Lean Six Sigma Secrets for the CIO

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Process Overview .....................................................................28

Process Metrics ........................................................................28

Process Principles .....................................................................29

Process Flow ............................................................................29

Process Description .................................................................29

Process ARCI ..........................................................................29

Roles and Responsibilities ........................................................30

Glossary and Definitions .........................................................30

Process Library .................................................................................30

3 An Abundance of Wealth .....................................................................33

Balanced Scorecards ..................................................................................36

Basic Principles of Balanced Scorecard .............................................39

Financial Perspective ...............................................................39

Customer Perspective...............................................................39

Internal Process Perspective .....................................................39

Learning and Growth Perspective........................................... 40

BSC Implementation ....................................................................... 40

BSC and Lean Six Sigma ................................................................. 40

Theory of Constraints ................................................................................41

Basic Principles of TOC .................................................................. 42

TOC Axioms .......................................................................... 42

Ongoing Improvement Steps ...................................................43

The TOC Thinking Processes ..................................................43

TOC and Lean Six Sigma .................................................................43

ISO 9000 .................................................................................................. 46

Basic Principles of ISO 9000 ........................................................... 46

ISO 9000 and Lean Six Sigma..........................................................48

Total Quality Management .......................................................................48

Basic Principles of TQM ...................................................................48

TQM and Lean Six Sigma ................................................................49

IT Governance ...........................................................................................50

IT Governance Guidance ..........................................................................51

CobiT ...............................................................................................52

Basic Principles of CobiT ........................................................53

CobiT Structure ......................................................................54

CobiT and Lean Six Sigma ......................................................55

ISO 27001 ........................................................................................55

Basic Principles of ISO/IEC 27001 ..........................................56

ISO 27001 and Lean Six Sigma ...............................................58

ITIL .................................................................................................58

Basic Principles of ITIL ...........................................................59

ITIL and Lean Six Sigma ........................................................61

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Val IT .............................................................................................. 64

Basic Principles of Val IT ........................................................ 66

Val IT and Lean Six Sigma ..................................................... 66

Providing More Specificity .........................................................................67

CMMI ..............................................................................................68

Basic Principles of CMMI .......................................................69

CMMI and Lean Six Sigma ....................................................69

IEEE 829 ..........................................................................................72

Basic Principles of IEEE 829 ...................................................72

IEEE 829 and Lean Six Sigma .................................................73

PMBOK ...........................................................................................73

Basic Principles of PMBOK .....................................................73

PMBOK and Lean Six Sigma ..................................................74

PRINCE2 .........................................................................................78

Basic Principles of PRINCE2 ..................................................78

PRINCE2 and Lean Six Sigma ...............................................79

Zachman Framework .......................................................................80

Basic Principles of the Zachman Framework ...........................81

Zachman and Lean Six Sigma .................................................82

Adopt and Adapt .......................................................................................83

4 What Is Lean Six Sigma? ......................................................................85

Understanding Data ..................................................................................86

Continuous Data .......................................................................................87

Attribute (or Discrete) Data .......................................................................88

Inputs versus Outputs ................................................................................89

Data Collection Plans ............................................................................... 90

Check Sheets ..............................................................................................95

Basic Sampling...........................................................................................97

Measurement System Analysis .................................................................100

5 Understanding Lean ...........................................................................105

Lean and the Socratic Method .................................................................108

Kaizen Events ..........................................................................................109

A Typical Kaizen Event................................................................... 111

Before the Event .................................................................... 111

Day 1 ..................................................................................... 111

Day 2 ..................................................................................... 111

Day 3 ..................................................................................... 111

Day 4 .....................................................................................112

Day 5 .....................................................................................112

Muda, Muri, or Mura? .............................................................................112

Defects ........................................................................................... 115

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Overproduction .............................................................................. 116

Waiting ........................................................................................... 116

Transportation ................................................................................ 116

Inventory ........................................................................................ 117

Motion ........................................................................................... 117

Extra Processing Waste ................................................................... 118

Underutilized People ...................................................................... 118

Process Efficiency ..................................................................................... 119

Capacity Constraints ......................................................................120

The Five Ss (Your Mother on Steroids) .....................................................124

6 Understanding Six Sigma ...................................................................129

What Is a Standard Deviation? ................................................................130

DMAIC ...................................................................................................133

Data Displays ...........................................................................................139

Descriptive Statistics ................................................................................ 145

Measures of Central Tendency: What Do You Mean? ............................. 145

Measures of Spread ..................................................................................147

Distributions (Not Those from Your IRA) ...............................................149

Normal Distributions ..................................................................... 152

Non-Normal Distributions ............................................................. 155

Process Monitoring ..................................................................................156

Variation Analysis: What’s So Special about It?........................................ 157

Process Stability ....................................................................................... 159

