Caesar Formica knew survival of his IS department depended two factors: adding value for their customers and making sure those customers recognised the added value With the Victorian Department of Justice deep in the throes of outsourcing its data centre and network support functions three years ago, the IT department was confronted by numbers of looming staffing issues. IT staff morale had plummeted. No matter the savings and efficiencies the outsourcing was promising, turnover was soaring. Those who remained felt deeply threatened about their ability to maintain their technical skills, and keep abreast of new technologies. To compound the group's difficulties, says CIO Caesar Formica, a silo mentality prevailed throughout the branch.
"Each of the sections worked within its own unit and was only interested in doing what it did best and was not worried about how the whole process hung together from one end to the other end," Formica says. "Within that silo mentality we had lack of communication across our sections and we had finger-pointing - one group saying: that wasn't my problem; I did what I needed to do, it was the other unit in IT at fault'. But at the end of the day, the customers only saw us as IT. Regardless of how well one unit performed, if another area or section didn't perform well then as a branch we were seen as not delivering service.
"We had a lack of customer focus from our staff - I mean staff were pretty much saying: I'm doing my job and this is all I do', rather than looking at it from a customer point of view and saying you need to adopt good customer focus principles. And there was also a perception from our client base that we weren't actually delivering a good service, even though we may have been doing things well in isolation."
That situation began to turn around once Formica decided to embark on adopting the Australian Quality Council's Business Excellence Framework (ABEF), which the Victorian government and Justice Department alike had adopted as a way of making departments more innovative, relevant, flexible, efficient and practical. Three years on, the situation continues to improve and Justice intends to extend the work well into the future. Formica says despite a degree of initial scepticism by many in his department, the framework has been a boon to IT.
"We decided to use the framework as a basis to see whether it would start to break down the barriers, get people talking together, working together and starting to improve on how we're doing things; and in particular, start to become more client-focused," Formica says. "As a result, we've seen major change both in staff's attitude and their approach to the way they do things, which is completely different to the approaches they would have adopted three years ago. People are becoming more consultative; they're using facts and data to try and substantiate things that they're doing and they have improved the way they operate and conduct business."
Morale is also on the rise and looking increasingly resilient. Even a further change project conducted during the last six months covering the devolution of the applications development and support group as well as their budgets into the business units has proven far less destructive to morale than it might once have been. This is largely because people are involved and are now communicating more openly across units.
No Ad Hockery, Please
"A strategic and formal approach to business improvement should be one of the most fundamental aspects of any business today. An ad hoc approach is simply not as effective as an innovative and flexible formalised method," says Norbert Vogel, CEO of the Australian Quality Council (AQC). His remarks are backed up by a recent study which found that leading Australian businesses that adopt a formalised approach to business improvement win significant benefits for their organisation.
Results from the Deloitte Touche Tohmatsu/Australian Quality Council "Achieving Business Excellence 2000" survey show business improvement in Australia's leading companies is planned systematically rather than in response to passing trends. Two-thirds of respondents have had an improvement program in place for at least two years. The results also show organisations that are managed appropriately and plan for growth and development yet remain flexible are more likely to succeed, says Kerry Busteed, best practice consulting director for Deloitte Touche Tohmatsu.
"It is apparent that those companies that take a long-term, strategic view of business improvement are pulling ahead," Busteed says. "Half of the survey respondents said a formalised approach to business improvement led to improved strategy development and management control, and more than a third said it led to improved customer relationships and increased staff involvement and morale.
"Also, more than a quarter of the respondents said they achieved an improvement in financial performance after adopting a formal business improvement strategy."
By adopting the Australian Business Excellence Framework, Australian-based Award winners and finalists have achieved:
20 per cent productivity increase in one year 247 per cent sales increase over two years 600 per cent increase in profit per employee in four years 100 per cent profit increase over two years 66 per cent reduction in lost time injuries in one year 80 per cent reduction in product defect rates over two years 11 per cent improvement in employee satisfaction in one year Know Thyself At the Department of Justice, the IT department set up internal teams to assess various aspects of its operations in the context of the framework. The team was then charged with coming up with a report recommending how these services could be enhanced.
The Australian Business Excellence Model under the framework identifies the seven categories in which organisations can strive to achieve business excellence: leadership and innovation; strategy and planning process; data, information and knowledge; people, customer and market focus; processes, products and services; business results and indicators of sustainability.
All categories are linked to one another and all categories are interdependent. AQC says the framework promotes a systems approach by exploring how the organisation works to achieve its goals, leaving the specifics of addressing each facet of management up to the people within the organisation.
At Justice, the IT department's Kathryn Beggs, manager quality and knowledge, says using the Australian Business Excellence Framework gave the department a model of what organisations should be about. Organisational self-evaluation, a time-consuming but extremely valuable process, helped them to see where they were as an organisation and to prioritise what they needed to work on to improve their organisational and people processes.
"It took quite a lot of effort. We had choices - we could have had someone evaluate us - but we took the approach we wanted it to be a learning experience for staff, so we decided to involve staff in the evaluation process," Beggs says. "We got about 18 staff from across the IT department; we gave them two days training in the Australian Business Excellence Framework and how to do an organisational self-evaluation. Then they broke up into teams and spent six weeks doing data gathering, looking for evidence, doing a few surveys to find out what was really going on. Then they came back for a two-and-a-half-day conference where we combined all the information that we had."
From there the team went through a process of determining the main priorities for the first year of ABEF's adoption. They included a project to improve the business planning process, a customer satisfaction project, a business process mapping and improvement process, and one that was focused on helping the IT department become a learning organisation.
