How 3 Visionary IT Executives Maximize Value and Minimize Waste

When the going gets tough, the tough get lean.

CIOs find themselves in a tough spot. Business priorities are shifting faster and more radically than ever before. Budgets have been cut, but the expectations for service delivery remain constant and astoundingly high. Never mind the complexity of IT infrastructure, the range of security threats IT must address and the ever-growing web of compliance mandates IT must support. By applying lean thinking to IT, CIOs can identify opportunities to reduce waste, increase efficiencies and improve the customer experience. They can more effectively manage complexity and risk. They can maximize the value IT delivers. On the following pages, senior executives from TransUnion, Tesco and Fujitsu Services discuss their experiences and strategies for maximizing value and minimizing waste.

Q A
with:
John Parkinson
Chief TeChnology offiCer, TransUnion

Mike yorwerth

groUP TeChnology and arChiTeCTUre direCTor, TesCo

Marc silvester

Chief TeChnology offiCer, fUJiTsU serviCes

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Masters of Lean IT

John Parkinson
Chief Technology officer, TransUnion

Career Highlights
Founder of ParkWood Advisors LLC Chief technologist Capgeminis Americas Region Senior partner Ernst & Young LLP Has written or edited 5 books on information systems development Named one of Computerworlds top 100 leaders in IT in 2005 Named one of worlds 25 most influential consultants in 2003

Personal Interests
Wine and food. Has eaten dinner in over 100 countries Reading almost anything, but especially Science Fiction and Crime Fiction Writing the Strong Signals column in CIO Insight Keeping up with the latest in computing and A/V technology

TransUnion is a global leader in credit and information management, helping companies better manage risk and enabling consumers to better understand and manage credit. TransUnion serves 50,000 business customers on 5 continents and maintains credit histories on an estimated 500 million consumers around the globe.

Masters of Lean IT

Q A

Tell us about TransUnions efforts to improve its business and iT processes.

At TransUnion, IT is the business. We consider IT to be the operations side of TransUnions core business rather than a corporate support function. So IT is necessarily part of our business process improvement initiatives. We are currently embarking on a Lean Six Sigma process improvement initiative. Our goals are to reduce the cost of operations, improve availability, and improve our ability to deliver differentiated products to customers. From an IT standpoint, we plan to support these goals through better instrumentation of our technology, increased automation and standardization.

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how does your lean six sigma effort relate to the work youve done with iTil?

We consider ITIL the framework that describes what our processes should be and Lean Six Sigma is one set of tools we use to determine how well we are doing with those processes and how to improve them. Lean is about reducing cycle times and waste. Lean thinking tells us to look at how we are spending our product development time, how long it takes us to get a product to a customer and how we can take non-value added activity out of that cycle. The Six Sigma part simply says how we should be measuring appropriate parts of the process to figure out how were doing.

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What role does enterprise iT management play in making iT lean?

To reduce waste in our processes, its critical for us to have comprehensive and close to real-time information on whats going on. CAs enterprise IT management software gives us that visibility. For example, consider the process of provisioning a new server from the initial request to putting a new box in a rack, to powering it up, configuring it, connecting it to the network, connecting it to storage and bringing it into productive use. We provision new servers up to 300 times a year, so it is an important opportunity to increase efficiencies. When we started, this process would take us about 2 weeks. Our goal is to get that down to 4 hours. To achieve this goal, we have to look at where the delays are. All our server provisioning requests are tracked in our Service Desk, along with information about when work was assigned to a given staff member and how long it took to do the work. By looking at this data, we realized that the delays were occurring when the work was handed off between different teams. So we needed better scheduling and process visibility so resource pool managers can allocate people to the task in a more timely fashion.

Masters of Lean IT

In addition, each provisioned server is monitored by a network and systems management agent and automatically shows up as a configuration item in the CMDB. These discovery and reporting tools are essential to the process because they help us correlate the timelines and ensure provisioned assets have been properly configured. We could have cobbled together our own toolkit, but with one set of tools and a common reporting framework from CA weve been able to much more rapidly get all the information we need in an easily comprehensible and consistent form.

Q A

Why should companies focus on process improvement during times of economic turmoil?

As our new government likes to say a crisis is a terrible thing to waste. So, this is an opportunity to focus on the operational excellence side of the business. In good times, we tend to be very focused on growth and there is a natural tendency to not focus on the things that make it easy to operate efficiently. If revenue is what drives your objectives, you do things that help promote revenue but you might be causing incidental damage along the way with the things you are doing to support growth. In bad economic times, we have to start looking at how we can be more efficient and more effective. It is my belief and my experience that if youre smart during the bad times, you build cultural habits in your operations in IT that persist into the good times.

