Lean Software Development

Creating Value in Transactional Businesses

Written by:
Gerry Fung, P.Eng, Group Manager of Business Services

Lean Six Sigma emerged in a manufacturing environment, but there is a growing trend of companies in the transactional industry implementing Lean Six Sigma practices. A wide variety of businesses including banks, insurance companies, hospitals, hotels and even businesses in the tourism, retail and education sectors have experienced significant financial benefits from Lean Six Sigma implementation. This trend can also be observed by the growing tendency of these companies to allocate resources for coaching their employees in Lean Six Sigma practices

Lean Six Sigma in the Transactional Industry

As the transactional industry grows, so too does the demand for improved transaction speed and quality; however, the most challenging aspect of implementing Lean Six Sigma in transactional settings is the lack of quantitative data that is normally utilized at the ‘Measure’ stage of the DMAIC method. Another challenge in the transactional industry is the existence of many hidden processes (also known in Lean as ‘hidden factories’) that may not necessarily add any value to the final service delivered to customers. The implementation of the Lean Six Sigma methodology is becoming especially useful for increasing transactional efficiency and helping companies meet a demand for increased transactional speed by quantifying processes, as well as by identifying these ‘hidden factories’ such as operations that are not evident until the process is carefully analyzed with a detailed process map. In these ‘hidden factories’ many unnecessary reworks and check points take place with further detrimental consequences to the fast flow of information, which is the raw material and work in process of transactional businesses.

Lean Six Sigma Innovation in Information Technology

As with filing for SR&ED tax credits, Lean Six Sigma implementation requires corporate commitment and leadership in order to succeed. Effective Lean Six Sigma leaders instill a corporate culture of innovation that derives from a continuous improvement mindset. Although this can be quite challenging as companies contend with daily business demands and employee reluctance towards change, ultimately, the return on investment in SR&ED and Lean Six Sigma initiatives can translate into more money, more time, and more innovation.

Lean Six Sigma Innovation in Software Development

Although the origins of lean principles come from production, they can be extended to disciplines such as software development. Software Development differs from manufacturing production, in that it involves making one unique thing for each customer, while minimizing labour on features that the customer does not want, whereas manufacturing production traditionally involves repeatedly reproducing the same thing while minimizing variation. Although there is a fundamental difference between the two activities, the high-level notion of reducing unnecessary waste is highly applicable to software development. The principles of lean software were developed by Mary and Tom Poppendieck, who extended Lean principles to include: eliminating waste, amplifying learning, deciding as late as possible, delivering as fast as possible, empowering the team, building integrity, and seeing the whole. The paradigm of Agile software development branches off one of these key, principles-deciding as late as possible. An Agile software development approach involves developers working on small modules that allow for bugs to be identified, and for customer feedback to be incorporated before running the next sprint. In this manner, crucial decisions can be delayed until customers have realized and better communicated their needs, which allows for adaptation to changes and the prevention of costly early decisions.

Gerry Fung, P.Eng

Gerry Fung, CPA, CMA, MBA, is a Professional Engineer with a background in Information and Communications Technology, and he is the Group Manager of Business Services at NorthBridge Consultants.

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