Agile, Lean methodologies aren't about cost-cutting

Research firm warns that such frameworks aren't simply budget-reducers

Organisations that are looking to process improvement methods in the current economic environment are too late, as the economic tide might turn before such moves deliver cost benefits, says research firm Ovum.

While commonly used approaches such as Agile and Lean can reduce waste in IT systems and software development, they don't offer the rapid efficiency gains that chief financial officers are increasingly demanding of CIOs.

Their implementation takes too long and is too resource-intensive for organisations that are currently reviewing its IT processes.

"A lot of CFOs have heard that process improvement can cut the cost of IT processes, and in the current economic environment, that's very appealing," says Dr Alexander Simkin, a senior analyst and process improvement specialist in Ovum's IT services practice.

"What they don't realise is that becoming Agile or Lean takes time and requires major change management," Simkin says. "If you're starting from a base of traditional processes, these approaches won't provide rapid cost reduction. The efficiency of your processes may even get worse before they get better. CFOs need to know that and it's a CIO's job to educate them," Simkin says.

Organisations that already have an established process improvement programme aimed at waste reduction in IT have a competitive advantage in the current economic situation. However, when the economy eventually improves, the cost-cutting agenda will wane and other priorities such as improving the quality of processes will come to the fore.

"Organisations that are only now seeking to improve their IT processes should consider methods that are optimum now and beyond the recession, that is, that both cut costs and improve quality. Lean Six Sigma is a good choice," says Simkin.

Methods that audit and certify the maturity of an organisation's IT processes such as the Capability Maturity Model Interactive (CMMI) and the International Organisation for Standardisation's ISO 20000 are also attracting renewed interest in the recession. These methods provide CIOs with evidence to C-level colleagues and other stakeholders that investments in process improvements are providing returns.

For IT services vendors, they have another advantage: they make those vendors eligible for contracts that stipulate minimum levels of process maturity. Two sectors in which IT service contractors typically have to certify the maturity of their processes are defence and healthcare, especially in the US.

"Defence and healthcare have been relatively unscathed by the recession, so being able to bid for contracts in those sectors is increasingly important. Hence some of the extra attention that audit methods are currently receiving," Simkin says.

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Tags managementagileLeancost-cutting

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