Q A

Whats next in your process improvement journey?

Our process improvement journey started several years ago when we implemented ITIL. Now, were going to be optimizing our processes using a Lean Six Sigma approach. Once we have the Lean Six Sigma practices deployed and have some greenbelts and blackbelts trained, well have the capability and the habit of continuous improvement. After that, our goal will be to become more dynamic. As we introduce new products to market, there is generally a cycle that they follow. A new product is deployed; it grows quickly when its new, then less quickly as it matures and its finally retired. The capacity demands on IT during this cycle vary considerably. We arent very good at responding to these changes in capacity demand we tend to focus on adding new capacity to accommodate new services without taking into account where other products are in their demand curve. Over time, we want to find a better way to sum all of the capacity for IT that these cycles demand and provision the least amount of assets required to run the business at that point in time. We believe that with this approach we can be 25 to 30 percent more efficient users of capital in about 5 years time.

Masters of Lean IT

To

reduce waste in our processes, its critical for us to have comprehensive and close to real-time information on whats going on. CAs enterprise IT management software gives us that visibility.
John Parkinson, Chief Technology Officer, TransUnion

Masters of Lean IT

Mike Yorwerth
group Technology and architecture director, Tesco

Career Highlights
15+ years in retail sector IT Responsible for enterprise architecture, information services and R&D Engineering degree from Cambridge

Personal Interests
Hill-walking with his family Cycling

Tesco is the worlds third largest grocery retailer with a presence in 13 markets. Tesco generates annual sales of 51.8 billion, operates more than 3700 stores and employs more than 440,000 people worldwide. Tesco operates in the US under the brand Fresh & Easy.

Masters of Lean IT

Q A

Tell us about the Tesco operating Model and how it has helped streamline business operations?

We have defined a standard Operating Model for the business, that encompasses business capabilities, processes and IT systems. The Tesco Operating Model defines and documents processes from building and maintaining stores to forecasting and ordering stock to front-end and customer service. This is driving improvements in our operations worldwide. The systems are underpinned by our IT Operations Framework, which describes standard processes for operating and supporting IT across the business, based on ITIL best practices. We have also standardized on a core set of technology and specified precisely how to deploy this technology across the world. When we enter new markets for instance in the US, a market that we entered in late 2007 under the Fresh & Easy brand we deploy the Tesco Operating Model from the get-go. But its also critical to our strategy to introduce the model to our more established markets and to routinely look at ways we can further increase efficiencies. By continually improving our processes and introducing the Tesco Operating Model to additional countries, we try to take a couple hundred million pounds worth of costs off the bottom line each year.

Q A

how has iT helped improve the efficiency of Tescos supply chain?

The ultimate goal for our supply chain is one touch replenishment. That is, when new products are delivered, only one person will touch that stock as it goes from truck to shelf. We want to order precisely the right amount so we never quite sell out of product, but we dont have crates of inventory sitting in a warehouse waiting to be put on the shelf. IT is absolutely critical in helping us increase the efficiency of our supply chain and weve already seen great progress. In the past we might have had as much as 40 days of inventory on hand. Today, we are close to our target of stocking inventory levels for 7 days, which is consistent with industry best practices. Similarly, our goal is that any given product we sell will be available in stores 98% of the time. In some countries product availability has historically been around 90%. Closing that gap will both improve the shoppers experience and allow us to sell more product. To achieve these goals, weve enabled a completely integrated supply chain and a sales-based ordering process. Quantities of products sold are tracked centrally throughout the day. Our systems forecast the right amount of product to reorder and communicate that information to our partners so that the next morning there is exactly the right amount of product available to re-stock the shelves. Weve built a very tight, real-time system. IT management plays an important role here by ensuring that the integrated infrastructure connecting Tesco to our distribution partners is always running smoothly.

Masters of Lean IT

Q A

how does iT help make Tesco a greener company?

