McKinsey: IT should lead lean initiatives

Recently, we explored some new thinking around the concept of "Lean IT," in which lean principles (doing things simpler, faster, better, cheaper) are applied to IT management and operations.

A bank put a CIO in charge of lean, reports millions in savings

Conversely, IT also can facilitate lean initiatives in other parts of the enterprise. In fact, it can even more firmly nail down lean practices into day-to-day operations. A new report from McKinsey & Co. explains why and how. The report's authors, Nicklas Ilebrand, Tor Mesøy, and Remco Vlemmix, point out that lean and IT are "complementary in the effort to streamline, standardize, and integrate process improvements." 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, as we all know, a new system can lock in some unwanted results as well. 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.