QUALITY - Cost Center or Profit Center

QUALITY - Does it cost you money or make you money?

Crosby's message was that a quality program, properly applied, returned money to the business bottom line, far in excess of the costs of operating the quality system.  Quality saves/makes you money in a couple of ways: real savings, and cost avoidance.

Real Savings
If you add/delete/modify your production processes it is quite likely that you will become both more efficient and produce better products.  Efficiency translates directly to profit; you can make more with less, and it'll be better.  You may be able to charge more for better products.  This is the typical argument made for process improvement.

Avoiding Costs (Real Savings Too!)
Avoiding costs that historical data shows you would have otherwise incurred is equivalent to profit; it is money that you can now use productively to advance the business rather than to fix defects.  Just because you don't have a production development phase on the project schedule for fixing defective products does not mean that it's not there.  You have to allocate resources, time, money, equipment, etc. to fix the defective things before you deliver them.

The Problem that the Quality People Face
The sooner that quality organizations can convince management that the quality organization is a profit center rather than a cost center the better off the quality organization(s) will be.  The numbers come out the same; however, everyone likes profit, it sounds so much better than we avoided costs.  This is a marketing problem that the quality folks have not yet become very adept at solving.

You DONT have to rearchitect your processes to be CMMI compliant

I'm still surprised at how many clients have the misperception that they have to rearchitect their processes to be CMMI compliant.  There is nothing in the model that says you have to contort yourselves into some CMMI shaped box to comply with the guidelines in the model.  In fact, it's nearly impossible to do so and still carry on with your business model.  The CMMI is written as functional stovepipes (in alphabetical order), and your company processes, in all likelihood, are written to accomodate your business pursuit and delivery lifecycles.

The real trick to becoming CMMI compliant is to capture all of your business and technical processes, arrange them in some reasonable lifecycle order, then map that order to the CMMI to see where you have adequate model coverage and where you don't, develop a set of plans to address the gaps, and finally implement the plans to close the gaps.

If you have one monolithic Project Management process that addresses all the practices in the PP, PMC, IPM, and RSKM PAs, so be it.  Don't go rearranging everything to match the model.  Put together a mapping matrix that allows you to keep everything where it is, while at the same time allowing you to check yourselves against the model's guidelines.

CMMI SCAMPI Appraisals are CHEAP, Relatively Speaking

Quite a few clients are surprised by the cost of a SCAMPI Appraisal. While a SCAMPI Appraisal may seem expensive, when considered within the context of what it costs to implement a process improvement program within an organization, well, a SCAMPI Appraisal is CHEAP, relatively speaking.

Industry data show that a Process Improvement (PI) effort takes on the order of a 5-7% investment of resources: planning, improving, training, measuring, estimating, quality assurance, configuration management, status, etc. Essentially 5 FTEs of your 100 FTE organization need to be dedicated to your PI effort. Similarly, PI will take 5 weeks of effort on your 100 week project and $5K will be spent on your $100K project. Industry data also show that you can expect to receive on the order of a 4:1 Return On Investment (ROI).

If you create a process group early on, and allocate the 5-7% that we expect it to take, when it comes time for the appraisal, you’ve already got the appraisal resources you need, without taking away from billable work at the always critical stage. The other people in the organization will also realize that senior management takes this effort seriously by their demonstrated and not just verbalized commitment to the effort.

PI, if it’s really important to your organization, needs to be treated like any other important project. To not give it the benefit of “Real Project” status is to all but doom it to failure. “Real Projects” get real project managers, they have Work Breakdown Structures (WBSs)/Task Lists/Deliverables, they have identified staff who are committed to the effort at a negotiated effort level at a specific frequency of interaction over a particular duration, real projects get budget, schedule, resources, training, standard processes, and senior management face time.

So . . .How much does an appraisal really cost; IT DEPENDS :-)

In a typical 300 person development organization it takes roughly 3 to 4 people to generate $1M in revenue. So our hypothetical organization is generating $75-$100M. A 5% commitment to PI would be $7.5-$10M. Please feel free to substitute your own numbers.

A 4:1 ROI benefit to the organization would be $30-$40M or 4 times the $7.5M investment (almost 50% equivalent improvement organizationally) in reduced waste, greater throughput capability, more profitability, increased customer satisfaction, fewer defects, faster turn-around time, etc.

A fully featured appraisal with all the bells and whistles, planning, training, consulting, paperwork, materials, travel, etc., should cost on the order of $100K. A $100K appraisal investment against a $10M PI Project investment is 1%. If your current project estimating methodology is not producing estimates that are accurate to within 1% of the actual outcomes, I can legitimately (tongue in cheek) make the argument, using your data, that the appraisal is free, because the margin of error exceeds the appraisal cost.

