Can IT Learn Any Lessons from Manufacturing?
Information technology in the United States might be in danger of falling into the same productivity stagnation that the U.S. manufacturing sector faced in the 1970s and 1980s, according to Joe Hessmiller, director of the IT Metrics and Productivity Institute (ITMPI). In a presentation at an ITMPI conference in Chicago last week, Hessmiller said the challenges IT is dealing with today are not unlike those factory floor workers and managers encountered just a few decades ago.
The manufacturing industry in this country led the world by a large margin following World War II, due in part to the wholesale obliteration of several combatant nations’ infrastructures—many of which had been leading producers only a few years before—as well as the United States’ own high wartime production levels. However, the U.S. advantage in heavy industry was challenged in the 1970s by leaner, more efficient industrial models in Japan and Europe. Although U.S. firms had to play catch-up for a few years, the eventual result was an explosion of productivity in all countries.
Similarly, American IT professionals have been turning in relatively static performance in terms of output per full-time worker for several years now. Meanwhile, while they likewise face challenges from their European and Japanese counterparts, productivity competition is heating up in places like India and China (although, to be fair, output measurements in less developed nations probably started from a very low baseline).
One of the problems with the IT industry right now is the way performance is measured. In a standard business formulation, productivity equals output divided by input. In IT, output tends to be defined as something like lines of code written, when it should be solutions delivered to the customer, Hessmiller explained. This substantially skews the results of the measurement.
Additionally, misallocation of resources is an obstacle. Some IT managers have even confessed to Hessmiller that more than 50 percent of the departments’ funding goes toward things that don’t add value to the company. Another difficulty is with IT project success rates. He cited a Meta Group study that showed that only 26 percent of application development projects were delivered on time and on budget. About 46 percent were challenged, meaning they didn’t meet one or both of those criteria, and 28 percent failed outright.
Hessmiller suggested that IT leaders in this country should learn from the history of U.S. industrial firms, lest they repeat it. Those organizations ultimately implemented a three-phase implementation model to improve their workers’ capability levels and become competitive again. Those sequential stages included visibility (classifying and capturing work, employing performance metrics), control (implementing workflow processes) and optimization (streamlining and crafting work processes).
“Manufacturing lessons apply in IT,” Hessmiller said. “The main lesson is that we do have to improve. We can’t wait three, four or five years for our managers to get their minds around this.” He added a warning to his audience, though: “There are two types of people in the world: gain seekers and pain avoiders. Which one do you think is larger?”