Control Charts ........................................................................................160

Types of Control Charts .................................................................160

Interpreting Control Charts............................................................164

Process Capability ....................................................................................166

Specification Limits .................................................................................167

Internal Specification Limits ...........................................................168

Measuring Process Capability ..................................................................169

Identifying and Verifying Root Causes ....................................................171

Cause-and-Effect Diagrams .....................................................................172

Five Whys ................................................................................................175

Pareto Charts ...........................................................................................175

C&E Matrix ............................................................................................ 176

7 The Customer and the Workplace: Putting IT All Together ..............179

Managing Your Customers ......................................................................179

Voice of the Business ................................................................................180

Voice of the Customer.............................................................................. 181

Critical to Quality ..........................................................................182

Kano Analysis .................................................................................183

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Voice of the Employee ..............................................................................185

Voice of the Process .................................................................................186

Processes That Matter .....................................................................187

The Three Reals ..............................................................................188

Processes Capability Revisited ........................................................190

Process Flow Tools ...................................................................................190

SIPOC ............................................................................................190

Use Case Diagrams ......................................................................... 191

Spaghetti Diagrams ........................................................................194

Swim Lane Diagrams .....................................................................194

Value Stream Mapping ...................................................................197

Value-Added and Non-Value-Added ...............................................199

Complexity Analysis .......................................................................203

Time Value Maps ...........................................................................205

Value Add Chart .............................................................................205

Evaluation Techniques ....................................................................205

Simulation Models ......................................................................... 206

Benchmarking ................................................................................209

Industry Standards and Internet Research ......................................209

Limited Pilots .................................................................................210

Poka-Yoke: Mistake Proofing ................................................................... 211

8 Working on Ideas ...............................................................................215

Brainstorming .......................................................................................... 215

Six Thinking Hats....................................................................................216

Mind Mapping ........................................................................................ 218

Affinity Diagrams ................................................................................... 220

Multivoting............................................................................................. 222

TRIZ .......................................................................................................223

Process Thinking .....................................................................................225

9 Lean Six Sigma Projects .....................................................................229

Potential IT Projects ................................................................................231

Ensuring Compliance ..............................................................................231

IT Security...............................................................................................232

Deactivating Employees’ Access ......................................................232

Data Accuracy ................................................................................232

Password Reset ...............................................................................233

User Account Creation .................................................................. 234

Improving Network Security ......................................................... 234

Improve Application, Server, and Network Uptime .................................235

Improving Personal Productivity .............................................................235

Software Development .............................................................................236

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DFSS ..............................................................................................237

DMADV Methodology and Tools ..................................................240

QFD and House of Quality ............................................................243

Other IT Improvement Projects ...............................................................248

Generating Project Ideas ..........................................................................250

Call to Action ..........................................................................................251

Appendix A: Guidance ................................................................................253

Appendix B: Shewhart Constants for Control Charts ................................257

Appendix C: Table of z Values .....................................................................259

Appendix D: Useful Microsoft Excel® Statistics Functions .........................263

Appendix E: Bibliography ...........................................................................265

Appendix F: Lean and Six Sigma Resources ................................................269

Appendix G: Acronyms and Initialisms Used in This Book ........................271

Index ...........................................................................................................275

www.EngineeringEbooksPdf.comAcknowledgments

We would like to acknowledge Rich O’Hanley who started this rolling; John

Wyzalek, acquisitions editor, for pitching the book to the editorial committee and

getting us a contract (Much appreciated, John); Teresa Horton, copy editor, who

kept us honest; and Rich Halstead-Nussloch, technical editor, for his diligence in

reviewing the material (Thanks, Rich).

Peter T. Davis would like to thank first and foremost his co-author for tak-

ing this trip with him. He also would like to thank Dorian Cougias, Rabindra

“Danny” Jaggernauth, John Kearns, Al Marcella, Tony Noblett, William Prado,

Winn Schwartau, Rob van den Eijnden, and Herman Veltkamp for answering a

call for help. The provided information shows in this book. Any mistakes, as they

say, are mine and not theirs.

William (Bill) Bentley would like to thank Peter, his co-author for being patient

enough to wait for him to come around and write this with him, and his wonderful

network of Value-Train students and trainers, who are always there to help with his

sometimes unusual requests.

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www.EngineeringEbooksPdf.comwww.EngineeringEbooksPdf.comAbout the Authors

William (Bill) Bentley (BSEE, MSEE, Six Sigma Master Black Belt, Lean Black

Belt) is the owner and president of Value-Train, a process improvement consulting

and training firm started in Atlanta, Georgia, in 2002. Bill’s college education is in

electrical engineering (advanced automatic control systems) and he practiced that

in various roles with Procter & Gamble, Frito-Lay, and Nabisco Brands for twenty

years. His last assignment in that career was director of automation for Nabisco

Brands. He subsequently managed engineering and software operations for various

companies, with his most recent corporate position being president and CEO of

MDT Software in Atlanta. He lives with his wife Joyce, two dogs, and two parrots,

all of whom get along just fine. He is an avid sailor, motorcyclist, bicyclist, and

virtual world advocate.

