Click here to read this Lean Six Sigma in IT Services Project.ppt
Upcoming SlideShare
Loading in...5
×
 

Click here to read this Lean Six Sigma in IT Services Project.ppt

on

  • 1,711 views

 

Statistics

Views

Total Views
1,711
Views on SlideShare
1,704
Embed Views
7

Actions

Likes
0
Downloads
89
Comments
0

1 Embed 7

http://www.slideshare.net 7

Accessibility

Categories

Upload Details

Uploaded via as Microsoft PowerPoint

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment
  • 1 Activity-Based Costing ( ABC ) is a costing model that identifies activities and assigns the cost of each activity resource to all products and services according to each actual consumption. The change lies in the assignment of indirect costs (overhead) into direct costs. This is the only way an organization can establish the true cost of its services. The purpose is to identify and eliminate unprofitable services, make unprofitable services profitable or lower the prices for those which are overpriced. Once the real cost is derived, this can be divided by the real revenue to determine your actual margin per service.
  • How many here manage or handle a P&L for their department? Are most of you cost centers? If you are a cost center, your revenue line my be a projection and your target is a flat GM
  • Cover high OT Costs and talk reduction Talk headcount associated to each tower. How do they vary from projections or original models? Avg salary is a function of total wages / headcount. Does it equal what is expected or perceived?
  • Cost per incident is a function of total COGS/total SR’s Do incremental margins meet or exceed target margin? Do the high contribution silos help or hinder overall margin?
  • Recognize costs are everywhere Quantify all of those costs and drivers Categorize them and sort them by logical group, Account, department etc.
  • This is an example of a basic SLA report. Although SLA’s are being met, there are always opportunities to remove variation. Consistent delivery of services is key to customer satisfaction.
  • Performance needs : hotel reservations the faster the better 30 minutes: Low performance 2 minutes: meets performance 10 seconds: excellent performance Expected Needs : Clean Room Do not add in satisfaction, but if missing will drive dissatisfaction Excitement Needs: Favorite snacks in the room waiting for me when I check in Cause excitement when there, but do not do anything when missing Latent and unarticulated needs Properly executed wow your customers Linked to emotions
  • Each team should be mindful of projects completed in the past. Often, project findings or approaches can be replicated in other areas, thus shortening the improvement cycle time.

Click here to read this Lean Six Sigma in IT Services Project.ppt Click here to read this Lean Six Sigma in IT Services Project.ppt Presentation Transcript

