Overproduction: Muda matters for IT

Overproduction is a source of waste or muda as defined in lean thinking. In manufacturing overproduction is defined as making things before they are needed. Reducing overproduction in lean manufacturing involves concentrating on changes that reduce finished goods and WIP inventories. In IT overproduction waste comes from IT solutions or services that are in excess of required business performance.

Over delivering is over production in IT. Over delivering creates waste measured by the opportunity cost of applying excessive resources. It is waste because over delivering steals resources away from other valuable business priorities. One could see how overproduction could account for 5 – 10% waste in the IT infrastructure and 10 – 20% waste in the IT investment portfolio.

In IT there are three sources of overproduction each with their own specific remedies.

• Overproduction in infrastructure and operations revolves around the resources and redundancies required to provide service levels that go beyond business requirements. This is the realm of 100% up time, platinum help desk support, unlimited storage, etc. Service management that sets business relevant service levels and risk management capabilities that provide for fault tolerant and ready recoverability help manage this form of waste.

• Overproduction in solution development occurs when IT builds a solution that does more than is required, or takes on scope beyond the project charter. “Gold Platting” or “Scope Creep” are other names for this type of waste. While these things might delight the customer and give them more than what they asked for, they also steal resources away from their stated needs. Cost and schedule driven program and project management are a remedy to this type of waste.

• Overproduction in IT planning and initiatives occurs when IT creates solutions or commits to initiatives that have or will lose their business relevance or value. This is the realm of “sunk cost” where IT continues work to complete a solution that is no longer relevant just to complete it. “Resource allocation” waste occurs when the CIO has to prove to the CFO that all IT resources are fully loaded for the year. Recognize that at least 10 to 20% of initiatives approved at the start of a year lose their business relevance before they are completed. Shortening the IT planning and project horizon is the remedy for this type of waste as it keeps IT delivering first things first.

The idea that overproduction is waste can be tough to understand particularly when you see value as doing more or going beyond the call. That view assumes that the volume of IT produced is the measure of IT’s business value. In reality, the business does not want more IT for the sake of more IT, no they want more IT in the right places. That means taking back resources wasted on over production and putting them where they matter.