In manufacturing transport is moving products between operations and locations. It could be moving product from the machine shop to the welding shop, or from a factory in China to an assembly line in America. Transport increases shipping and handling costs, damages product and delays the process without adding value to customers.
In IT transport waste is the time and cost caused by handing over work from one functional team to another. For example from a build team to a test team, from an internal team to a vendor team or from an onshore team to an offshore team.
When work is handed over from one group to another there are engagement costs, management costs, learning costs and delays. To maximise utilization many functional teams do work in big batches which leads to over production, over engineering and big queues of work in progress. In additional physical, organisational and cultural distance between groups often lead to poor communication and poor integration which cause a lot of defects and rework which increase time and cost further.
Many big IT departments are full of handover costs because they have adopted a strategy of cutting costs by centralizing each specialist function in a shared service, standardizing the work and outsourcing it to the lowest cost commodity vendor. When this is done each central function focuses on cutting costs by reducing team size and skill until they just barely meet minimum acceptable standards and by adopting strict procedures which push as much work as possible onto customers and other teams. Any local savings from doing this are outweighed by a large increase in time and cost to the customer when you look at the system as a whole. As mentioned before this leads to situations where it takes 12 weeks to get a firewall rule changed and 12 months to get new servers in production.
Handover time and cost can be reduced by setting up co-located, cross functional teams that contain all the functional specialists required to do the work from beginning to end just in time to meet customer demand and by mapping out the end to end business process from the customer’s point of view and eliminating any steps that don’t add value. This approach can deliver large savings in time and money with little cost.
The lean approach to reducing transaction costs is well aligned with the Agile Manifesto which says that we value “Customer collaboration over contract negotiation” and the Agile principle that “The most efficient and effective method of conveying information to and within a development team is face-to-face conversation.”
This is not an argument to do everything in house with permanent staff. If your IT organization is not able to work in cross functional agile teams or does not have the capability for a particular project then you may be better off engaging an agile team from a quality local provider to both do the project for you and teach you how to operate in a lean agile way.
In the next article we will look at another cause of IT waste.