With two daughters in college, it is great to see some of the styles of the 1980s which have come back around as it was a great decade. Great music and movies, clothing styles, big hair…well, maybe not the hair.
Some things I've been sad to see go away, like Deloreans and movies which were good clean fun like Back to the Future or Better Off Dead. However, there are some things which I was glad to see go away - ordering printouts from Vax machines on green bar paper, typewriters which jammed up, the Cold War. There is a time to go for some things, and anytime is a good time to stop using the wrong metrics (or none at all!), but expect things to get better without knowing if they did or not. As I was told by a boss years ago, you get what you inspect, not what you expect. This has always held true for me.
We should also learn from our past, use what works and get rid of what doesn't. To this point, there was a great deal of change in the 80's - a time where computer-based technological innovations took off after the economic challenges of the '70s ended in the '80s. With the economic growth, competition drove companies to start looking at getting more efficient and applying process improvements with software technology to help them - ERP systems, just-in-time manufacturing, total quality management, and MRP II grew in popularity and expanded into many companies. Also, a book I consider as one of my top business books was written which described the journey from traditional to constraints management - The Goal by Eliyahu Goldratt and Jeff Cox. The concepts in constraints management, and as described in the book, are very relatable, focused, and apply to many different types of companies rather than other techniques. Additionally, and more importantly, these techniques change the mindset of companies to a sensible way to measure and address challenges. Really, this comes down to these three main measurements:
These measurements interact with each other in order to provide great indicators of where improvements need to be focused. For example, low throughput and high inventory indicate problems with forecasting, planning, and/or WIP management. High operational expenses with stable throughput and inventory indicate quality issues or problems in operational management or capacity management. These are very easy to use and understand, and you don't need plutonium or a flux capacitor to make them work. Please read The Goal to see more about the logic behind this, but having used these for a couple of decades, these metrics provide the correct focus for getting performance in the supply chain, but also in IT.
Yes, IT. Since the time of New Wave, the role of IT in many companies have changed from being a support function to a key strategic game-changer. Customer-facing websites and applications, EDM solutions, automation of procedures, and more are some of the products that lead to more sales or reduced costs. As such, the development and product configuration teams are a work center and must produce these tools in a timely and cost-controlled manner, so there need to be appropriate measurements to indicate to managers where to focus on to improve and what is working well. Quantitative metrics are needed for unbiased indicators of what is happening in order to correct problems - this is not about performance management which is completely different.
Throughput
Throughput shows the output of development (number of enhancements or points) from each sprint over the hours spent developing. The drive is always to increase throughput, but not to have an unhealthy environment. Some of the keys ways to increase input include the elimination of time not spent developing (i.e. are all the meetings necessary? Are too many issues being escalated to development?) and modularize your code to allow for additional services to be added in a shorter amount of time.
Operating Expense
For Operating Expense, use escaped defects and time accounting to measure. The time accounting is important to see how much time is being spent developing (i.e. sprint burndown) and on which projects and enhancements (right priorities, good estimates?), but also how much time is working on escalated tickets and in meetings instead of productive time. If Throughput is down, and/or unplanned time is up, then this indicates a quality issue, whether it is incomplete testing or requirements or code that is not robust.
Escaped defects measure the quality of testing and capturing requirements correctly, and this should be a primary metric to keep minimal. Fixing this area will make everything else flow smoother and faster, will increase the confidence of your customers, and will reduce cost. This is truly the key to making Agile work well.
So, great. Now we have measurements, but how do you go about addressing the issues? Focus on the fundamentals. With mechanical engineering in my background, I always go back to the maxim that 80% of the product cost is determined in design. Also, look at the problems rather than individual tickets - apply the 80/20 rule to see if is there a consolidated change that can fix most of the tickets (yes, the 80's once again). Re-examine the coding standards - is there the right amount of modularity and micro-services as part of this? Are there quality checks within the code with logging and notifications? Are you allocating enough time to migrate from old code or platforms to the new standards? Answering these will put your teams on the right path, and as Howard Jones said, "things can only get better."
Also, look at your strategic direction - are you using the core off-the-shelf system functionalities rather than customizing too much? Are your interface standards robust and appropriate? But these are bigger topics for another article. Until then, put these metrics into place to drive corrective actions so you don't tear your clothes up in frustration. Unless you combine it with a neon top, untucked shirt, and a mullet or crimped hair all in the name of fashion, of course.
Whether it is assessing and selecting a new system, creating an IT or ERP Roadmap, or another technology initiative, The experienced team of experts at Liberty Technologies Advisors can help. At LTA we ensure your company is on the right path as well as make sure you are getting the most out of your companies IT and technology.