Get Started Now, things will never really change until you change them.

Quality

Quality, in general, addresses four main points: Process Compliance, Work Product Creation, Work Product Quality and Process Improvement.

Process Compliance
Organizations spend a great deal of time and money creating processes. To not follow them is to waste the time and effort that went into creating them. If the processes are not useful, that is more properly addressed in topic 4, Process Improvement. Even if the processes are less than optimal, they should still be followed, at least until enough data is collected such that you can make an effective process improvement suggestion.

Typically, people follow the processes using tools to create the work products in accordance with a contract and complying with standards. Following the process usually leaves some type of “paper” trail that can be used to determine that the process was followed. The “paper” trail is composed of things like: meeting minutes, measures of the process, audit trails, activity logs, attendance sheets, etc.  These types of process records tell us that the right people, spent the right amount of time doing the right things to create the work product.

Work Product Creation
All organizations are in business to create/deliver a product/service. The work products are created by following the process. Work products can be destined for internal or external use, deliverable, or non-deliverable.

Work Product Quality
It is essential that the work products created are fit for use by those for whom they are intended. Essentially there is no purpose in following any process unless it creates a work product that is intended for use by the author(s) or another, now or at some time in the future.  Work product quality is determined by assessing the work product against its requirements: format, content, function, performance, etc. (generally, Verification).  Work product usefullness, or fitness for use in its intended operational environment by its intended users, is determined by those who must use it (generally, Validation).
Process Improvement
Never confuse doing it differently with doing it better. Running away from the old bad process is not the same as moving with intent toward a new and likely better process. The processes we follow ought to result in our being able create/deliver a quality product/service profitably. That means the total cost of creating, following, assuring and improving the processes plus the cost to create/deliver a product/service ought to be less than the revenue the business derives from delivery of the product/service. The data we collect ought to be able prove this. If the data tell us differently, we have a decision to make, do we keep losing money, or do we improve our processes so they drive us to be profitable.

Before you hire a CMMI consultant or SEPG Lead, at least check them out.

I have several clients who are in the process of selecting a CMMI Consultant or SEPG Lead. 

I offered to do a quick check just to get a feel for who was claiming to be a CMMI Expert.  I didn't do much:

I tried to add one of the candidates to an open appraisal, and I couldn't; it seems that they had some internal CMMI training but had never taken the formal class. 

I looked to see if another was an authorized/certified provider of anything and no luck there either.

Then I did the simplest thing of all, I googled them, and believe it or not, when I googled "firstname lastname CMMI", no results came up.  I thought you could google any three words and something would come up, or you win some type of prize.

There are a number of other simple credential checks that can also be done. Although no guarantee of finding a good consultant, at least you have a better chance.

Before you go through all the trouble of seeing if there is a fit for your business context, culture, project domain, etc. there are some very simple things you can do to thin the herd.  I highly recommend it.

Can CMMI, Lean, TOC, 6 Sigma, and Agile Play Together – They Better

There’s been a lot of chatter in the blogosphere lately about various different models, methods, and tools; and, not unsurprisingly about which one is best. It’s not a zero sum game; there can be more than one winner. In fact, if you adopt the best attributes of all of them, you’ll certainly be better off for it.

CMMI presents a set of industry agreed to best practices. If you develop your own company’s best practices for the management and development of projects, and then map them to the CMMI with an eye toward addressing the CMMI best practices, you can’t really go wrong.

Lean is based foundationally on the Toyota Production System, and is a combination of methodology and tools that seeks to improve the flow of work products through the system, while at the same time eliminating the many causes of waste inherent in any system. By mapping the as executed processes, you can determine if there are any wasted steps, motions, meetings, etc. The improvement of flow and the elimination of waste can not help but improve the efficiency of your business.

Theory of Constraints is based on the premise that there are constraints or bottlenecks in any system. To the extent that you can successfully mitigate the effect of the constraint on the system, your organization’s throughput will increase.

6 Sigma is a statistically based tool that seeks to identify and analyze the causes of process variation so they can be reduced or eliminated. Variation causes risk to the success of your project, because variation means that your predictions are only accurate to within the limits of the variation. To mitigate the risk you must allocate contingency buffers to ensure that your degree of uncertainty is covered by the additional set asides, which then can not be used for other purposes.