Peter T. Davis (CISA, CMA, CISSP, CWNA, CCNA, CMC, CISM, CobiT FL,

ITIL v3 FL, ISSPCS, PMP, SSGB, CGEIT) founded Peter Davis + Associates (a

very original name) as an information technology governance firm specializing in

the security, audit, and control of information. A battle-scarred information sys-

tems veteran, his career includes positions as programmer, systems analyst, security

administrator, security planner, information systems auditor, and consultant. Peter

also is the past president and founder of the Toronto Information Systems Security

Association (ISSA) chapter, past recording secretary of the ISSA’s International

Board and past Computer Security Institute Advisory Committee member. He has

written or co-written numerous articles and ten books including Hacking Wireless

Networks for Dummies and Securing and Controlling Cisco Routers. He was listed in

the International Who’s Who of Professionals. In addition, he was only the third edi-

tor in the three-decade history of EDPACS, a security, audit, and control publica-

tion. He lives with his wife Janet, a cat, and a dog in Toronto, Ontario.

xv

www.EngineeringEbooksPdf.comwww.EngineeringEbooksPdf.comChapter

1

Beyond IT Governance

The CEO’s secretary calls and tells you the boss wants to see you immediately.

As you stride confidently toward the corner office, you cannot help wondering

what’s up. You have met all your targets and you believe your users are satisfied—

although you have no proof. When you enter the office, you notice the CEO is

sitting with the CFO. The air in the room is icy and you get a slight chill. This does

not augur well. With the CFO nodding like a bobblehead doll, the CEO explains

the financials this quarter are not good and the stock is going to get pummeled.

Right now you are thinking of the pointy-haired boss from the Dilbert cartoon.

Now the CFO explains that you will need to cut 10 percent from salaries and

noninterest expenses.

The Corporate Paradox

Does this sound familiar? This is not an unusual tactic. When times are tough,

many organizations retreat and decide to cut costs. Read the paper any given day

and you will see that organizations are laying off employees to reduce costs to

return to profitability or just to survive. As we write this book, U.S. automakers

are laying off workers because they did not foresee the shift in the auto market or

increases in gas prices.

When organizations cut staff, financial analysts respond favorably by buy-

ing the organizations’ stock and forcing the value of the companies upward. This

behavior perpetuates the cycle: Hire them when times are good and fire them when

times are bad. This behavior obviously has a negative impact on any organization.

If your employees think they are the next to go, they will not demonstrate a lot of

loyalty. Furthermore, the good ones will look for alternative employment while the

1

www.EngineeringEbooksPdf.com2  Lean Six Sigma Secrets for the CIO

poor ones remain. If that doesn’t convince you, read the 2008 Cyber-Ark survey*

that reports a whopping 88 percent of information technology (IT) administrators

admitted they would take corporate secrets, should their organization suddenly lay

them off. This strategy is obviously not always the best. As motivational speaker

Catherine DeVrye warns, “Remember that the six most expensive words in business

are: ‘We’ve always done it that way.’”

Downsizing, rightsizing, capsizing: You know that cutting resources beyond

the point of pain is not the way to succeed. You will have burnt-out staffers and

stressed-out managers who are just trying to keep their heads above water. Forget

trying to rework processes to improve performance when your staff finds it difficult

to just cope.

The Pitch

As you consider the CEO’s request, you are reminded of Monty Python’s first

film And Now for Something Completely Different and you tell the CEO and CFO

you’d like to go in a different direction. You think now is the time for Lean Six

Sigma. Your golfing buddy has been going on and on about it and you’d like to

try it.

Why not focus on becoming better at what you do? By focusing on improving

your processes, you can add to the bottom line. If it costs $100 to handle a call to

the service desk and you can reduce the number of calls from 100,000 to 50,000,

you have just added $5 million to the bottom line. So why not focus on efficiency

and effectiveness? You understand it is necessary to do some belt-tightening to affect

the bottom line, but kick-starting the top line is equally important. You also know

Lean Six Sigma can help improve your processes and stimulate innovation.

You tell them, “I would like to try to use Lean Six Sigma in my area. Lean Six

Sigma is a combination of historical methods for process improvement that focuses

on the bottom line and critical-to-customer requirements. It is a robust business

improvement methodology that focuses an organization on customer requirements,

process alignment, analytical rigor, and timely execution. LSS includes leadership,

infrastructure, tools and methods.”

