Introducing Six Sigma into EA Practice - Assignment Example

Introducing the Six Sigma Approach into Enterprise Architecture Practice White paper by Hussain Al Hamidi November 2008 Examining the Role of Introducing the Six Sigma Approach in the Scope of Enterprise Architecture Practice and the Management and Technical Activities Involved in Introducing the Six Sigma Approach into EA Practice and Associated Organizational Consequences Contents 1. An Overview of Enterprise Architecture 2. An Overview of Six Sigma 3. The Main Characteristics of the Six Sigma Approach 4. Feasibility of Introducing Six Sigma into EA Practice 5. Introducing Six Sigma into Enterprise Architecture Practice: 5.1 Its Advantages, Purpose and Objectives (A Look at Why) (A) The Social Advantages and Consequences of Six Sigma (B) The Basic Economic Advantages of Six Sigma (C) Essential Implementations of Six Sigma (D) The Strategic Motivation for Introducing Six Sigma 5.2 Taking the Initiative and Leading the Direction (A Look at Who) (A) The Six Sigma Support Structure (B) Collective Collaboration 5.3 The Circumstances for Suitability (A Look at When) (A) Conditions for Success (B) Summary of Necessary Conditions 5.4 The Scope of Introducing Six Sigma (A Look at Where) (A) The Parts of the organization in which Six Sigma can be applied (B) Six Sigma in the Context of Other EA Frameworks 5.5 The Mechanism of its Introduction (A Look at How) (A) Programme of Implementation (B) Construction of an EA Model Incorporating the Six Sigma Methodology (C) Organisational Measures of Efficiency and Competency 6. Summary and Conclusions 7. Bibliography Introducing the Six Sigma Approach into Enterprise Architecture Practice 1. An Overview of Enterprise Architecture “Enterprise Architecture (EA) is a methodology to determine and establish the present and future direction of a company and simultaneously align IT and business.” (Mansuras LLC)1 This definition of Enterprise Architecture (EA) points out that the methodology intends to accomplish a goal and specifies the importance of direction for the company to take. It also places the significance of Information Technology (IT) into context. Firstly, defining the raison d’etre for the business operation is very important if any direction is to be guided. Then, ensuring that all the processes and strategies, and corporate data serve the interests of the enterprise keeps it focused within the enterprise architecture framework in order to achieve its objectives. Jeanne Ross’s2 definition of EA describing it as ‘an organizing logic’ emphasizes the organizing capability of EA; the way it is structured. Thus, we could say that EA deals with the structure and processes of the business and the methods and tools that model and evaluate the structure and processes by producing architectural descriptions of the enterprise. Whereas Information Architecture and System Oriented IT Architecture are models that deal with specific areas of the enterprise, EA is a more general architecture that relates to the structure and processes of the whole enterprise and provides the underlying framework. Based loosely on the NIH IT Enterprise Architecture3, in our own whole Enterprise Architecture, the following architecture frameworks and their components have been identified: 2. An Overview of Six Sigma Six Sigma is essentially a business management strategy. It was originally developed by Motorola and is modeled on martial arts principles of Japanese philosophy. Six Sigma can be described as a philosophy, methodology or collective strategy based on a combination of business concepts of quality control/management, customer satisfaction, zero defects, lean manufacturing and general concepts of good leadership, commitment and dedication, balance etc. The name itself refers to six standard deviations between the closest specification limit and the mean of a process, which if achieved implies that practically no items will fail to meet the specifications defined for quality. Six Sigma is a rigorous iterative process in that it guides us to make fewer and fewer mistakes in anything that could lead to customer dissatisfaction and improve upon the product, service or process quality by ‘minimizing the deviations from the mean’. This is important because it enhances predictability in the processes involved and minimizes waste. It therefore encourages us to be more productive by not only working harder, but also smarter. The objective by doing so is to improve the performance of the organization or business by producing products and services that prove to be better and last longer. However, unlike other methods to improve quality by specific continual improvements, it stands apart from them because it makes sustainable breakthrough improvements possible that are also clearly identifiable and measurable. To achieve this requires a thorough understanding of the processes involved and breakthroughs in thinking. The approach followed by Six Sigma is best summarized by the acronym DMAIC, which stands for Define, Measure, Analyze, Improve, and Control, which is illustrated in the diagram below. DMAIC is used to improve existing business processes. For creating tailored new products, services or process designs specified specially by customer needs and design preferences, there is the DMADV methodology. The basic outline is detailed below. 