the manufacturing revolution and it…a better way

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Computer Aid, Inc.

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The Manufacturing

Revolution and IT

…a Better Way

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Computer Aid, Inc.

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CAI Mission Statement

“To become the premier computer software development and support

organization in the world”

1986 - 2007

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Computer Aid, Inc.

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CAI• In The Business Of Information Technology

Outsourcing

• Focused On Being A Best Practices & Productivity Leader

• Thought Leadership Is A Key Focus

• Business Value To Clients Is Very Large

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The Intersection of Human Capital & Best Practices

HUMAN CAPITAL COSTS– Insourcing– T&M– Outsourcing– Project Outsourcing– It Software Best Practices

BEST PRACTICES– Metrics Based Management– Process Definition– Computer and Operational

Control– Real Time Repository– Continuous Improvement

“The IT Management Revolution”

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Current Human Capital Costs• People

•$•T & M

•Outsourcing

Best Practices

Critical Success Factors•Consolidate and Leverage T & M Dollars•Build a Best Practices Plan

-Assess Current Status-Create a Best Practices Vision-Develop a Tactical Plan-Finance with T & M Dollars

Current Level

Results

Co

sts

• 30% Reduction in Human Capitol Costs

• Best Practices Management

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Computer Aid, Inc.

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CAI Best Practice Enablers250 M

$125M

175 M

$150M

$30M

$100M

$50M

$15M

$5M

$10M

85 88 91 92 94 98 00 03 0786

Mission Statement

createdFirst $1

Million Dollar Fixed Price

Project

First $1 Million Dollar Fixed Price

Project

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Computer Aid, Inc.

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$125M

175 M

$150M

$30M

$100M

$50M

$15M

$5M

$10M

85 88 91 92 94 98 00 03 0786

Created Legacy Systems Managed

Maintenance Methodology

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Computer Aid, Inc.

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$125M

175 M

$150M

$30M

$100M

$50M

$15M

$5M

$10M

85 88 91 92 94 98 00 03 0786

Mission Statement

createdFirst $1 Million Dollar Fixed Price Project

First $1 Million Dollar Fixed Price Project

Created Legacy Systems Managed Maintenance Methodology - Dupont

Created first “Nearshore

Development Center”

Large “Off Site” Fixed Price

Development Project - IBM

Application of metrics Based Management to Help Desk Operations

Real Time Operations and

Workflow Management

….Tracer to Legacy Systems

Real Time Operations

Management for all software

operations – TRACER

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Computer Aid, Inc.

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$125M

175 M

$150M

$30M

$100M

$50M

$15M

$5M

$10M

85 88 91 92 94 98 00 03 0486

Mission Statement

createdFirst $1 Million Dollar Fixed Price Project

First $1 Million Dollar Fixed Price Project

Created Legacy Systems Managed Maintenance Methodology - Dupont

Created first “Nearshore

Development Center”

Large “Off Site” Fixed Price

Development Project - IBM

Application of metrics Based Management to Help Desk Operations

Real Time Operations and Workflow

Management ….Tracer to legacy systems

Created Offshore Manila

Development Center

Project Office and Quality

Management Systemic

Integration

Real Time Operations

Management for all software operations

– TRACER

Automated Project Office

System

07

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Computer Aid, Inc.

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The Manufacturing

Revolution and IT

…a Better Way

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Computer Aid, Inc.

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The Manufacturing Model• U.S. Post-War Manufacturing Leadership Set World

Standards for Decades

• Emerging Asian and European Manufacturers’ Capability Shook the Foundations of North American Economic Assumptions in 1970’s and 1980’s

• Led to a Fundamental Transformation in the Manufacturing Model

This Transformation Model Provides Vital Lessons for Transforming Software

Management Today

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Manufacturing Results Compared to Service Sector

Real Output per Full-Time Equivalent Worker, 1977-2001

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Manufacturing Revolution Results

• Dramatically Lower Costs Per Unit• Continuous Cost Reductions Per Unit• Higher Quality

Examples• Steel: 8 hrs/ton vs. 25• Auto: Toyota 23 Hours per car vs. 100

GM 28 Hours per car vs. 100• GE: Constant stream of 10% per year cost reductions• Motorola, et al Six Sigma

3.4 Failures per Million

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Computer Aid, Inc.

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Core Principles of the Manufacturing Revolution

• Constantly Improving Productivity• Standard Cost Model• Continuous Improvement• Defined Processes• Process Management• Metrics• Rock Solid Metrics Based Management

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Computer Aid, Inc.

