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Should CIOs and IT managers be put in charge of lean initiatives?

Posting in Sustainability

New McKinsey & Company report suggests looking to IT for long-lasting success in lean initiatives.

Recently, we explored some new thinking around lean principles (doing things simpler, faster, better, cheaper), and some of the challenges to large, multi-faceted organizations.

A new report from McKinsey & Co. looked at lean practices in action, and its authors observe that information technology shouldn't just have a supporting role in lean initiatives -- IT should be leading the charge.

The report’s authors, Nicklas Ilebrand, Tor Mesøy, and Remco Vlemmix, say IT can help more firmly nail down lean practices into day-to-day operations across the organization. Lean and IT are “complementary in the effort to streamline, standardize, and integrate process improvements,” they say. Thus, CIOs should lead company-wide lean efforts, they urge:

“Allowing IT to play a central role in developing and driving the implementation of lean projects can help organizations in many industries better address two problems that have long plagued such initiatives: high complexity and poor sustainability.”

They cite the progress of one unnamed European bank that employed its IT team to help embed lean principles into its operations. Executives wanted to speed the account-opening process for corporate customers and improve CRM, but needed to overcome poor IT integration and fragmented oversight that resulted in manual entries, overlapping requirements, and high volumes of paperwork.

The solution was to employ the CIO and IT to work with various departments involved in the processes associated with new accounts and streamline steps and automate as much as possible. The bank estimates that labor costs were reduced by 50%, and ultimately saved €4 million in savings from the effort.

By involving IT at the forefront of the lean initiative, the bank was able to achieve a more sustainable lean practice, the McKinsey team says:

“Wiring IT into the lean-improvement effort made it easier for employees to sustain these successes. With a unified account-opening system in place, reverting to earlier practices was harder—by default, the new system became the standard operating procedure.”

Of course, a new system can lock in some unwanted results as well. For example, business processes are forced into the restraints of an ERP system. That’s why the business needs to drive the implementation. But as McKinsey illustrates, good technology practices can be a crucial asset in lean initiatives.

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Joe McKendrick

Contributing Editor

Joe McKendrick is an independent analyst who tracks the impact of information technology on management and markets. He is a co-author of the SOA Manifesto and has written for Forbes, ZDNet and Database Trends & Applications. He holds a degree from Temple University. He is based in Pennsylvania. Follow him on Twitter. Disclosure