Agile is a project management methodology that builds foundationally on Lean and 6 Sigma; with its most obvious characteristics being frequent face to face meetings of the stakeholders to ensure the latest plan/iteration pair is on track; and, decomposing large projects into small timeboxes, iterations, sprints depending on your terminological preferences, so you can’t go too far astray before the next meeting to sync up on progress.

Nowhere in any of them does it say if you use one you may NOT use the other.

Institutionalization - It’s Not Just Another 20 Letter Word

Institutionalization – It’s just the way we do it here, Maturity Level by Maturity Level.

• Initial/Performed (ML1/CL1) – The work is done, the work products are produced, the Goals are satisfied. You have smart people doing good stuff.
  
• Managed (ML2) – The work is done according to a plan, the people are available and skilled/trained, adequate resources are assigned/acquired, identified work products are created, stored, evaluated and ultimately delivered, the work is monitored and controlled, and senior management takes an interest in the project throughout its lifecycle. ML2 is focused at the project level – Similar projects may do similar things dis-similarly.
  
• Defined (ML3) – All of the above, and there are documented characteristics and attributes that process descriptions possess: Purpose, Roles, Inputs and Entry Criteria, Process Steps, Outputs and Exit Criteria, Measures, Verification Steps, Job Aids (templates, fill-in guides, samples, tools, training, etc.). ML3 is focused at the organization level – Similar projects do similar things similarly, with allowable tailoring for the specific needs of projects.

Institutionalization is not how long the processes have been documented, but rather how ingrained into the organization’s operational methodology.

Institutionalization is codified in the CMMI’s Generic Practices. No matter how many smart people you have doing good stuff (Specific Practices), unless you Institutionalize (embrace the Generic Practices) you’ll never be other than ML1/CL1.

The Generic Practices of the CMMI lead to institutionalization of the following concepts.

Policy

• It is not enough for senior management to just talk about process
• Senior management must be continuous, visible, advocates for doing it the right way
• If senior management does not get out in front of the process improvement initiative, people will soon figure out that it is not that important and it will fall by the wayside until the next new best thing comes along; it migh be perceived as the flavor of the month phenomenon we see in organizations that are struggling for a magical solution

Planing

• Who (actor and role)
• What (what the project is to accomplish)
• How (the process steps for converting the project's inputs into outputs)
• When (schedule)
• How Well (objective quality standards and measures)
• Where (do they stage their intermediate and final work products)
• With What (samples, tools, checklists, guidelines, etc.)
• Where (do they get help)

Resources

• People (empowered, trained, available)
• Tools (hardware, software, job aids)
• Environments (proper working spaces, labs, etc.)

Training

• Availability is not a skill (process training and appropriate skills are needed)
• Organizational (what process training is the responsibility of the organization)
• Home Organization (what specific skills training is ones home organization responsible for)
• Project Training (new tools or processes that are for the primary benefit of the project)
• Individual (what must the individual do to make themselves a valuable, contributing member of the company)

Configuration Management

• All work products ought to be placed under some level of control
• Changes must be authorized
• Changes must be controlled
• Audits must be performed to ensure the documentation matches the work products, which may be documents themselves

Teamwork

• All work is accomplished by teams
• Teams must be managed to effectively develop the synergy that makes teams more powerful than the sum of their parts
• Teams must be empowered and authorized to do what they are tasked to do

Measure

• Without developing a quantitative understanding of project status it is difficult to determine if a project is on track
• Without developing a quantitative understanding of what your processes are doing for you, it is easy to fool yourself into thinking process change is the same as process improvement 
• Measures may be both qualitative and quantitative

Control

• Project and senior management must effectively steer the project according to the data they are collecting, both qualitative and quantitative data should be used
• When the data indicate the current state is significantly different from the predicted or desired state, the project manager must take control
• Typically the project manager may change the staffing, scoping, or scheduling

 Process Assurance

• The CMMI focuses on process improvement as the basis for improving the results of projects
• It is, therefore, essential that the processes are executed as documented.
• If a different process is followed each time, it is impossible to gather data on how following the process is really helping you

Product Quality

• It is not enough just to follow the processes, it is also essential that following the processes enables you to do better work

Status

•  Gathering data from multiple sources allows a project manager to develop a composite picture of the project that can be viewed from many vantage points
• This multiple view picture gives the project manager a better understanding of the project and the ability to make projections about its future

Standardization

• Following standards allows the project to do the same things the same way over and over again.
• This repeatability permits the projects and organization to develop data over a period of time that allows for prediction of future similar projects

Improvement

• Using the collected data collected over a period of time allows the organization to improve their processes to ensure the best possible process is being used for each project in the present and for the future