Lean as a driver for change and cost reduction at KBC ICT

Jan Mennens

Agenda

• Company intro

• Using Lean as a tool for a large scale transformational change

– How did the programme get started?

– What are the key lean tools used, how are they deployed?

• Combining top down and bottom up approach to ensure sustainability

• How does this affect ICT process, is ITIL, PMBOK, CMM, … obsolete then?

• Tracking the results of the programme

• First results and lessons learned

• Wrap-up

COMPANY INTRO

KBC

• KBC at a glance KBC Group has a successful track record in bancassurance in its domestic market of Belgium and has been expanding to Central & Eastern Europe over the last 10 years

• Key data on KBC Group

– Total market cap (mid-Nov 2011): 5bn EUR – Total assets: 305bn EUR at the end of 9M11 – Total equity: 17bn EUR – Tier-1 ratio: 13.6% (11.7% core)

• Key data on KBC Bank

– Total assets: 262bn EUR at the end of 9M11 – Total equity: 14bn EUR – Tier-1 ratio: 12.5% (10.4% core)

KBC’s core markets

Company size

• Customers (estimate) 12 million • Number of staff (in FTEs)

• Bank branches – Belgium 845 – Central and Eastern Europe 1 181

• Insurance network – Belgium 506 tied agencies – Central and Eastern Europe sales via various distribution

channels

Belgium 17 537

Central and Eastern Europe 30 760

Rest of the world 2 197

Total 50 494

Shared Services and Operations

8000 people

HOW DID THE PROGRAMME GET STARTED?

Using Lean as a tool for a large scale transformational change

First a clear purpose needs to be defined

• The Lean programme wants to change the behaviour of people and the culture of the company, to a lean way of working, by coaching them and introducing a set of supporting tools and techniques in order to increase efficiency and lower cost Transfor

mational

change

With lean we want to increase flow and add value to the customer

• Customer involvement in process improvement is fundamental

• Introduce KPI’s to measure the improvement and go to a performance driven organisation

• People get responsibility to improve time and again

– Empowerment of people

A lean transformation team should be built

• Get knowledge from external consultant: Celerant

• Gather (to be) Lean coaches from the entities involved

– Mix of senior and junior profiles, internal and newly hired

– Assessment to get a clear view on baseline of capability and avoid wrong choices from both sides

• Start building the team

– Fundamental investment

– Seed for later success!

Roles have to be defined to spread the knowledge in the organisation

con

sult

ant

nav

igat

or

pra

ctit

ion

er

“lean coaches”

promotor

spo

nso

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met

ho

do

logi

st

Our goal is sustainable transformation

Consultancy support reduces in every wave

Wave Role

1 “I do”

2 “We do”

3 “You do”

Celerant Lead Co-Lead Support

Coaches Learn Co-Lead Lead

Entity Engage Manage Own

PMO Build Support Anchor

Approach: • Emphasis on learning-by-doing through practical experience and co-creation of solutions • Coaches assume greater accountability as they gain confidence and experience • Celerant support reduces as business become more capable and assumes greater ownership

KBC Celerant Support:

A lean competence center supports the transformation

• Provide support to drive Lean transformation – Documentation (project approach, lean tools, …) – Training – Communication – Reporting

• Grow Lean know-how and provide one lean communication platform

• Share best practices and experience among countries and entities – Lean coach forums – Lean Wiki – Community calls

• Give support in leadership coaching – How to deal with new “lean leaders”

WHAT ARE THE KEY LEAN TOOLS USED, HOW ARE THEY DEPLOYED?