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Techniques Used in Manufacturing

• Standard Components - Standard Cost per Component

• Workflow Process Definition• Real Time Tracking: Operational

Events• Real-Time Operations Costs and

Activity Process Control Concepts…Best Practices

P OutputInput

=

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Computer Aid, Inc.

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Techniques Used in Manufacturing

• Real-Time Operational Software

• “Smart Repository” for all Operational Data

• Knowledge Capture

• Systematic Approach

• Mine Operational Data

• Continuous Improvement (Six Sigma)

• Artificial Intelligence Engines

P OutputInput

=

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How Did They Do It?

Measure ImproveLearn

DATA REPOSITORY

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Productivity OutputInput

=

How Did They Do It?

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How Did They Do It?

• Measure Like Crazy• Establish Aggressive Targets• Use Data Aggressively to

Make Decisions• Learn • Recognize Accomplishments

and Progress• Reward Results, not Credentials• Treasure Every Cycle of Learning

Measure

Improve

Learn

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Manufacturing Initiatives

TQM BPR JIT Six Sigma Alignment “Learning

Organization” Balanced

Scorecard

Lower Costs

High Quality

Fewer Reworks

Faster Time to Market

Improved Customer Value

Realigned Value Chain

“Teaming”

Competitive advantage

Strategic Focus

Higher Investor Value

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YES IT DOES…Almost Literally!

Does This Apply To IT?

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The IT Challenge: Productivity Trend is Flat…or Declining

Ave

rag

e P

rod

uct

ivit

y In

dex

*Source: IT Metrics Strategies @2001 Cuter Information Corp

Year

1982-1985 1985-1988 1988-1991 1991-1994 1994-1997 1997-2007

15

10

5

20

0

13.815.0 14.8

16.1

17.4

16.6

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Project Delivery and Cost

Meta Group statistical survey of 23,000 application development projects:

• 26% succeeded: Project delivered on-time and on-budget

• 46% challenged: Project completed over-budget or past deadline

• 28% failed: Project never completed

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Programming Productivity Disparity“Productivity of the 90th percentile teams is six times higher than that of the 15th percentile teams”Source: David Garmus, The David Consulting Group

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TransformationCURRENT

STATE

♦ Unpredictable

♦ Missed Delivery Dates

♦ Over Budget

♦ Ineffective Productivity Measurements

♦ Rationed Staff

♦ High Cost

♦ Reliable Reliable

♦ On TimeOn Time

♦ Within Budget Within Budget

♦ High ProductivityHigh Productivity

♦ Variable CapacityVariable Capacity

♦ Lower Fixed CostLower Fixed Cost

Leadership• Management Leadership• Lead By Example• Experienced Leadership

Control & Quality• Project Office• Quality assurance• Administration

Learning• Socratic Learning Process• Education• Overcome Resistance to Change

Intellectual Property• Methodology• Knowledge• Inventions/Tools

• Processes• Measurement Systems

FUTURESTATE

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METRICS

STANDARD PROCESSES

PROCESS CONTROL

BEST PRACTICES

I.T. OPERATIONAL EXCELLENCE

RIGHT MANAGEMENT SYSTEM

LE

AR

NIN

G

OR

GA

NIZ

AT

ION K

NO

WL

ED

GE

M

AN

AG

EM

EN

T

REAL TIME DATA

REPOSITORY

Governance/Compliance/Sarbanes Oxley

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DISCRETE WORK ITEMS

Standard Process

Std. Estimating

Real TimeComplianceReal Time

Data Recording

Work Plan

Repository•Work in Process•History

DATA Reports

Real TimeProcess Control

ProjectManagement

FeedbackFeedback

The TRACER Engine

By personBy teamBy product

•Six Sigma•Continuous improvement•Benchmarking•Comparative Analysis•Performance Planning•Goal setting•Project Office

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Foundation Elements• Identified/Repeatable Processes

• Discrete Measurable Outputs

• Standard Estimating

• Performance Data Repository–Track/Analyze Data

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Foundation Elements

• Software Tools to Ensure Consistency/Repeatability

• IT Organizational Change Methodology

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Standard Process

Metrics Database

Standard Estimating

Real Time Process Control

Education & Training

Governance

Metrics Based Management

THE FOUNDATION

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Imp

rove

d C

apab

ility

Lev

el

10%-15%

15%-25%

25%-35%

Cumulative Timeline

1-3 months 4-7 months 8-12 months

Implement Workflow Processes

CONTROL

Streamline & Craft Work

Processes

OPTIMIZATION

OPTIMIZATION

36 months

Summary: Three-Tier Implementation Model

50% Reductio

nIn Costs

VISIBILITY

GettingGettingStartedStarted

Classify and Capture Work ,

Metrics, Resources

and Tim e

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Normalized Cost/Headcount (Constant Scope)

