Eli Goldratt defined management attention as the ultimate constraint. However, sometimes other constraints emerge. Let’s analyze the emergence of IT as a universal bottleneck for improvement efforts of many organizations and corporations.
The ultra fast development of IT, including the cloud, Big Data, artificial intelligence (AI), Industry 4.0, mobile applications, e-commerce, cyber protection and routine software, creates a problematic situation in almost all medium and big organizations: the IT department becomes a bottleneck. The simple meaning of a bottleneck is: being incapable to perform all the required work.
Dealing with a real bottleneck is a critical strategic problem, because it forces top management to decide what good business to give up. This is not a problem with the technology itself; it is a difficult managerial duty to decide what new technology (actually any promising change) to adapt to and at what pace. That said the technology people don’t make it easy to top management to make the right decisions. The technology perspective is quite different from the goal of the organization.
While the products and services of the organization might have nothing to do with IT, the flow of materials, products and services and the means for more effective marketing and sales, depend more and more on IT. Most new technologies are heavily based on IT and the adaptation to the flow of incoming new IT capabilities becomes more and more difficult. Actually as the use of IT becomes bigger, and more complex, controlling the whole IT activity might become chaotic. New managerial capabilities are needed to maintain the huge suite of features, coming from various sources, under control.
Just to illustrate the problems: The banking systems generate huge amount of IT requests from better mobile applications to improving international and multi-currency transactions, which have to conform to various local regulations. The appearance of crypto-currency adds challenges that require new IT tools. Naturally banks have endless artificial intelligence initiatives and, of course, they need to constantly improve their cyber protection. Other business sectors, like Retail, also face new threats that require new IT tools to provide new services to their customers. The whole sector of Manufacturing is facing Industry 4.0 new digital control and connectivity.
The “Flow of Value” is defined as the current way the organization delivers value to customers. This is definitely a critical flow for every organization. However, every organization has also to maintain another critical flow: the “Flow of Initiatives” to improve the Flow of Value in the future. The Flow of Initiatives consists of all the efforts invested in expanding the market demand, developing new products/services or finding better ways for the “Flow of Value” to adapt to the trends in the market, like faster response time. Each of these flows has its own constraint.
The means for gaining more market, or even preserving the current demand, rely heavily on advanced features of IT. Being blocked by the bottleneck causes considerable damages, like confusion on what initiatives are in the pipeline and the priority they should get in competing for resources. The confusion and the raised internal competition on IT resources cause multi-tasking and frequent priority changes, which cause significant waste of capacity of IT people, turning the situation into a vicious cycle. Considering the fact that truly good IT people are scarce, so the competition on them is wide, having the IT as a bottleneck will not be solved in the near future.
IT as a bottleneck creates only minor problems to the current Flow of Value, because that flow continues to function using the older IT tools and it usually has adequate capacity of key resources. However, the perceived shortcomings of the IT system are obvious to the employees and also to the key clients and suppliers. This creates significant tension within the organization and between the organization and its clients and suppliers. Rumors and facts about the competition going on the new technology wagon, add to the ongoing pressure and the department that needs to respond to all the requests is the IT. The big problem of IT is that while they need to plan and implement new tools and upgrades to existing tools, they still need to support all the regular services. The conflict between the urgent and the important is especially noticeable in all IT departments.
The real acute problem with IT as a bottleneck to growth is that the situation looks temporary, but it is not. At any given time the stream of new IT-based technologies looks like it’d take certain time, maybe even few years, to implement, but then the pressure on the Flow of Initiatives will go down. This is simply not true. The whole area of Artificial Intelligence (AI) is just starting to penetrate into actual use in large organizations, and this flow will definitely continue and even accelerate. In the same way the need to improve the security of the IT would go up more and more. So, this state of having to deal with a stream of new significant IT oriented technologies will continue.
There are two parallel efforts required to get the IT, facing many routine but urgent requests, while also struggling with a stream of new technologies that seem relevant, in control.
- Significantly improving the flow of the work-in-process (WIP) of the IT.
- The first key insight is to keep a certain minimum amount of work items in progress and choke the release of more work items based on the pace of completed ones. In itself this would reduce multi-tasking and improve the focusing and concentration of the human resources on the current request or the project task they are working on.
- Implementing one scheme of priorities to warn when a certain project, or a specific mission, are stuck. The TOC methodology for priorities within execution is called Buffer Management.
- Identify within IT the internal constraint resource, and then search for the best scheme to exploit its work and subordinate all the rest to that scheme.
- Carefully choosing and prioritizing all IT requests. This practically means creating the organizational structure and its processes to evaluate the potential value from each request. This is an ultra-sensitive process and it has to be led by an executive, rather than by an IT professional manager, because the value should be assessed beyond the IT perspective. Such a check should also include the rough capacity requirements from each request and the time line to complete it. This creates a process for defining the most effective portfolio of projects and missions. TOC has contributed the ‘Six Questions on the Value of New Technology’ and other thinking tools to support the evaluation of value. This process would dictate the required effective stream of requests from the IT department, making sure every request is truly needed at the specific time frame and by that helps to define the capabilities and capacity levels that the IT department should maintain.