3. The Main Characteristics of the Six Sigma Approach On the face of it, Six Sigma appears to be simply a latest business fad that is really just another quality management technique. However, the features previously mentioned and summarized below show that it is more a complete philosophy or methodology, albeit focused on ensuring customer satisfaction through high quality in its products and services. Moreover, Six Sigma has had a better track record than total quality management on its own. The following features characterize Six Sigma in particular: It asserts a clear vision and is a customer centric system committed to their satisfaction and fosters dedicated company personnel encouraged to explore new ideas that may lead to breakthrough improvements Focus on “measurable and quantifiable returns to the bottom line of the organization” The orientations are focused on the process and end results (through minimization of variance), and the project overall Its stress on the “importance on strong and passionate leadership” The way it integrates various human and process elements, Its ability “for fixing problems in business processes in a sequential and disciplined fashion” Its emphasis on “the importance of data and decision making based on facts and data rather than assumptions” It is a rigorous and robust statistical methodology, so driven by verifiable data and measurement to measure, analyze, improve and control processes Its utilization of statistical thinking to “encourage the application of well-proven statistical tools and techniques for defect reduction”4 4. Feasibility of Introducing Six Sigma into EA Practice If we compare Six Sigma and EA, we see some expected similarities between the two, as well as distinct differences. The most obvious similarity is that both are designed to seek to gain improvements in the business processes5 in a significant qualitative manner by increasing their effectiveness and efficiency. Both are also based on derivations from measurements, the drive towards refined enterprise performance, and a management strategy of the results of operations so as to specify outputs as targeted strategic goals. On the other hand, there is a clear difference of the overall focus of the entire enterprise. The purpose of the Six Sigma methodology is to achieve Zero Defect i.e. a gradual minimization of the variation of the product, service or process from the mean quality mark or level. The focus of EA is to enhance business performance through means of the application of technology, its investment and planning, then better-informed decision-making. Instead, performance related information is used in the Six Sigma methodology to optimize the various business processes. This makes Six Sigma particularly suitable for manufacturing industries in particular. EA being a technology enhancement exercise is structured and implemented in such a way that it suits the service industries. Finally, we see that Six Sigma is a process-centric methodology because it is primarily concerned with the measurement of the parts of the process and process mechanisms, and its analysis, improvement and control (DMAIC). EA in contrast is information-centric in that it is primarily concerned with all aspects of information, its requirements, technological solutions, access, records, security etc. A summary of the comparison between Six Sigma and EA is given in the table below. factor Enterprise Architecture Six Sigma purpose and focus Improve business processes focused on technology Improve business processes focused on quality Statistical data and its usage To measure performance as an aid to decision making To measure performance to optimize processes outputs Aligned to strategy Aligned to strategy approach Information-centric Process-centric As Six Sigma and EA methods both seek to gain significant process improvements, therefore, an incorporation of the Six Sigma methodology into EA practice is very much feasible and could yield greater benefits than EA could achieve on its own. 5. Introducing Six Sigma into Enterprise Architecture Practice 5.1 Its Advantages, Purpose and Objectives (A Look at WHY) (A) The Social Advantages and Consequences of Six Sigma Delving on the human side of implementing the Six Sigma methodology into EA practice and a study of its social consequences, Six Sigma is looked upon favorably by the business leaders it develops and helps to rise, the workers in the company who feel privileged of being allowed and trusted to make valuable contributions, and the customers who get the opportunity of collaborating in the development of their product or service. The financial benefits aside, Six Sigma helps to bring out the best in people, who are not just human resources, but the most valuable of assets to the enterprise. Six Sigma encourages creativity by inviting high quality input and feedback from others. This is in stark contrast to the traditional capitalist model of the enterprise based on a top-down influence. In ‘Is the 360 degree Customer View Possible’, Susan Aldrich mentions that “customer relationships are critical to a company’s success.”6 (B) The Basic Economic Advantages of Six Sigma The advantages of