  • Using Lean Six Sigma to Lower IT Costs Steven H. Jones Lean Six Sigma Master Black Belt Quality & Continuous Improvement Siemens Information Services February 3 rd , 2009
  • Siemens IT Solutions & Services Who are we and what do we do?
  • About Siemens IT Solutions and Services
    • Siemens IT Solutions and Services is an international leader providing IT solutions and services. They cover the entire IT service chain from single source service provision, to consulting to system integration, to managing IT infrastructures. Additionally, Siemens IT Solutions and Services extends offerings of Siemens sectors to include software developments and IT solutions. Siemens IT Solutions and Services adds measurable value for its customers and employs 43,000 and posted $7.5 billion in fiscal year 2007 sales. Siemens AG (NYSE: SI) is a global powerhouse in electronics and electrical engineering, and operates in industry, energy and healthcare sectors. For over 160 years, Siemens has built a reputation for leading-edge innovation, high quality products, services and solutions. With nearly 400,000 employees in 190 countries, Siemens reported worldwide sales of $96.6 billion in fiscal 2007. Siemens reported $19.8 billion in U.S. sales and employs approximately 70,000 people throughout all 50 states and Puerto Rico.
  • Quality & Continuous Improvement
    • Siemens IT Solutions & Services Competency Center:
      • Lean Six Sigma
      • ITIL
      • [email_address]
    • ISO Certifications
      • 9001
      • 20000
    • 2003 (4 FTEs)
    • Developed QCI Team/Concept
    • Lean Six Sigma Implemented
    • Monthly PMO knowledge sharing
    • 2004 (6 FTEs)
    • Added ITIL practice and began Service Desk assessments
    • Awarded a Tier 1 Ohio State Quality Award
    • Adopted Quality Gate concept
    • Lean Six Sigma project results:
      • $990,000 in Hard Dollar Savings
      • $845,000 in Soft Dollar Savings
    • 2005 (6 FTEs)
    • Assigned (4) Regional Directors to help drive QCI programs in field
    • Focused ITIL alignment of Incident, Problem & Change Management
    • Developed “Siemens Stats” course teaching managers statistical tools
    • Clients began requesting Lean Six Sigma support
    • Developed PMO Accreditation program rating PMO standards & best practices
    • Proof of Quality practice w/Lean Six Sigma drove $9,000,000 in new business
    • Lean Six Sigma deployed in NOC to improve operations performance
      • Four projects drove $4,500,000 in Hard & Soft savings
    • 2006 (8 FTEs)
    • Lean Six Sigma grew cost reduction to revenue generation focus
    • Siemens AG Quality Gate Maturity Check rated QCI 3.25 out of 5
      • (3.0 corporate goal)
    • Won the itSMF (ITIL) Project of the Year
    • Won the Innovation at Work Award for Developing Siemens Stats
    • Lean Six Sigma Activity drove $7,000,000 in new business revenue
    • Lean Six Sigma Project results:
      • $4.6M in Hard & Soft savings; $146K in Customer Savings
    • 2007 (10 FTEs)
    • Siemens AG Quality Management assessed SIS maturity level 3.0 out of 4
      • (2nd highest scoring Siemens Operating Co)
    • SIS CEO awarded QCI for creating a quality & continuous improvement culture
    • Added Customer Experience Practice & implemented Net Promoter Score
    • Lean Six Sigma Activity drove $12,000,000 in new business revenue
    • Lean Six Sigma Project results:
      • $5.1M Hard & Soft savings $2,500,000 Customer Savings
    • 2008 (11 FTE’s)
    • 12 Lean Events
    • $4M Hard & $2M in Customer LSS savings
    • ISO 9001 & 20000 certified
    • Expanded PMO Accreditation to cover all services
    • Deployed Customer Loyalty Best Practices
    • Extend training to 1000+ employees
  • Why are we here?
    • What is the best use of Lean Six Sigma in corporations today?
    • How do we differentiate from past “Quality” initiatives like TQM, PDCA and others?
    • What will it take to make our Lean Six Sigma initiatives successful?
    • Answer: Move Lean Six Sigma from an Engineering Methodology to a Business Practice
    • “ Lean Six Sigma... It’s all about the money ”
    • Roger Myers Sylvania Director Lean Six Sigma
  • Lean Six Sigma as a Business Methodology
    • Common Belief:
    • Lean Six Sigma is only successful through headcount reduction
    • The Problem:
    • This belief negatively affects Lean Six Sigma project benefits
    • It limits the acceptance and support of Lean Six Sigma 
    • A Better Solution:
    • Align Lean Six Sigma programs with your Corporate Strategy
    • Drive projects that align with corporate strategy 
    • Position your practice as a strategic partner to the CEO
    • The Future:
    • Lean Six Sigma deployment should create business value
    • Lean Six Sigma will create opportunities for growth
    • Lean Six Sigma will help develop and achieve corporate strategies
  • IT Management Value Stream