The key argument is that improving the flow of WIP in the IT department might solve the problem for some time, but without managerial priorities on the incoming requests the problem will return in the near future.
The next step is to implement the new IT tools into the Flow of Value to generate the added value. The implementation may require going into a Transition Period. Getting used to the new tools takes time. During that period mistakes are done and all the managers have to be ready for signals of a problem and deal with it as soon as possible. At the transition time the need for management attention across the hierarchy is at its peak.
Should IT be the strategic constraint of the Flow of Initiatives?
The natural constraint for growth is management attention because adding more managers might cause considerably more communication obstacles and diminishes productivity. Elevating the management attention requires, first of all, learning to focus on the issues that matters the most. This is exactly what is also required to exploit the limited capacity of the IT resources. It means introducing a process of sorting all the ideas, including the partially developed initiatives, according to systematic assessments of their value, the required capacity from the relevant critical resources, and their expected completion time. Such a process is the ultimate solution to both management attention and also for the IT. Another conclusion is that the required capacities of all other resources, IT included, considering also the absolutely necessary protective capacity, have to conform to the ability of top management to lead the most effective portfolio of improvement initiatives.
12 thoughts on “IT as a universal bottleneck”
I concur with the problem and challenges you have identified. This is an area for TOC to bring significant improvement/value to ALL companies. Regrettably it is also misunderstood by the TOC community, they must be educated in order to address this ignorance and lack of appreciation.
I concur as well – but would also argue that this challenge is already being addressed by the DevOps community and its practices. Interestingly enough DevOps stems from TOC and Lean principles. The Phoenix Project is a novel written in the same way as The Goal, about this very topic.
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Remember : “The number one reason for not doing what should be done is doing what should not be done”. Probably focusing on a small number of initiatives -the ones that improve the performance of the system, there is no way to consider IT as a universal bottleneck.
Yes, you are right, the solution has to develop the process to decide what to work on and mainly, what not to work on. Problem is: it is not an easy straightforward process. You have to give up good initiatives, which might be not good enough.
Question, you speak a lot to IT managing this process. What role does Product Management play to support this prioritization? You’ve been in this field for a long time – so has your view of this changed over the years?
Thank you Zach. The product managers of the technology company should be able to guide the client to use the technology in a good enough way. But the product manager usually don’t fully understand the business of the client. More, sometimes they face a conflict when they should recommend the client not to use their own product, or even recommend using a competitor product. Eventually the organization has to look for their own performance and the streamline the load on their IT department, for the good of the organization as a whole.
As an executive in IT and then corporate strategy, I dealt with information bottlenecks for many years. My book about strategy, information, and constraints is due to ship around April 2020. It addresses many of the topics in Eli’s post, and more.
Elyakim Schragenheim, when we look outside of the traditional “sweet spot” of ToC — logistical systems — identifying constraints can be very difficult!
The five most valuable companies in the world (by market capitalization) are 21st Century internet-based companies. Not logistical companies… limited by old school IT departments.
What limits their “flow of initiatives” is traction with customers — not their ability to pilot and test those ideas (which they can do quickly and cheaply… thanks to the internet).
How did Zoom go from handling 10 million meeting participants a day three months ago, to handling 300 million a day this month? Not because of anything IT did, or any changes to their services… (OK they did have to provision a whole bunch of virtual servers). The market was their constraint then, and it’s still their constraint now. And that applies to the flow of initiatives too…
“Exceeding the Goal: Adventures in Strategy, Information Technology, Computer Software, Technical Services, and Goldratt’s Theory of Constraints” is available now. It wrestles with the issues raised here, and more…
Eli, you state “Considering the fact that truly good IT people are scarce, so the competition on them is wide, having the IT as a bottleneck will not be solved in the near future.”
I wonder what is for you somebody that is a truly good IT person?
Many make that statement but being asked have trouble answering the question even when working as IT managers. I am asking you that question because I know that you have a deep background in IT and I am quite sure that you put some thought into it before writing it.
Rainer, there are several unique characteristics of IT that make the need to look for for people who are “proven” as experts. One,
software is senstive in the sense that a change in one place could easily cause a major global problem. Two, programmers write the code and it is not simple (even though doable) for another programmer to go into the code and fix it. Three, the stream of new technologies making it almost impossible to be good at all the areas of software. Four, all software contain bugs – so there is a constant need to identify the bugs and quickly fix them, as the software is used and the bugs cause damage.
The resulting effect is that proven experience is what IT managers are looking for. Thus, it is difficult for a new IT person to get a job he/she can grow in and become a proven expert. Of course, the lack of such people force them to accept relatively beginners, but the flood of work make the way to become a proven expert difficult.
Agile, which puts a lot of pressure on team-work, which in my time was practically unheard of, makes it easier to grow people as a beginners can be ina team with a much more experienced one. Still, the overall situation is that there is much more demand for “proven experts” in very specific areas of software than supply, that we have a big problem of availability of reliable (maybe this is a better term than “truly good’) IT paople.
So, my direct answer comes last: truly good (reliable) IT people are those that they accomplish in good time their missions without creating bigger problems.
Eli, thanks a lot your response. I really like the way you describe the challenges of being a truly good (reliable) IT person.