Six Sigma are that it gives an idea of how well the products, services and processes are doing; allows comparison with benchmarks and other similar products, services and processes, and indicates the relative position of the company as compared to its competitors. Given this useful feedback, it thereby also allows scope for improvement in the product quality to an extremely high standard as well as providing information pertinent to achieve reduction in the costs involved during its production or preparation. Moreover, as far as customer relations are concerned, it helps to ensure that the objectives related to meeting customer needs have been met satisfactorily. It is significant to note that Six Sigma strives for an extremely high quality product or service coupled with a minimization of costs because this is contrary to traditional thinking that better quality equates with higher price. Six Sigma overturns this thinking by equating high quality with low cost, which it seeks to achieve through better processes to reduce the costs. To put it another way, this means achieving greater productivity. Besides this, the intangible savings of Six Sigma include customer retention and increase in the morale of all employers and employees. (C) Essential Implementations of Six Sigma In certain types of companies, industries and scenarios, Six Sigma is not just a useful approach in the EA or a part of it, but is essential for the sake of saving peoples’ lives or for security purposes. For example, in issuing medical prescriptions, train and flight schedules. In these cases it is not business advantages per se but wider implications and concerns. (D) The Strategic Motivation for Introducing Six Sigma Given the qualities it expounds, Six Sigma is a powerful business strategy. It has made a huge impact on businesses. Since its inception in the manufacturing industry, Six Sigma has also spread to a lot of other different industries. It has been proven very effective in the financial services industry too7, where the methodology has delivered quality improvements and cost reductions. In a capitalist market economy, companies are motivated primarily on the basis of profit and to gain a competitive advantage over others in the same market. Six Sigma provides that ability for gaining an edge over competitors, which would therefore become the company’s strategic motivation. For instance, this can be achieved through the reduction in costs leading to greater economies of scale on one hand, and improvements in the quality of its goods and services to greater customer satisfaction leading eventually to greater market share. Both cost and quality are key factors that affect the company’s profits and revenues. Statistics of various companies that incorporated Six Sigma into their EAs speak volumes about the power of Six Sigma. For instance, the Return-on-Investment figures for that devised the Six Sigma methodology show reduced manufacturing costs by $1.4 billion, and reduced in=process defect levels by a factor of 2008. Having demonstrated such power it is no wonder that Six Sigma drives the strategy execution for many business enterprises. In ‘Six Reasons Why Leaders Love Six Sigma’9 (Motorola University), Motorola lists the following points that could entice any leader into introducing Six Sigma into their EA: 1. Six Sigma impacts the bottom line 2. Six Sigma drives strategy execution 3. Six Sigma generates robust, flexible business processes 4. Six Sigma improves human performance across the enterprise 5. Six Sigma is highly scalable 6. Six Sigma is a low risk investment 5.2 Taking the Initiative and Leading the Direction (A Look at WHO) (A) The Six Sigma Support Structure The senior members of the Six Sigma support structure in the enterprise are the ‘champions’ and the ‘sponsors’. The Champion level role would typically be undertaken by the main enterprise leaders who would be responsible for identifying problems or issues and making the initial proposals to lead the implementation of Six Sigma within the enterprise. Sponsor level roles would typically be undertaken by other leaders who would be responsible for securing funding for the implementation of process improvements and monitoring process performance. These are also known as Process Owners. Other leaders of the Six Sigma support structure include the Master Black Belts responsible for the strategy, training, mentoring etc., Black Belts who are also fully trained Six Sigma experts who lead teams working on Six Sigma projects, Green Belts who are fully trained to apply Six Sigma skills to improvement projects, and Yellow Belts who are the team members; individuals supporting projects in their own areas of the enterprise. A hierarchical summary of the support structure10 follows: Strategic Level 1. Executive Steering Committee 2. Master Black Belts handle the strategy, training, mentoring and actual implementation 3. Sponsors secure funding for the proposal implementation Tactical Level 4. Champions identify the problem and make the initial proposal 5. Black Belts lead the teams working on the implementation 6. Team Members 7. Stakeholders Operational Level 8. Green Belts apply Six Sigma skills to the implementation 9. Yellow Belts help support the implementation (B) Collective