    • Value Stream Mapping is a Lean technique used to analyze the flow of materials and information currently required to bring a product or service to a consumer.
    • Wikipedia: http://en.wikipedia.org/wiki/Value_Stream_Mapping
    Service Support
  • Value Stream Exercise
    • Identify your area(s) of greatest focus within your organization.
    • ____________________________________________________
    • ____________________________________________________
    • ____________________________________________________
    • ____________________________________________________
    • ____________________________________________________
    • Why is this your greatest area?
    • ____________________________________________________
    • ____________________________________________________
  • Service Support Value Stream
  • Value Stream Exercise
    • Identify your area(s) of greatest cost within your organization.
    • ____________________________________________________
    • ____________________________________________________
    • ____________________________________________________
    • ____________________________________________________
    • ____________________________________________________
    • Why is the greatest area?
    • ____________________________________________________
    • ____________________________________________________
    • Activity-Based Costing ( ABC )
    • Cost model that identifies activities and assigns costs of each activity to all products and services according to each actual consumption.
    • The International Federation of Accountants proposed International Good Practice Guidance in 2008 and it is widely expected to become a standard accounting practice
    • Benefit of ABC:
    • Establish the true cost of its services
    • Identifies unprofitable services
    • Improves pricing quotes & forecasts
    • Once the real cost is derived, this can be divided by the real revenue to determine your actual margin per service.
    Activity Based Costing and Margins
  • The Profit & Loss Statement (P&L)
    • The P&L is the core financial statement for managing operational accounting.
    • It is the basic document used to track the profits and losses of a business operation.
    • The primary output of the P&L is the amount and percentage of profit (GM or GP) the operation is generating.
    • The GM Metric is one of the primary metrics for evaluating the success of an account.
    • Here is a sample P&L we will use from a fictional SIS account known as Precise & Simpel.
    • For this exercise, we will assume all costs remain constant each month.
  • The Profit & Loss Statement (P&L)
    • The P&L has 6 primary components:
    • Area of Business
      • The vertical silo or cost center conducted for the account
    • Business Segment
      • The horizontal line item where expenses are assigned across Areas of Business
    • Revenues or Sales
      • The total amount of revenue assigned to each Area of Business
    • COGS
      • Cost of Goods Sold is the expense assigned to each Area of Business activity to produce the contracted service.
    • GM*
      • Gross Profit Margin is the difference between the Total Revenues and COGS for each Area of Business
    • GM Percentage*
      • Gross Profit Margin Percentage is the percent of Gross Profit in Total Revenues
        • *GM is a major target area for management bonuses.
  • The Profit & Loss Statement (P&L)
        • Total GM/GP Percentage
          • Most accounts desire to run at a 25% minimum. If the account is under that target, increasing that number will be of the highest priority
          • We see that Precise & Simpel is under that Target, so we need to examine further to see root cause.
        • By looking at the “GM%” by silo we can see the desktop silo has the lowest GM%
        • The Desktop silo also has the largest percentage of revenue.
        • Therefore, raising the Desktop GM% will have the greatest overall affect on the accounts GM%
  • The Profit & Loss Statement (P&L)
        • Within the Desktop silo we see wages as the largest portion.
          • Logically reducing wages will align the GM % faster than any other area.
          • However, Overtime must always be targeted first.
          • In this case there is $30k per month spent in OT.
        • Business Case one:
        • Reduce Desk Side Overtime Expenses
        • By eliminating the $30k per month expense will save $360k per year
  • The Profit & Loss Statement (P&L)
        • Wages are the largest part of the Desktop silo.
          • After OT is eliminated, base wages may be reduced by cutting Task Time.
          • Base wage reduction, taxes and benefits drop proportionately.
        • Develop an Activity Based Cost per unit
          • Calculate average cost per Service Request (unit)
          • Total COGS/Total SR’s Closed
      • Business Case two:
      • Reduce Desk Side Average Cost per SR
        • Reducing the Average cost per SR 5% saves $37.5k per month & $450k per year
