College of Science Department of

Statistics

Collaborating AroundSix Sigma Innovation & Design

… and …

Department of Statistics

Six Sigma Information Technology:Averting Disaster in Washington, DC

Dr. Rick Edgeman, Professor & Chair and Six Sigma Black BeltTel. +1 208-885-4410 Fax. +1 208-885-7959 Email: redgeman@uidaho.edu

College of Science Department of

StatisticsSix Sigma is …

… a highly structured strategy for acquiring, assessing, and applying customer, competitor, and enterprise intelligence for the purposes of product, system or enterprise innovation and

design.

Innovation AlgorithmDMAIC (Define-Measure-Analyze-Improve-Control)

Design for Six Sigma AlgorithmDMADV (Define-Measure-Analyze-Design-Verify)

Makes Integrative Use Of:Various strategies and tools from Statistics, Quality, Business,

Engineering and … ???

College of Science Department of

StatisticsSix Sigma Organizations• GE … All 300,000+ GE employees

must be Six Sigma certified. All new GE products developed using the “Design for Six Sigma” (DFSS) approach.

• 3M … New CEO (from GE) requires all 3M employees to become Six Sigma certified.

• Dupont• AlliedSignal• Sun Microsystems• Raytheon• Motorola• Boeing• Lockheed-Martin• Bank-of-America• American Express• HSBC• SAS Institute

Rapidly Increasing Areas of Application.

– Healthcare – GE Heathcare - SLC– Financial,– Military – NSWC, Pentagon, etc.

• Fueled by:• Strategic Contexts.• Notorious bottom-line orientation &

results. • Adaptable to multiple bottom lines.• Process orientation: rigorous and

systematic approaches to innovation and design.

• Focus on the customer.• Successful track record elsewhere.• “Industry Buzz”.

While Six Sigma is new at, for example, 3M – its benefits at others ofthese organizations is measured in the multi-billions of US dollars.

College of Science Department of

StatisticsThe Villain Cost of Poorly Performing Processes

level DPMO CP3

2 308,537 Not Applicable3 66,807 25%-40% of sales4 6,210 15%-25% of sales5 233 5%-15% of sales6 3.4 < 1% of sales

Each sigma shift provides a 10% net income improvement

Cost of Poorly Performing Processes

(CP3)

Sigma () is a measure of “perfection” relating to process performance capability … the “bigger the better.”A process operating at a “Six Sigma” level produces only3.4 defects per million opportunities (DPMO) for a defect. Without dedication of significant and appropriate attention to a process, most processes in leading U.S. companies operate at a level between 3 and 4 sigma.

Why is Six Sigma Important?

College of Science Department of

Statistics… and the Hero

• We don’t know what we don’t know.• We can’t do what we don’t know.• We won’t know until we measure.• We don’t measure what we don’t value.• We don’t value what we don’t measure.

• Typical Results: companies that properly implement Six Sigma have seen profit margins grow 20% year after year for each sigma shift (up to about 4.8s to 5.0s. Since most companies start at about 3s, virtually each employee trained in Six Sigma will return on average $230,000 per project to the bottom line until the company reaches 4.7s. After that, the cost savings are not as dramatic.

• However, improved profit margins allow companies to create products & services with added features and functions that result in greater market share.

What Does Six Sigma Tell Us?

College of Science Department of

Statistics

Six Sigma COPIS Model

Customers Suppliers

Outputs InputsProcess

Steps

The Voice of the Customer (VOC) is aggressively sought and rigorously evaluated and used to determine needed outputs and hence the optimal process configuration needed to yield those outputs and their necessary inputs for which the best suppliers

are identified and allied with.

From Concept to Market: the Voice of the Customer

How does Six Sigma Work?

College of Science Department of

StatisticsDefine

Control

Improve Analyze

Measure

Six Sigma Innovation & the DMAIC

Algorithm

Define the problem and customerrequirements.

Measure defect rates and documentthe process in its current incarnation.

Analyze process data and determinethe capability of the process.

Improve the process and removedefect causes.

Control process performance andensure that defects do not recur.

“Common sense” doesn’t mean “commonly done” or when done, done well.

Six Sigma: How Do We Innovate?

College of Science Department of

StatisticsDefine

Verify

Design Analyze

Measure

Design for Six Sigma (DFSS)

All new products at GE are designed using a DFSS algorithm.

Define customer requirements andgoals for the process, product or service.

Measure and match performance to customer requirements.

Analyze and assess the design for the process, product or service.

Design and implement the array of new processes required for the new process, product or service.

Verify results and maintain performance.

Six Sigma: How Do We Design?

College of Science Department of

Statistics

A Specific Example

Six Sigma Innovation & Design for Information Technology:

Averting Disaster in Washington, DC

Dr. Rick L. Edgeman, Professor & Chair, Department of Statistics, University of Idaho

Dr. David Bigio, Associate Professor of Mechanical Engineering, University of Maryland

Thomas E. Ferleman, Information Technology Consultant, Office of the Chief Technology Officer, Government of the District of Columbia

College of Science Department of

Statistics

Mag

dale

na F

orsb

erg

– Sw

edis

h O

lym

pian

- 20

02

waking up and being able to simply do nothing.

