Latest News

Ovum claims it’s too late for ‘lean’ manufacturing processes

According to global advisory and consulting firm Ovum, many organisations that are looking to process improvement methods in the current economic environment are too late.

While commonly used approaches such as Agile and Lean can reduce waste in IT systems and software development, they don’t offer the rapid efficiency gains that CFOs are increasingly demanding of CIOs, Ovum claims.

According to Ovum, this is because their implementation takes too long and is too resource-intensive for an organisation that’s currently reviewing its IT processes.

“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,” said Ovum IT Services senior analyst and process improvement specialist, Dr Alexander Simkin.

“What they don’t realise is that becoming Agile or Lean takes time and requires major change management. 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.”

Organisations that already have an established process improvement programme aimed at waste reduction in IT have a competitive advantage in the current economic situation, says Ovum.

However, when the economy eventually improves, Ovum suggests that 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,” said Simkin.

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, Ovum claims.

These methods provide CIOs with evidence to C-level colleagues and other stakeholders that investments in process improvements are providing returns.

Two sectors in which IT service contractors typically have to certify the maturity of their processes are defence and healthcare — especially in the US, the company said.

“Defence and healthcare have been relatively unscathed by the recession, so being able to bid for contracts in those sectors is increasingly important. Hence some of the extra attention that audit methods are currently receiving,” Simkin said.

Send this to a friend