demand-pull flow
  4. Visual controls
  5. Business integration
The design principles have evolved as a way to improve the supply chain by disposing of the waste that is inherent in any process. A combination of the same principles needs to be applied within the IT process framework to address the seven different types of waste found in most processes:
  1. Motion – Physical movements made by people or code development across regions in completing a task or travel
  2. Waiting Time – any situation where people, products, or information is waiting before the next step in the process can take place
  3. Overproduction – Scope Creep - excess of customer requirements
  4. Processing Time –Project implementation time, regardless of whether value is added or not
  5. Defects – refers to excess raw materials, work in progress, finished goods, or information that is held “in inventory”
  6. Inventory (failure cost) – the time and expense associated with quality problems and failure prevention
  7. Transportation – the movement of goods/materials, paperwork, information, or supplies
Motion and waiting time are affected by people; overproduction is a function of people and process; processing time (efficiency) is a function of the process; defects and inventory relate to the process and the service; and transportation relates to the service delivery. A few examples of IT waste based on these principles are as follows: 
Type of Waste
Support functions: Preparing extra reports / Reports not acted upon or even read / Multiple copies in data storage / Duplication of effort/reports
Processing once each month instead of as the work comes in / Delayed work due to lack of communication from another internal group
Extra steps / More integration points/ Network Traffic
Extra steps in the process / Moving data from place to place/ Multiple Hops
Data redundancy/ Duplication of code
Late requirements / Too many bugs
Over processing
Excessive sign-offs / Reports that contain more information than the customer wants or needs
Changing the way in which people behave or view the business need will help avoid unnecessary motion, waiting time, and overproduction. Improving the process could address overproduction, processing time, inventory levels, and defect levels. Improving the service itself can help reduce inventory, defects, and transportation. As organizations move towards integrated IT operations, there are a number of key areas that should be considered in order to leverage assets and optimally assemble capabilities, like the make-or-buy approach, integrated functions, logistics responsiveness, support delivery location, project portfolio, and standardized process with more focus on consistency to gain trust and develop a robust relationship with the business customers.
An operations strategy is as much a decision about what competitive advantages the company won’t pursue as it is about what competitive advantages they will pursue. In order to be successful, the organization needs a set of defined IT operational strategies, as follows:
  1. Operations strategy should be explicit and be flexible
  2. Operational strengths should not be compromised by “shoring up weaknesses”
  3. IT experts endeavor has to achieve “local excellence” that is congruent with the overall business strategy
  4. Adoption of appropriate “best practices” to be responsive and to find quick resolutions
  5. Ability to adapt “successful operations strategies” to changing competitive environments
  6. Not trying to be all things to all people.
Mr. Ganesh Seetharaman is Head of IT Group Services heading Enterprise Architecture, Project Delivery and Business systems focus area for an Insurance group in U.K. His diverse background experience (16 years) spans planning and executing business and IT strategies across multiple industries. Mr. Ganesh's main area of expertise is analyzing business operations and recommending leading edge technology solutions for improving processes, enhancing productivity and reducing expenditure. He has earned a postgraduate degree in Information Sciences from the Kennedy Western University, specializing in Data management, Operations and Strategy that include Information Architecture, Usability Studies, System Design, and planning. 

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