The customer-driven, technology empowered business transformation we call digital transformation impacts every corner of the enterprise. Every process, every organizational unit, every piece of technology is subject to disruption.
You might jump to the conclusion, therefore, that digital transformation has to be expensive.
I have some good news for you: digital transformation doesn’t have to cost you a dime. In fact, it could actually save you money. Here’s a story that proves the point.
Westpac New Zealand’s Remarkable Transformation Story
At this week’s ChefConf, Chef Software’s annual customer conference and ground zero for the DevOps movement, I spoke with Dave Corlett, Head of Application Lifecycle Management at Westpac New Zealand Limited, about his bank’s digital transformation.
Westpac’s results were remarkable. “We didn’t need to spend money on transformation,” Corlett said. “It was based upon improved efficiency.”
Even more remarkable: unlike the similar story at DBS Bank in Singapore whose transformation efforts originated with the CEO, Westpac New Zealand’s efforts arose from the software development organization.
In other words, DevOps drove digital transformation for the bank as a whole. The starting point: changing the culture within IT. “We started with a ‘culture quest’,” explained Corlett. “It started with a question: ‘what would a great day at work feel like?’”
Reworking techie culture is a cornerstone of DevOps to be sure, but in Westpac’s case, this cultural shift had a laser focus on customer value. “Value only occurs in the heads of customers,” Corlett pointed out. “A measure of ‘structural efficiency’ is how much of every dollar invested goes to customer value.”
What about the rest of each dollar – the part that doesn’t go toward customer value? That portion represents waste – and eliminating waste was the key to the bank’s entire transformation.
Eliminating Muda
According to Wikipedia, muda is a Japanese word meaning futility, uselessness, or wastefulness. It is a central concept to the Toyota Production System (TPS), one of the progenitors of the Lean movement.
Muda is a term that Barry Crist, CEO of Chef Software, likes to use to refer to the waste that Westpac targeted, as eliminating muda is a key benefit of the Agile/Lean/DevOps approach that Chef champions.
Eliminating muda leads to increased customer value as its core business outcome. “Companies want to get to ‘outcome-centric IT’,” Crist explained. “They need to reassign calories by getting good at what should be easy.”
Crist uses the calories metaphor to describe the resources companies devote to various wasteful IT efforts. Too many enterprises are spending such calories on muda – slow processes, siloed decision making, and inefficient application of resources generally.
DevOps seeks to streamline many software development, deployment, and management tasks, thus eliminating muda and freeing up resources that can now focus on better customer value – a recommendation Westpac took to heart.
Connecting Muda in IT to Customer Value
Westpac’s culture rethink led to a cross-IT reorganization as it moved to cross-functional teams, including even the mainframe people. “They can move just as fast as anybody,” Corlett explained. “It was just process slowing them down.”
Westpac had been deploying software on 9 to 18-month cycles. Its move to DevOps changed this schedule to weekly deployments. “We learned how to break IT projects down into small deployable items,” Corlett said.
The benefits were substantial. “Customer outage time dropped by 90%,” Corlett continued. “We were able to deliver twice as much value.”
In other words, by eliminating the muda inherent in customer outage time, Westpac was able to reduce its costs while improving customer value – essentially paying for the entire transformation.
End-to-End Improvement
As with every successful digital transformation initiative, no part of the organization remained untouched. “We used to have meetings of managers,” Corlett said. “The wrong people were in the room.”
Today, instead of management driving customer value, cross-functional teams do – and they do it without traditional projects. “We don’t do projects,” Corlett explained. “We now have a model of standing capacity. We work with the business to prioritize work.”
Even the vendors the bank works with are participating in the transformation. “Vendors need to operate at velocity or they slow us down,” Corlett said. “We bring vendors to hackathons. It works much better than RFIs and RFPs.”
Chef Software stood out as a vendor that operates at such velocity – and not simply because Corlett was speaking at ChefConf. In fact, Chef was a catalyst for the cultural shift that drove Westpac’s transformation.
Reorganizations are typically nightmares – but Westpac’s cultural shift drove excitement. “It got to the point where teams were saying, ‘let me do this’,” Corlett explained. “When you start doing it, it’s pretty obvious.”
Intellyx publishes the Agile Digital Transformation Roadmap poster, advises companies on their digital transformation initiatives, and helps vendors communicate their agility stories. As of the time of writing, Chef Software is an Intellyx customer. None of the other organizations mentioned in this article are Intellyx customers. Chef Software covered Jason Bloomberg’s expenses at ChefConf, a standard industry practice. Image credit: Scott Lewis.