Using Lean as a tool for a large scale transformational change

A lean pyramid contains building blocks to build to a lean culture

Continuous improve-

ment

Learning organiza-

tion

Lean vision & strategy

Clear roles & account-

abilities (RACI)

Open communi-cation & feedback

Pro-active manage-

ment

Effective meetings

Voice of Customer

Value stream

mapping

Voice of Business

Workplace organiza-

tion

Waste quantifi-cation &

elimination

Lean KPIs

Integrated reporting

system

Fact-based decision making

Empowered ownership

Work flow and layout optimiza-

tion

Visual manage-

ment

Problem solving

sessions (Kaizen)

Root cause analysis

Coaching & facilitation

Collabora-tion &

teamwork

Results focus

Organiza-tional

flexibility

Work standardi-

zation

Lean leadership

Lean culture

Basic lean tools are provided to support these building blocks

But some tools

are more

important than

others

APPROACH Using lean to drive efficiency: key areas to focus on

The KBC lean approach… …is a holistic approach

Results

Operational Financial Cultural

Behaviour

Customer centricity Results focus

Accountability Teamwork

People Capability &

Accountability

Process Steps to add value

System P

C

D A

Measurement & Improvement

START ON THE FLOOR AND WITH MANAGEMENT AT THE SAME TIME

Combining top down and bottom up approach to ensure sustainability

A three phase implementation approach proves to give good results

Awareness Create

understanding Build

capability

Train Methodologists

Implement performance management system (LDMS)

•VOC

•KPI, RACI, Meetings

•Gemba

•Lean behaviour

Coaching

Implementation example

Aw

aren

ess

Management interviews

Top down analysis

Focus areas

Target setting

Make resources available

Optional

•Value proposition

•Strategy workshop

Set

the

flag

wo

rksh

op

Senior management

Middle management

Departement / Teams

Aw

aren

ess Lean Yourself

•WS 1 Visual management, white board, daily meeting

•WS 2 Cont inuous improvement and problem solving

Continuous improvement

•Problem solving

•Kaizen

•Organisation projects

What do we want to achieve!

Set-up core team Train core team Coach core team

End-to-end process projects

IS ITIL, PMBOK, CMM, … OBSOLETE THEN?

How does this affect ICT processes?

ITIL as an example: evolution in 23 years

• Throughout its history, ITIL makes service delivery more and more explicit – 1989: Service level management – 1990: Problem, Configuration, Cost management… – 1997: Customer focussed SLM – 2006: ITIL V2 did not differ a lot from V1 although books were

called Service support and Service delivery • Content restructured • Introduction of a first function: Helpdesk

– 2007: ITIL V3 pivots the standard ICT operations processes to a more service oriented view • Content restructured again • More focus on service management through the whole cycle • Emphasis on creating business value • Focus on “Continual Service Improvement”

– 2011: ITIL V3.1 • Business relationship management and demand management are explicit

processes

Lean helps to improve Service and Customer oriented thinking

Outside in focus

Put the customer in the centre Look at end to end value chain

Performance driven organisation People get responsibility to

improve time and again

Introduce service thinking

Introduce process thinking (ICT Operations) Process oriented

Inside out focus

Lean puts process responsibilities back in the organisation

• Introducing lean techniques on the work floor

– White boards

– Daily huddle / Short interval control

– Issue / problem detection

– Problem solving

– Performance driven culture

– Move to continuous improvement

Give the responsibility of the process back to the people on

the floor

Some examples

• Catalogue Request Management in ICT HU – Improvement of SLA fulfilment with 12-50 % for 7 most frequent used catalogue

items

– Reduce the implementation time below the target chosen catalogue items (e.g. from 8 to 0,8 days for fileserver directory generation)

• “We are particularly satisfied about the ‘lean testing’: testing together, and using small sprints, have led to on time in full completion of tests”

• “I realise now I have to help my customer in understanding the design – I will follow up more closely, give them intermediate steps, and ask more questions about my assumptions.”

• After a thorough examination of the issues from 1 ICT development department, it showed that 80% of the improvement actions were internal, department related

HOW DO YOU KNOW YOU ARE ON TRACK?

