Implementing lean IT jumpstarts telecom transformation
Disciplined pricing and distribution spearhead marketing and market transformation. Streamlined ADM processes drastically improve on-time delivery, speed-to-market, and productivity.
A leading global telecom services provider steadily strengthened its market position in part because of the efficiency of its IT operations. Yet, overall effectiveness had slipped, with both on-time delivery and time-to-market suffering. In short, rather than enable and expedite execution of business strategy, the IT group was perceived by some business leaders as a bottleneck. The company knew it had to reverse these trends and asked McKinsey to work with the IT organization. Together, IT leadership and McKinsey conceived and executed a multiyear transformation plan designed to improve throughput of services, on-time delivery, time-to-market, and people productivity.
A diagnostic confirmed that many of the performance issues were rooted in a one-size-fits-all product-development process and the team's fragmented interactions during product functional design. These were in turn exacerbated by misaligned objectives and misunderstandings with the outsourced software factory as well as the team leader acting more as an expert rather than a people manager. In fact, the processes and tools used by IT teams were found to slow issue resolution and fragment teamwork, all of which contributed to lower productivity and longer time to market.
To address the shortcomings, the joint team identified nine priorities to meet both the short- and long-term goals of the company as well as build needed capabilities and processes within the IT team. These included:
- increasing process efficiency by using demand-based segmentation that reflected differentiated processes and factory capacity, and "Power Workshops" to reduce product design time
- enhancing performance management, entailing both extensive coaching on resource management and use of tools such as daily huddles and visual review boards to aid team and project planning
- ensuring back-up on critical functions and roles by offering broad organization and multi-skills capability development
- changing team mindsets and behaviors by using frequent interventions to reinforce alignment of frontline and vendor actions with company objectives
The Power Workshop, a unique mechanism created by McKinsey, efficiently addressed several product development issues. The workshops brought together key stakeholders and decision makers to focus on discrete, significant problems and quickly agree on corrective action plans. Workshop participants also defined and posted team-level KPIs, creating a strong shared sense of problem solving, urgency, and responsibility.
Although the transformation is ongoing, the company saw several key performance indicators improve significantly within the first year. Among the most impressive:
- quality improved as the overall defect rate was cut by more than 50 percent and issue resolution time plummeted by 75 percent
- productivity of the IT group improved by 40 percent, of which 25 percent was pure efficiency gains
- time to market for products that were fast-tracked was reduced by 50 percent
- the percentage of projects delivered on time initially improved by 15 percent and is on track to double within a year
The IT group continues to use new tools such as visual problem-solving boards to prioritize work and make assignments more transparent. Similarly, the team's adoption of standardized project reporting allows members to track progress on complex or multi-department initiatives to minimize delays and work through bottlenecks faster.