Look to IT for Process Innovation?

The following was first posted on Harvard Business Review:

Suppose you’re a senior executive at a large financial services company such as Nationwide Insurance or ING. Would you look to your information technology organization for ways to improve customer service? Would you ask IT to come up with ideas for new financial products and services, or new ways to deliver them?

Probably not. While you realize that all your products and processes depend on information systems (which is why the industry spends far more on IT than any other), you associate the IT function with the drudgery of maintaining the firm’s ancient systems. You think your IT organization is overwhelmed just keeping all the old systems running.

If this is you, you’re likely missing out on the product and process ingenuity of your IT people. Just consider how Nationwide and ING have tapped the brains of their IT organizations. What they’ve done provides lessons for broader organizational change and adaptation.

How are they doing it? David Bogaerts and Jael Schuyer are process improvement experts (“Lean Master Black Belts” and “Agile coaches”) in the IT and operations group at ING, a leading bank based in the Netherlands. When I asked them about skills their IT organization has brought to process improvement activities, their answer was quick: The IT organization knows how to get people working together as teams.

ING is in the middle of a transition from traditional step-by-step (“waterfall“) software development approaches to using cross-functional teams to make quick, small changes to systems (called “agile scrum” methods). It has worked very effectively at a team level, and they’ve scaled up to 40 “scrum” teams.

When I asked them whether their company as a whole could work this way, they gave an emphatic “yes.” Building on their team successes, they created an “Agility capture team” of senior IT leaders to address larger issues. They have weekly planning meetings and conference calls twice a week to work on internal customer service improvements. While the IT organization is driving this, more importantly they have roped in business unit and functional heads to surface their needs. As a result, process improvement activities have begun rippling out from the IT project team level to the core operations of the business.

I saw this ripple effect at Nationwide Insurance after speaking to Tom Paider and Tim Heller, managers in the firm’s Application Development Center. They told me that entrepreneurial people in IT at this $20 billion financial services provider started using a process improvement (“lean”) development framework and rapid (“agile”) development techniques several years ago to standardize system development approaches. “It enabled us to take teams that were having successes and build on them to scale,” Paider said. “We now have dozens of teams with industry-leading quality and productivity statistics. We are adding 1-2 teams a month to this model.”

Fifty companies have visited Nationwide in the last 12 months to learn how the company has embedded process improvement into the work of the IT function. Building a new mindset of making many smaller changes and learning from each one, instead of getting a detailed specification and delivering it, has been a concerted cultural transformation. This continuous improvement thinking is well known in manufacturing, but few do it well or consistently. At Nationwide, it’s not an elite group’s job to improve work every day — it’s everybody’s job.

I see a big opportunity for senior executives to embrace the process innovation successes that are bubbling up from IT organizations such as those in Nationwide and ING — and then expand on them. Improving the performance of the IT department is hard enough. But by adopting the techniques of process improvement leaders, Nationwide and ING are doing what’s nearly impossible at most large organizations: forming cross-functional teams to quickly design and implement better ways of serving customers and improving enterprise performance.

In the past, IT functions at even the most IT-intensive companies have struggled to get a seat at the business strategy and operational improvement table. However, today IT functions in financial services firms (more than any other sector) are in a leadership role to drive competitive advantage.

Question: Have you seen IT functions that are leading the way in their companies to make cross-functional process innovation happen?

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Categories: Continuous Improvement, Disciplines, Future of work, Information Technology, Strategy

Author:Brad Power

Brad is a consultant and researcher in process innovation. His current research is on sustaining attention to process management. He is currently conducting research with the Lean Enterprise Institute.

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8 Comments on “Look to IT for Process Innovation?”

  1. March 29, 2012 at 6:51 pm #

    I just finished up a two day APQC knowledge transfer session around building strong process management capabiities. One of the questions raised was where does the processes management group live within the organization. I believe the that the answer was that about 1/3 of the time it falls under IT. I was very impressed with some of the process management work done by a number of the IT led groups in the study.

  2. March 29, 2012 at 8:15 pm #

    As most cross functional (internal and external) business processes are dynamic systems of engagement. While ERP systems are systems of record, probably explains why business managers do not see IT as the first port of call for process improvement.
    It might also explain why there are so many shadow Excel and access database systems in place within so many enterprises

  3. Mark Carrington
    April 6, 2012 at 2:01 am #

    Process improvement has for so long been the domain of management consultants with the attendant use of ad hoc databases and spreadsheets. There is a clear market gap for strong software tools in this area – I can remember using software design mapping tools to improve processes. Would it not be amazing to find a tool that helps to map processes, down load cost and performance data and identify and quantify performance improvement opportunities from process change? Well the wait will son be over with the imminent launch of Centimex Performace Improvement software

  4. Reza
    April 6, 2012 at 5:40 am #

    Without knowing “What and How” any technology “IT or other kind” is the waste of the $$$$$. First deploy FTS to create a common, uniform, and standardized understanding of What and How, then ask “Why” Why are we doing it, when you are certain that what you are doing is the core and necessary for your organization then you can ask “How can I do it better?” and deploy Lean, 6 Sigma or CQI to get there.

  5. April 6, 2012 at 5:08 pm #

    Tom: I think where process reports depends in part on industry and in part on unique circumstances of the individuals in each organization. For example, it makes sense for process to be under IT when IT is driving process change, which tends to be more in financial services and less in manufacturing. Ideally process reports to the COO. Personally, I really like the idea of process being under HR.

  6. April 6, 2012 at 5:10 pm #

    BestResults IRP: I see shadow Excel and Access systems as a part of the natural software ecosystem. Do you see them as indicating a problem?

  7. April 6, 2012 at 5:13 pm #

    Reza: What is FTS?

  8. Kenneth Duemig
    April 12, 2012 at 8:05 am #

    I find it interesting that discussions surrounding where the process improvement team should live are taking place. The entire healthcare buiness model is continuously being modified. Newer, untraditional partners are beginning to surface in healthcare that hd never been there before. Social media, cell phones and alike are shaping new processes in healthcare in areas such as admissions, billing, payments and so forth.

    Healthcare company executives must ensure that all in e-staff understand their busness model, and how (strategy) it might evolve ver a multi-year plan. Thi is how executives shuld decide what capabilities are worthy of investment, and which should be sunset. This alone will dictate the areas of process improvement, engineering or re-engineering your healthcare company should prioritize. The process team should repot into those responsible for realizing the model. Since most businesses are financially motivated, all procsses should have key CFO performane metrics built in. In any event, the direction of the business should drive the process team. And the business model should describe how your company wants to conduct its business. The processes that support this model will be where the work is needed.

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