PERCENT

53%CostReduction2000-2004

0

20

40

60

80

100

TECBaseline

CAI Start YE 2001 YE 2002 YE 2003 YE 2004

PeopleDollars

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Summary:F U T U R E

S T A T E• METRICS-BASED

MANAGEMENT SYSTEM

• VISIBILITY

• CONTROL

• OPTIMIZATION

• REDUCE COST BY 50%

♦ On TimeOn Time♦ Within Budget Within Budget ♦ Dramatic Cost Dramatic Cost

ReductionReduction♦ Metrics-Based Metrics-Based

Management Management SystemSystem

♦ Lower Fixed Lower Fixed CostCost

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Critical Success Factors• Leadership

• Standard Processes


• Real-Time Process Manager

• Complete and Comparative Data

• Early Success

• Education & Training

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CSF #1: Leadership – CIO & Management Team

A “Top 5” Priority

Senior Management Leadership

Metric-Based Management

Six-Sigma Like Executive Training Program

Support and Monitor

Identify Champions

Repeatable Management System

Leadership

Standard Processes

Standard Estimating

Real-time Process Manager

Complete and Comparable Data

Education andTraining

Early Success

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CSF #2: Standard Processes Capture Key Events

Repeatable

Event-Driven

Measurable

Controllable

Provides Consistent Results

Continuous Improvement

Repeatable Process

Leadership

Standard Processes

Standard Estimating




Early Success

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CSF #3: Standard Estimating Define “Output”

Standard Components Standard Cost/Component

Estimating Techniques, Matrices

Provides Common Baseline for Measurement

Up-Skills Employees

Quantitative Measure of Performance

Repeatable Definition of Output

Leadership

Standard Processes

Standard Estimating




Early Success

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CSF #4: Real-Time Process Manager

Workflow Manager Integrated, Real-Time, Easy-to-Use Operational Processes

(i.e. work requests, incidents, calls, estimates, etc)

Process Tools(i.e. resources, time, work events)

Measurable & Controllable Feedback for Continuous Improvement Baseline Data

Repeatable and Controlled Process

Leadership

Standard Processes

Standard Estimating




Early Success

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CSF #5: Complete and Comparable Data

Leadership

Standard Processes

Standard Estimating


Stored in Robust Repository

Grow Data Repository Over Time

Measure/Analyze/Take Action

Familiarize and Orient People with Metrics

Baseline Performance Data

Metrics-Based Management System

Comparative Performance

Operational Benchmarking

Basis for Continuous Improvement



Repeatable Event Types and Components

Early Success

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CSF #6: Early Success Choose an Area with a Champion

i.e. Believer, Proactive, Change Agent

CAI Recommendation: Application Support

A Successful Pilot Should Result in:

Productivity Improvement Trend Line 15% by Month 6 20% by Month 8 25% by Month 10

Success and Training

Leadership

Standard Processes

Standard Estimating




Early Success

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CSF #8: Education and Training

Change Management-Executive & Management

Leadership and Management

Mobilize for Success

Business Process Change

Coaching / Mentoring

Six Sigma Like Program Metrics Based Management Data Driven Analysis

Organizational Evolution

Leadership

Standard Processes

Standard Estimating




Early Success

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Critical Success Factors• Leadership

• Standard Processes


• Real-Time Process Manager

• Complete and Comparative Data

• Early Success

• Education & Training

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Imp

rov

ed C

ap

abili

ty L

eve

l

10%-15%

15%-25%

25%-35%

Cumulative Timeline

1-3 months 4-7 months 8-12 months

GettingGettingStartedStarted

VISIBILITYClassify and

Capture Work , Metrics,

Resources

and Time

Implement Workflow Processes

Streamline & Craft Work

ProcessesCONTROL

OPTIMIZATION

OPTIMIZATION50%

Reduction

In Costs

36 months

Summary: Three-Tier Implementation Model

the manufacturing revolution and it…a better way

Technology

software management

management revolution

workflow management

cai best practice enablers250

best practices visiondevelop

manufacturing results

manufacturing modelu

cai mission statement