In 1911, Frederick Taylor wrote his seminal The Principles of Scientific Management. It changed the way work was done and influenced thinking around specialization and productivity measurement. And it has allowed many efficiency and process improvement consultants to develop lucrative practices along the way.
Technology services (systems integration, outsourcing, contract staffing) valued annually at over $ 500 billion worldwide are procured with the promise of making corporations even more efficient. As the services market morphs (HP may be looking to acquire CSC, private equity funds looking at ACS, BPO deals becoming bigger than ITO deals, offshore vendors continuing their market share grab), the industry should take a hard look at its own delivery models - and apply Taylor's concepts to itself.
While most of these practices I list below are in use in the industry, their usage tend to be spotty:
a) Geographic optimization - Offshore vendors have shown they can perform 70 to 80% of work in remote locations. But remote does not always mean thousands of miles away. It could be low cost, rural locations. On the flip side, staff that need to be assigned to client site should, to the extent possible, be local. The tech services business keeps the airline industry alive. Long-term travel is not only expensive, it also saps staff and project productivity
b) Functional optimization: Through use of shared service centers e.g. specialists servicing multiple clients at the same time - e.g. DBAs monitoring performance of multiple client databases. And factories for coding, data conversion, testing, documentation etc with specialists armed with specialized tools.
c) Capacity optimization: Through sub-contracting arrangements, just-in-time recruiting/ training capabilities, use of "shadow" teams, "buffer zones" - concepts widely used in production and inventory management provide clients the ability to rapidly ramp up or down capacity. One of their biggest selling points to CIOs is the ability to turn their fixed staff costs in to variable - but services vendors promise that but seem to just end up being another, often higher fixed cost.
d) Continuous improvement - Expect more from each staff and your teams each year. It was considered inhuman a century ago when Taylor designed time and motion studies. It is still considered inhuman - but the brutal economic reality is pay raises without productivity improvement equals inflation. The 5th Siebel project should take less effort than the 1st, the 50th should take even less and so on. The second year of an outsourcing contract should show improvements, the third year even more. Offshore vendors cite continuous improvement around their CMM, Six Sigma initiatives - but even there you have to push them for tangible productivity improvement metrics to offset their growing wage inflation.
e) Automation: It is starting to happen gradually around systems management, it needs to happen more around systems integration. While services firms talk about selling "solutions", they really are still very driven to sell bodies and time. Man and machine need to be packaged - and optimized - in solutions. The key word is optimized - it is infuriating to have an IVR go through security questions, then have the call center rep ask the same ones. The other advantage services companies can pass along to their customers is time shared software licenses - much lower than each company licensing its own, wide array of testing, conversion and infrastructure management tools.
Optimizing across geographic, functional, time zone. man-machine and other constraints is complex . But, over the last century the industry has taught its clients about the theory of constraints, economies of scale, lean manufacturing. As they say at Microsoft - the industry needs to eat more of its own dog food. With the seismic changes in the industry that will be the only way to survive and thrive.