Tracking the results of the programme

Measure your results by focussing on capability…

• Capability looks at 7 must haves 1. Voice Of the Customer feedback and analysis integrated

into process

2. KPIs aligned with value drivers in all departments

3. Top-down performance management system (LDMS) in place

4. RACI defining accountabilities in all departments

5. White board and regular stand-up meetings in all teams

6. Regular Kaizen events to generate improvement ideas (opportunities)

7. Regular 'gemba' walking tours by leaders on the floor

• This is tracked in all teams of the entities – Monthly reporting on all performance meetings up till

management committee of SSO

Part of the overall dashboard

Reported on entity level

Example of capability tracking

MWB - Maximize Staff Engagement and Talent Development

Scoring Level

0 20 40 60 80 100actual

scoreVOC

LEAN must have 1. VOC feedback and analysis integrated

into process

team

x 20

PERFORMANCE MANAGEMENT

LEAN must have

2. KPIs aligned with value drivers in all departments

3. Top-down performance management system (LDMS) in

place

4. RACI defining accountabilities in all departments

team

x 20

SHORT INTERVAL CONTROL

LEAN must have 5. White board and daily stand-upo

meetings in all departments

team

x 20

OPPORTUNITIES

LEAN must have 6. Regular Kaizen events to generate

improvement ideas (opportunities)

team

x 40

GEMBA

LEAN must have 7. Regular 'gemba' walking tours by leaders

on the floor

team

x 20

meth 1

x 0

meth 2

x 0

meth 3

x 0

120

KPI Lean Score evaluate the Lean maturity of the organisation based on the 7 Lean Must haves

in combination with the capability of the methodologists

LEAN CAPABILITY OF THE METHODOLOGISTS

Lean capability of a team

…and benefits: example of overview of benefits 2011

• Evolution of generated benefits in 2011

– December 2011 shows the final result:

• Realised benefits: 28,4 M € (vs a target of 30,6 M €)

• Available: 25,8 M €

• Identified: 41,7 M€

What do our customers think about lean?

"By meeting every day at a fixed time round the whiteboard, we are now becoming involved with each other's issues and successes much more quickly, it is easier to consult each other and to organise matters.” Tine Procureur Middle Office KBC Asset Management

"Each echelon in the hierarchy must be committed. That is certainly half of the success“ Yves Lippens KBC Asset Management

Our relationship with business was already good and has even improved while using some VOC-techniques. More frequent but shorter meetings with our customer keep a finger on the pulse Maarten Casteleyn, ICT project leader Investment Services

LESSONS LEA(R)NED

Even a lean programme can continuously improve

• Lean is a way-of-working, not a program Reinforce that lean is a commitment to different way-of-working, not a project with an end-date; minimize bureaucracy and use simple tools to plan and manage implementation, e.g. maturity assessment, white-boards, and A3s

• Emphasize lean-thinking, not lean-tools Focus on the creation of customer value though improved work-flow and the elimination of waste, not the implementation of tools, e.g. VSM or 5S

• Conduct awareness training before implementation Invest in up-front training to create understanding and awareness of lean principles including continuous improvement, performance management, and adaptive change to minimize resistance to change

• Top-down, bottom-up, and end-to-end Implement top-down performance management to create “pull” for improvement; Build capability bottom-up within teams; Optimize work-flow across end-to-end processes to improve performance

• Implement KPIs before introducing lean techniques Define value and performance measures first to identify focus areas and select the relevant approach and tools, i.e. end-to-end vs. bottom-up

• Think big, start small, scale fast Start with a limited scope proof-of-concept project to demonstrate benefits; Use self-implementation for rapid deployment of foundation practices, e.g. white-boards; Use coaches to build-capability and quickly replicate best-practices - not to manage and control

• Management is a key lever in the transformation Management support, exemplary behaviour is very important for the success of the program

WRAP-UP

Summarizing the high level timeline

1H2010 • Programme preparation, analysis, set focus

September 2010

• Train first wave coaches

Oktober 2010

• Start proof of concept projects

April 2011 • Start second wave

2H2011 • Start “Lean Yourself” approach

1Q2012

• 20 certified lean coaches, 20 certified methodologists, 5% savings, first steps outside SSO

End 2012

• 40 certified lean coaches, 150 certified methodologists, 20% savings, expand to the rest of KBC…

Thank You!

Questions?