Collaboration One of the most striking aspects of introducing Six Sigma into EA is the opportunity of involvement it confers upon all its members in a procedure know an Collective Collaboraion. The role of the management is crucial in defining the mission, objectives, values etc. but other voices of those involved in the enterprise are also important. The consumers who are the end users have a right to make sure they get what they want. After all business enterprises exist to satisfy their wants in the capitalist system. Then the voice of the engineer knows best how to go about to achieve this with respect to the technical requirements. And last but not least, the voice of the various employees can ensure that the right kind of environment is created to operate the enterprise. This open policy has the advantage of allowing creative thinking to take place and thereby making the necessary breakthroughs possible that characterizes the Six Sigma approach. 5.3 The Circumstances for Suitability (A Look at WHEN) (A) Conditions for Success For Six Sigma to work successfully, the business system needs to be firm in its commitment and prevent certain barriers from being established. This is required of all personnel of the entire organization, but particularly from the top-level management. The customer-centric enterprise also needs more than just commitment; an active collaboration is necessary so that the company effectively functions as an integrated whole. In all of these cases, the hindrance would not yield improvements in quality or customer satisfaction. For example, unclear values and objectives, inadequate training or a lack of understanding Six Sigma strategies and therefore failing to implement it properly, a lack of management support, and too soon expectation of instant results leading to disappointment and de-motivation and stifled investment. Furthermore, there is the challenge of having quality data available, and that not all defect rates necessarily have a normal distribution. It is also noteworthy that the success of Six Sigma is impingent on the accuracy of the hindsight and that the course of its future strategies depends on the accuracy of the extrapolation of past statistical information of the enterprise.11 For this reason, Six Sigma is best implemented in those enterprises that have a linear progression. In fact, the Six Sigma methodology is unable to accommodate systems that have non-linear progressions. Therefore, to avoid the possibility of irrelevant outcomes of applying the Six Sigma methodology, continuous newer methods need to be sought. (B) Summary of Necessary Conditions A summary of the conditions that would facilitate the successful introduction of Six Sigma into its EA practice follows: Clearly defined values and objectives Firm commitment and openness to introducing a new methodology from all tiers of the organization Work environment to be conducive to active collaboration Facilities for training management and personnel and positive management support Operations management and data analysts to provide quality data and expertise in business forecasting techniques 5.4 The Scope of Introducing Six Sigma (A Look at WHERE) (A) The Parts of the organization in which Six Sigma can be applied The Six Sigma methodology would necessarily be applied throughout the organisation in all its departments and across its entire human, information and technological resource structures. However, it affects those areas in a greater way in which measurable operational procedures are implemented whose outcome is quantifiable and which follow a linear progression. For example, the information and technology architectures can particularly benefit from this type of approach such as data, integration and application technologies as well as other management and technical processes and procedures. Process modeling tools would be applied to represent the different parts of the system and management systems devised to detail the controlling operations. The Six Sigma approach could then be applied to improve upon these various models and systems making them more efficient and optimal so as to benefit the overall business enterprise and position the business into a strategically advantageous point. (B) Six Sigma in the Context of Other EA Frameworks The role of IT in Information and Service Oriented Architecture is that it is not to be used to direct the business; rather it is itself to be directed by business goals. In today’s competitive environment, it is imperative for organizations to be acquainted with the proper extent of their current processes, ensure that these meet the goals of the business, and that they set for themselves appropriate goals and procedures for successful future growth. In this regard, Six Sigma can help to accomplish this because its methodology incorporates these very principles and strategies. 