The CEO and CFO have heard the term, but they’re not quite sure what it

means. Is Lean Six Sigma really different, or is it just another flavor-of-the-month

program that will disappear eventually? Is it an expensive, complicated approach

oversold by engineers and zealots? Is it the fabled goose that laid the golden egg, as

some suggest, or is it a boondoggle?

• http://www.cyber-ark.com/news-events/pr_20080827.asp.

www.EngineeringEbooksPdf.comBeyond IT Governance  3

Lean Six Sigma Business Case

You assure them that Lean Six Sigma is not a skinny rock band from northern

Kentucky, a fad or a cult, or a fraternity or secret society with secret handshakes—

although there are some really neat pins. Rather, it is a flexible quality improvement

strategy used by organizations to identify and eliminate variation and reduce cycle

time and costs. This method differs from previous process improvement approaches

because it uses established engineering principles and is based on the institutional-

ization of the approach and independent validation of claims of success. You also

ensure them that it complements the existing corporate and IT governance pro-

grams. You explain how General Electric (GE) used Six Sigma (6∑) alone to turn

around their performance and strengthen customer relationships and how Toyota

used Lean Six Sigma to become a juggernaut.

Lean Six Sigma techniques go back to the 1920s with the development of time

and motion studies and the principles of statistical quality control. Thirty years

later in the early 1950s, W. Edwards Deming and Bonnie Small developed the

foundations of modern process improvement methods. Deming developed Total

Quality Management (TQM) and exported it to Japan. Small made the analyses of

statistical quality control accessible to people who were not professional statisticians

and mathematicians through her publication of The Western Electric Rule.*

Incorporating elements from the work of many quality pioneers, Six Sigma aims

for virtually error-free business performance. Six Sigma is a rigorous, focused, and

highly effective implementation of proven quality principles and techniques. You can

measure an organization’s performance by the sigma level of their business processes.

The 14 Principles of The Toyota Way, created by the Toyota Corporation is a

management philosophy that includes the Toyota Production System. Guiding prin-

ciples of The Toyota Way are to base management decisions on a “philosophical sense

of purpose” and to think long term, to have a process for solving problems, to add

value to the organization by developing its people, and to recognize that continu-

ously solving root causes drives organizational learning.

You add, “According to the American Society for Quality, eighty-two of the

one hundred largest companies in the United States have embraced Six Sigma.

Lean Six Sigma is steamrolling the nation as well. When companies start paying

attention to process improvement, they can realize huge improvements in produc-

tivity and profitability. Recent research tells us that efforts like Lean Six Sigma are

certainly needed. For example, in the service industry, slow production and rework

accounts for between 30 and 50 percent of the actual cost of producing and deliver-

ing a service. Think of how much better off any company would be when they pay

attention to processes and controls. Sure we would eat up some time and dollars in

the near term should we implement Lean Six Sigma, but it will pay big dividends in

the long term. For non-Lean Six Sigma companies, the cost of nonconformance is

• You can read about the rules at http://tinyurl.com/m2p76u.

www.EngineeringEbooksPdf.com4  Lean Six Sigma Secrets for the CIO

often extremely high. Companies operating at three or four sigma typically spend

between 25 and 40 percent of their revenues fixing problems. This translates to

approximately 67,000 defects per million opportunities! If the rework costs just $10

per defect, an extremely low number, that’s a cool $670,000! This is known as the

cost of quality, or more accurately the cost of poor quality (COPQ). In companies

where the COPQ is unknown, it usually exceeds the profit margin. Think what

this could mean to our competitiveness when we’re at three sigma and our direct

competitor is at four sigma. The dollar cost of this gap is huge. Every time you move

up a sigma level, it can easily mean a 20 percent increase in profit margin. GE, a

pioneer of the concept, estimates that the gap between three or four sigma and Six

Sigma was costing them between $8 billion and $12 billion per year. Traditionally,

companies accepted three or four sigma performance levels as the norm, despite the

fact that these processes created between 6,200 and 67,000 problems per million

opportunities! The Six Sigma standard of 3.4 defects per million opportunities is a

response to the increasing expectations of customers and the increased complexity

of modern products and processes. Companies operating at Six Sigma typically

spend less than 5 percent of their revenues fixing problems.”

In short, what sets Lean Six Sigma apart from its individual components is the

recognition that you cannot do “just quality” or “just speed,” you need the bal-

anced process that can help an organization focus on improving service quality, as

defined by the customer within a set time limit.

Simple tools, simple questions, and common sense enhance customer expe-

rience, maximize growth, and enhance profitability—regardless of business size

and structure.

Lean Six Sigma Benefits

Lean Six Sigma for services is a business improvement methodology that maxi-

mizes shareholder value by achieving the fastest rate of improvement in customer

satisfaction, cost, quality, process speed, and invested capital. The...