When thinking green, people in IT tend to focus on what to do to get its own house in order. While thats important, its even more important to look at the broader organization and how IT can help. At Tesco, IT is only responsible for 4% of our overall carbon footprint. So we focus a lot of our effort on reducing the 96% caused by the rest of the business. Tesco is committed to being on the leading edge of sustainability. We have set a target of reducing our total carbon footprint by 50% by 2020. I can anticipate reducing our carbon footprint between 10 to 20% through the practical application of IT management software and processes. About 80% of Tescos carbon footprint is caused by energy usage and refrigerant in the stores. All of the operational elements (refrigerators, HVAC units, lighting) are becoming IP-enabled, so we will be able to inventory and manage these systems in the same way we manage IT infrastructure today. If we see a spike in energy usage, it might indicate that a refrigerator has stopped working or is running out of refrigerant. Performance of each element can be monitored remotely, alerts can automatically be sent if thresholds are crossed and store personnel can be notified if they need to take action.

Q A

To what extent have your supply chain process improvements supported your green goals?
Some of the supply chain efficiencies weve put in place have absolutely contributed to our goals to reduce the impact we have on the environment.

One key area of our business is the home delivery of products ordered at Tesco.com. We have introduced integrated telematics, route scheduling and route optimization to make this part of our business much more efficient. Telematics monitor driving practices and might alert us, for instance to whether a driver is frequently braking too hard and might need additional training on fuel-efficient driving habits. Route scheduling and route optimization ensure our vehicles are as full as possible and take the most efficient paths possible to distribute their cargo. Weve realized on average a 10 20% reduction in fuel usage because of these new processes. Additionally, our sophisticated forecasting mechanisms and our ability to share information with partners more easily, enables us to ensure our suppliers dont over-produce product and waste raw materials.

Masters of Lean IT

Our

goal is that any given product we sell will be available in stores 98% of the time.
In some countries product availability has historically been around 90%. Closing that gap will both improve the shoppers experience and allow us to sell more product.
Mike Yorwerth, Group Technology and Architecture Director, Tesco

Q A

With Tescos emphasis on efficiency, is innovation also important? if so, how do you manage innovation?

Practical innovation continues to be very important to Tesco. IT can play an important role in enabling innovation, especially if you embrace some of the newer Web 2.0 collaboration tools that are available. At Tesco, weve used forum-based collaboration technology to take innovation out of the hands of the few and into the hands of the many. We run innovation competitions wherein we pose real business problems to a broad community of individuals from different geographies and organizational roles. These competitions have yielded some great ideas that we are using to further our competitive edge.

Masters of Lean IT

Marc Silvester
Chief Technology officer, fujitsu services

Career Highlights
18 years at Fujitsu Services, began career as a software engineer While at Fujitsu, has served as Director of Partner Technologies and Head of Technical Programmes for the Microsoft Alliance Pure and applied computer science degree from Staffordshire University

Personal Interests
Cars the faster the better Photography and art Gaming with his two sons

Fujitsu is a leading provider of IT-based business solutions for the global marketplace. With 160,000 employees, Fujitsu supports customers in 70 countries. Headquartered in Tokyo, Fujitsu Limited reported consolidated revenues of 5.3 trillion yen (US $53 billion) for the fiscal year ended March 31, 2008.

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Q A

What is fujitsus approach to making iT leaner?

Fujitsu has invested heavily over the last 7 years in TRIOLE, which is a methodology supported by tools and techniques for creating industrialized IT infrastructures and services; making them more efficient, more reliable, quicker to implement and easier to change. We use experience learned from industries that have gone through the industrialization curve, apply trusted mainframe disciplines (which many have forgotten about), and use lean approaches to engineer out defects and waste before delivery. Supplemental to this is something we call Sense and Respond, an approach which focuses on how operational dynamics can reduce costs, increase user satisfaction, and create a mechanism for continual improvement. We believe transforming Good Service into Great Service involves focusing on customer value and satisfaction (or sensing what matters to customers), and unlocking the potential of the staff and management systems within the delivery organisation to do the right things (responding). This is very different than a traditional approach where the result can be to keep doing the wrong things albeit in a better and more efficient way. At the heart of our approach is of course a desire to make IT services leaner by eliminating waste and unnecessary work. But also essential is a focus on the quality and value of IT services designing IT services that are sustainable or fit for purpose.

Q A

What are the leading indicators of waste in iT? how do you know waste when you see it?

