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.
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