IT as a universal bottleneck

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.

1. Significantly improving the flow of the work-in-process (WIP) of the IT.
   1. 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.
   2. 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.
   3. 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.
2. 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.