  • Margin/Cost Recovery Exercise
    • Example: Reduce PC support costs
    • PC Support Pareto Shows Reimages as most expensive repair
    • PC Reimage MTTR = 4.2 hours
    • Labor rate = $17 per hour
    • Fully burdened labor rate = $21
    • Labor cost of a reimage = $88.20
      • 4.2 x $21
    • Price customer pays = $47.50
    • Margin/Cost Recovery = -$40.70 or -46.15%
      • $47.50/$88.20
    • Desired Margin = 25%
    • Margin/Cost Recovery Goal = -59.6%
      • (47.5-25%)/88.20-1
    • Process Improvement Time Target 1.69 hours
      • (47.5-25%)/21
  • Continuous Improvement Process
  • Service Support Value Stream $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $
  • IT Services Project Portfolio Dash Board: Financials
  • IT Services Project Portfolio Dash Board: Financials
  • IT Services Project Portfolio Dash Board: Metrics
    • Remove defects
    • Remove variation
    • Improve customer experience
    Service Desk SLA/KPI Categories SLA/KPI Expected % to Target Achieved Data Range # of Missed Service Desk IT Forms Response Time SLA 95% within 15 mins     0 0 Service Desk Email Response Time SLA 90% within 4 hours 100.85% 90.76% 563 52 Service Desk Voicemail Response Time SLA 90% within 60 mins 101.59% 91.43% 35 3 Service Desk Fax Response Time SLA 90% within 4 hours 111.11% 100.00% 4 0 Service Desk First Call Resolution Rate SLA 60.00% 95.83% 86.25% 800 110 Service Desk Gross Resolution Rate SLA 80.00% 117.64% 94.11% 1273 75 Service Desk Non Service Requests Resolved Tickets Number KPI within 60 mins 160.04% 96.03% 151 6 Service Desk Service Request Resolution Class A SLA 80% within 60 mins 123.14% 98.51% 403 6 Service Desk Service Request Resolution Class B SLA 80% within 1 business day 125.00% 100.00% 359 0 Service Desk Service Request Resolution Class C SLA 80% within 2 business days 125.00% 100.00% 3 0 Service Desk Service Request Resolution Class D SLA 80% within 3 business days 120.37% 96.30% 27 1 Service Desk Service Requests Resolution Rate SLA 80% within 60 mins 117.39% 93.91% 345 21 Service Desk Routing Time not within Scope of Service Desk Support SLA 95%within 5 mins 94.05% 89.35% 845 90 Service Desk Routing Time within scope of Service Desk Support SLA 90% within 15 mins 101.59% 91.43% 105 9 Service Desk Routing Quality Downstream Support SLA 90.00% 101.89% 91.70% 916 76 Service Desk All Incoming Tickets Resolution Time SLA 80.00% 117.08% 93.66% 1830 116
  • IT Services Project Portfolio Dash Board: Metrics
  • IT Services Project Portfolio Dash Board: Metrics
  • Project Portfolio Prioritization from VOC
    • Kano Model uses customer product attribute ratings as follows:
      • Must Have
      • Nice to Have
      • One-dimensional
      • Indifferent
    • Completed survey are used to plot feature location on the map.
    • Today’s Excitement will be Basic tomorrow.
    http://www.c2c-solutions.com/tutorial.htm
  • Project Portfolio Prioritization from VOC
  • Project Catalog / Translation Opportunities
    • Increase 1 st Call Resolution
    • Reduce MTTR
    • Reduce response time
    • Reduce routing time
    • Reduce routing errors
    • Increase SLA compliance
    • Reduce Average Handle Time – ASA, Talk time, Wrap time
    Service Desk
    • Increase 1 st contact resolution
    • Improve server backup success rates
    • Reduce patch deployment cycle time
    • Reduce false monitoring alerts
    • Improve triage accuracy
    • Reduce batch processing failures
    Data Center
    • Reduce re-visits
    • Optimize consignment parts processes
    • Reduce hardware deployment cycle time
    • Reduce network build time
    • Reduce asset refresh cycle time
    Desk Side
    • Improve employee retention
    • Improve forecast efficiency
    • Reduce bid process cycle time
    • Reduce manual journal entries
    • Optimize reporting
    • Reduce project cycle time
    • Reduce RCA cycle time
    Business Processes
  • Questions?
  • Speaker Bio Steven H. Jones is a certified Lean Six Sigma Black Belt and Project Management Professional. He received his Black belt Certification from the George Group in 2004 while employed at the Xerox Corporation. His career started at 3M, an early adopter of the Lean Six Sigma in 1988. Steven has delivered quality and continuous improvement projects in Telecommunications and IT since 1993. He has executed Lean Six Sigma projects domestically and internationally for clients such as BP Canada, Convergys, Intercontinental Hotels, and Microsoft generating over $100M in financial benefit. He is currently a Lean Six Sigma Master Black Belt with Siemens IT Solutions and Services’ Quality & Continuous Improvement team.  He is member of the International Society of Six Sigma Professionals, the American Society for Quality and the Project Management Institute.  Steven earned his B.A. in Communications from The University of Cincinnati and an Executive MBA at Xavier University of Ohio.  He can be reached at [email_address] .