5.5 The Mechanism of the Six Sigma Introduction (A Look at HOW) (A) Programme of Implementation An effective organization wide adoption of the Six Sigma methodology would require a comprehensive programme to implement specific processes, procedures and techniques. A special unit or office could be established to oversee these implementations to ensure that the company is able to take full advantage of Six Sigma. This office could also be given the task of initiating useful projects such as feasibility study projects, assessment projects, pilot projects, and other incremental implementation projects. Projects to enable changes to be brought about can and should also be initiated from time to time or as the need arises. In the spirit of the Six Sigma methodology, such programs should ideally be run as part of the organisations’s own EA management and involve all those who are associated with the company from the management down to its administrators, clerical staff, workers and also customers or clients. As long as it does not diminish the company’s strategic position or affect it adversely in any way, allowing independent people also can enrich this pool of people and ideas further. Regardless, as far as the role of identifying and defining the policies, principles, mission vision etc. are concerned; these should under all circumstances be the prerogative of the management-cum-owners responsible for directing the enterprise lest these become diluted. To demonstrate SOA in Six Sigma as a customer centric methodology, Patricia Seybold and Brenda made good use of customer co-design techniques together with their own tools to capture the customers’ ‘ideal state’ scenario designs and identify the customer critical services.12 What is important in EA or any architecture system is to have a clear information management model, which closely matches the products, services and processes of the business and ensures a quality product or service for the customer. After a suitable model is devised, it can then be used to deliver the service to the customers’ satisfaction. (B) Construction of an EA Model Incorporating the Six Sigma Methodology A suitable model for a statistical analysis of a customer centric enterprise architecture would necessarily have to comprise of a multivariate value analysis where an iterative consultative approach to model building is taken. A requisite model in particular is ideal for a Six Sigma implementation as it best represents a shared social reality created by a group of people i.e. the customers and the information pertaining to their valuable input for the company because this otherwise complex model allows meta-perspectives to be constructed by combining the several perspectives in one recursive model. The senior decision makers in the enterprise can then focus on evaluating what is to be done instead of getting tied up with how it is to be done. As far as the EA model is concerned, considering the features of the Six Sigma methodology, its similarities with EA and potential for being a complementary approach, for an effective assimilation of Six Sigma into EA practice, a Generalised Enterprise Reference Architecture and Methodology (GERAM) is proposed. It is suitable because it facilitates “the unification of methods of several disciplines used in the change process, … [and] it unifies the two distinct approaches of enterprise integration.”13 Some possible components of the complex and dynamic model are shown below. (C) Organisational Measures of Efficiency and Competency In terms of the statistical model of this combination, it generates integro-differential equations Six Sigma on its own results in partial differential equations as it deals with deviations from the norm, and EA is concerned with integrating the various parts into a whole. The operation or statistical analysts unit would also be an essential and integral part of the programme charged with the responsibility of handling all the data involved. Specific tools that are typically utilized in the Six Sigma methodology include baselining, gauge measures, hypothesis testing, Pareto analysis, regression analysis, structure trees, and tolerance analysis. 6. Summary and Conclusions Why Six Sigma provides strategic motivations to gain a competitive advantage through breakthrough improvements in various processes such as quality and costs When Six Sigma requires a firm commitment, clarity of values and objectives and a conducive environment for active collaboration and training, amongst other things Who Six Sigma is based on a support structure of leaders for its implementation and provides the opportunity for all voices to be heard pooling together all people involved and their ideas Where Six Sigma can be implemented throughout the enterprise especially the information and technology architectures How Six Sigma methodology requires a programme of implementations and is based on process modeling tools and statistical analyses that seek to make breakthrough improvements Six Sigma is a complete methodology, which given the right conditions can easily be incorporated into the entire Enterprise Architecture practice. The motivation for adopting this methodology arises due to the opportunity it allows the enterprise to gain a strategic advantage as a result of breakthrough improvements in its various processes. This setup requires the proper support structure of skilled leaders and is based on statistical analyses of the data pertaining to the processes. Moreover, it enhances the motivation of all members of the enterprise including the end users because it allows them the opportunity to be involved in the processes. 7. Bibliography Read More