Even that was more than the IT group could cope with at any one time, Formica says. "We probably had too many of these projects on the go. At the same time we had our day-to-day work commitments going on and there's only a certain amount of effort you can devote to a number of new initiatives."
As a result, the team working on making the IT department a learning organisation eventually imploded, having spent a lot of time going around in circles.
"Why did it implode? There was probably a lack of balance of team skills in the group that was self-selected; in addition, the learning team started off with some very ambitious goals, which they couldn't achieve, and then found it very difficult to focus on some very specific achievable objectives," Formica says. "They finally got down to one objective that one person in that team took up and kept going with, which was just a matter of reorganising the way we structured our electronic information. And they made a small improvement to the way we did that."
Despite the hiccups, there have been continuous improvements over the past three years. The IT department has now completed a number of projects to streamline processes, and there have been several improvements in the way IT delivers its services, including cuts in project delivery time.
"And there has been another major activity that's come out of our continuous improvement program," Formica says. "We now have statements which all staff have had an input into and which they're all happy to adopt as their statements in terms of our visions, purpose, values and principles. These were further explored through a series of ITB Takes Off' workshops the IT managers delivered for all IT staff. "Then we embarked on another project to actually try to change people's behaviour in line with those statements of values and principles. Now we've got a challenge of continually reinforcing that, and making sure people actually live those values."
As part of the continuous improvement initiative, the IT department developed an enhanced staff recognition system that endeavours to reward people. The system is based not only on their successes but also on the behaviour which they have demonstrated to be in line with those good practices by which the IT department wants to abide in dealing with customers and other parts of IT.
Organisational self-assessment is now conducted once a year within IT. While the initial self-assessment exercise took a long time, now assessment happens reasonably quickly and efficiently, and a clear picture emerges of the improvement projects identified by staff and managers together. It is the staff and managers who assess themselves and the performance of the IT department.
"We don't involve our clients' participation in the self-assessment process," Formica says. "The self-assessment approach is that you do the study within your own branch or division. That way the staff know what the problem areas are across IT and what things are blocking their activities or progress. They then come up with the improvement opportunities.
"One of the biggest single factors/ benefits that I've seen from the processes has actually got people from each of the silo sections now actually working together and starting to help each other more than they would have in the past. That's been a major plus."
But despite all the improvement, Formica says the group has barely started to scratch the surface of the work it wants to do to streamline its processes. Work will proceed in priority order, he says, in recognition that adopting the framework should never been seen as a project but instead be recognised as an ongoing process.
"It's a culture change in the way we act, in the way we think, and in the way we operate at work in line with the ABEF. Every time you do something, you then need to say: Well, let's review what we've done, where we could improve', and look at how you then feed that back so the next project doesn't go through the same mistakes," Formica says. "That's really one of the keys in terms of trying to change people's mindset and culture. If someone embarks on this activity as a project and says: Look, I'll do half a dozen things and when I'm done that's the end of it', they will not get the desired outcomes. They'll get some improvements along the way and then I think they'll go back to their old ways of doing things."
More than 40 per cent of those companies surveyed by Deloitte Touche Tohmatsu said the biggest barrier they found to implementing the framework was staff resistance. Formica says that predictably his staff were extremely cynical when the decision to adopt the framework was first announced. "The first time we did it, staff were saying what a waste of time, there's nothing in it for them, it was just another fad and when they get this over they could get on with some real work."
To overcome that cynicism, he says, they found it important to get some quick wins on the board, while accepting that major change would take considerable time. Without early successes people are likely to rapidly lose faith in the process. "We encountered that when we first did our organisational self-assessment," Formica says. "We tried to concentrate on the big ticket items and failed to deliver on some short-term results. Staff were asking when were they actually going to get some results out of this. So we've changed that in terms of doing quick wins, quick results, so people can actually see some changes.
"If you talk to staff now, they actually understand it, they know what continuous improvement is, and it's starting to be built into their culture. That's another one of the major changes that you would find if you talked to any one of our staff here - they all understand why we're doing it and they see benefits to it."
The team has also learned the importance of having a skilled facilitator on board to drive the process through the first couple of years. Otherwise there's a very real danger that people will simply get bogged down and give way to frustration, Formica says. The facilitator played a useful role as mentor. This helped the IT department recognise where it was failing to live up to important principles or what it needed to do differently to start moving more as an organisation towards those principles outlined in the framework.
The IT department has also learned the value of getting top-down support for the program and also getting section managers involved. Beggs says staff were impressed that section managers conducted the "ITB Takes Off" workshops for the vision, purpose and values development.
"We didn't just present to our own staff, we mixed up the groups and put together people who didn't know each other. They found it great to talk to different people in the management team. And so the management team has to be out there showing that they're changing themselves and the way they work is changing. I think that is quite critical, because people are looking at the management team for those differences."
There is also a challenge in embarking on the framework while still continuing to deliver on day-to-day activities. Formica says management needs to ensure staff as part of their works program have a commitment to spending time on continuous improvement activities.
"We fell down in that area in the first couple of years where we just said: Well, It's just another add-on and just do this', and staff tried their best but in the end the work pressures overtook some of the continuous improvement activity," Formica says. "So you need to make sure people make allowances in the annual works program for staff input and commitment into the continuous improvement activities.
"The other key challenge is the culture change," he says. "You've got to change people's culture and attitude. Otherwise embarking on this exercise will have some results, in terms of project outcomes, but you're not going to achieve the long-term continuous improvement where people have a new mindset about how they do things, how they relate to clients and how they relate to each other when they're doing work."
"And that's just what we're heading towards now," Formica says.