Across the production line of IT services there are massive amounts of waste from their initial design to operations. The classic approach to managing this waste has been to build a technology or process-based solution from scratch; that is, to apply new thinking to a problem that has probably been addressed before. This leads to a plethora of management systems, and associated eco-systems to support them. All this introduces very high levels of inefficiency and overhead to a business or more waste. Thinking practically, the areas where I have seen the most benefit in applying lean principles to IT are those processes that are high-volume, resource intensive and repetitive areas such as service desks, call centers, change requests, desktop support, provisioning. Look at the core processes that happen day in and day out and identify anything that doesnt add value to your customers (waste) within those processes. Focus on the inter-relationships between groups and the dependencies. Look for places where there is a lot of manual intervention and opportunities to automate process steps and workflow. By identifying the waste in these areas, you can realize great benefits very quickly.

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Q A

What are some of the benefits an organization can gain from a lean transformation?

Some of the benefits Ive seen from lean IT initiatives include reducing unnecessary work by identifying the root cause of problems and putting in place permanent fixes to common issues. Also, by ensuring that service delivery processes are optimized to effectively and efficiently resolve issues, you can increase business productivity and reduce end-user frustration. An example of this would be reducing the time it takes to enable a new service for a user. Additionally, a lean IT initiative helps foster a culture of continuous service improvement, where people become adept at recognizing and removing waste. What Ive found is that when you start to apply lean to IT processes, you very quickly start touching upon the broader business processes themselves, so the ultimate benefits of this exercise become much farther reaching than you initially expected. For instance, you might start out by trying to optimize your backup and recovery processes. This exercise could drive questions and answers around how the business itself recovers from a disaster and what the most essential business processes are in terms of customer and financial impact.

Q A

What are the trends that will drive the need for lean thinking in iT?

I see a number of business dynamics and technology trends that will drive the need for lean transformations. First, organizations are going to consider more seriously what their core processes are and manage them accordingly. Processes that drive revenue and competitive differentiation will continue to be supported, delivered and managed in-house. Services that are not essential to a companys core business or are inherently wasteful are going to be moved to the cloud or be outsourced. Solution providers like Fujitsu and CA are going to have to offer tools and services that support both models, especially those that can adapt to supporting a disaggregated channel of process and functionality, information and storage. Second, IT management is going to become far more dynamic. One example is information security, which has to evolve from managing individual assets to securing end-to-end services. The traditional asset-based approach has a major cost implication and cant scale to keep up with the pace of changes being made to the infrastructure. The third area of influence I see is the need to focus on what makes a difference to business and its customers. At the heart of Lean thinking is the need to create more value for the customer which often comes through innovation. This doesnt mean innovation in IT for the sake of it, but rather to drive business innovation. More business processes will end up encapsulated within IT, with higher expectations on the IT function to lead the business recovery charge. How we manage these processes, together with how we harness people and talent will radically change over the next 3-5 years.

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At

the heart of our approach is a desire to make IT services leaner by eliminating waste and unnecessary work.
But also essential is a focus on the quality and value of IT services designing IT services that are sustainable or fit for purpose.
Marc Silvester, Chief Technology Officer, Fujitsu Services

Q A

how has iT management and your partnership with Ca helped fujitsu deliver value-based services to your customers more efficiently?
Shared services are a big enabler for us to provide best in class solutions to our customer base, while helping them control IT costs.

Our service desk is designed as a shared service and we have successfully implemented it for a number of customers with differing geographic footprints and across a number of market sectors. Our strong relationship with CA has helped us develop and deliver our global service through the use of their tools to support our vision of end-to-end user services. In addition, our TRIOLE programme, Sense and Respond and general approach to continuous improvement allows us to greatly reduce the effort and expense involved in bidding, solution design, transition/transformation and delivery, all of which ultimately benefit the cost saving aspirations of our customer base.

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Survive and Thrive

Tough times end. Winners prepare to thrive in up-times even as they intelligently survive downturns. Lean IT provides a recipe for survival that simultaneously lays the groundwork for growth. Said another way, Lean IT is as much or more about thriving as it is about surviving. IT leaders from TransUnion, Tesco and Fujitsu Services share their lean IT strategies, results and recommendations.

CA (NYSE: CA), one of the worlds leading independent, enterprise management software companies, unifies and simplifies complex information technology (IT) management across the enterprise for greater business results. With our Enterprise IT Management vision, solutions and expertise, we help customers effectively govern, manage and secure IT.
Copyright 2009 CA. All rights reserved. All trademarks, trade names, service marks and logos referenced herein belong to their respective companies. ITIL is a Registered Trademark and a Registered Community Trademark of the Office of Government Commerce, and is registered in the U.S. Patent and Trademark Office. 337490309