Not having to train.

Jumping in the car and driving to the country.

Making it through a whole daywithout feeling any pain.” “Goldfinger”, January-February 2002, Scanorama, pp. 22-27.

Imagine …

… Working toward an IT future at OCTO where …

College of Science Department of

Statistics

Imagine what was once Unthinkable …Imagine the potential implications of a well-timed and successful terrorist strike initiated by crippling or otherwise compromising the integrity of the information technology infrastructure of the government of Washington, DC – tourist haven; within 100 kilometers of three major international airports; home of key defense, biotechnology, and information technology firms; host to diplomats; the military and political capitol of the free world. Truly the potential impact on the world order is staggering and likely well beyond what the majority of us are reasonably able to guess.

Goal: to immunize / protect the IT infrastructure of the government of the District of Columbia.Means: Six Sigma Innovation and Design applied to critical IT functions.

College of Science Department of

Statistics

Agencies of the District of Columbia provide services that simply must be operational at some minimal level or –

having failed – must quickly recover.

The Office of the Chief Technology Officer (OCTO) is the primary providerof information technology (IT) services to all 68 agencies of the governmentof the District of Columbia (Washington, DC).

This includes, for example, police, fire and other emergency response, public education, fire, public utilities, and Department of Motor Vehicles.

Service availability was promised to client agencies was well in excess ofOCTO’s ability to deliver. Moreover, the harsh reality of September 11, 2001underscored the critical role of OCTO. Much of OCTO’s funding comes from the United States Congress with a large amount of funding from theDepartment of Homeland Security.

College of Science Department of

Statistics

Five Critical Areas of Information Technology Service to OCTO Client Agencies were examined and methods of improvement, design, and integration explored. These areas were:

• Service Level Management (SLM)• Capacity Management (CaM)• Availability Management (AM)• IT Service Continuity, a.k.a., Disaster Recovery (SCM), and• Financial Management (FM)

These are detailed on the following slide.

College of Science Department of

StatisticsService Level Management (SLM) ensures that SLAs are met and that adverse impacts on service quality are minimized, assessing the impact of changes on service quality and SLAs, both when changes are proposed and after their implementation. Key targets set in SLAs relate to service availability thus requiring incident resolution within agreed periods. SLM is the hinge of service support and delivery and relies on the effectiveand efficient working of underpinning support processes, without which an SLA is useless, since these are foundational to content agreement.

Capacity Management (CM) ensures constant availability of adequate capacity to meet agency business requirements. CM involves incident resolution and problem identification for those difficulties related to capacity issues and generates requests for change (RFCs) that ensure sufficient capacity. RFCs are subject to a change management process and implementation often affects hardware, software and documentation and requires effective release management.

Availability Management (AM) concerns design, implementation, measurement and management of IT services to ensure that stated availability requirements are met and requires IT service FMEA and the understanding the time taken to resume service. Incident management and problem management provide key inputs ensuring that appropriate corrective actions occur. Availability targets specified in SLAs are monitored as part of the AM process that also supports the SLM process by providing measurements and reporting to support service reviews.

IT Service Continuity Management (SCM) or “Disaster Recovery” manages an organization’s ability to provide a pre-determined agreed upon level of IT services to support minimum business requirements. Among the means used are resilient systems and recovery options such as back-up facilities. Configuration management data is required to facilitate this prevention and planning. Infrastructure and business changes need to be assessed for their potential impact on continuity plans, and IT and business plans are then subject to change management procedures.

Financial Management (FM) accounts for costs and returns of IT service investments and cost recovery from clients. FM requires interfaces with CM, configuration management, and SLM to identify the true costs of service. FM works together with business relationship management and the IT organization during the negotiation of IT budgets and client IT expenditures.

KEY: SLA = Service Level Agreement. FMEA = Failure Modes and Effects Analysis. RFC = Request for Change.

Definitions

College of Science Department of

StatisticsApproach Description or Example Use 1ITIL Areas

Charter Purpose is to define the business case; project goals and limits; way of working together; and conflict resolution plan.

All

Brainstorming Uses included cause identification and solution generation. All

Affinity Diagram Uses included associations among OCTO needs (CTQs) All

Interrelationship Digraph Primarily used to explore causal relationships between enablers (“hows”) to capture correlations and form the roof in the HOQ.

AM, CtM

Nominal Group Technique: NGT Nominal Group Technique used as part of QFD / HOQ to prioritize OCTO needs. All

Matrix / Priority Matrix Diagrams Various uses including distribution of tasks to team members and relating OCTO needs (CTQs) to enablers (“hows”) in QFD.

All

SMART Goals Specific, Measurable, Attainable, Relevant, and Time-Bound goals and problem statements. All

Process Maps Included high-level COPIS maps and detailed process maps. Both “before” and “after” improvement versions were used.

All

VOC Tools Approaches included surveys, focus groups, customer complaints, and interviews. All

Drill Down Trees Process-Product Drill Down Tree. All

FMEA Failure Modes & Effects Analysis. AM, CtM

HOQ / QFD House of Quality / Quality Function Deployment. Integrated use of Matrix Diagrams and NGT to assess internal and external customer needs and deploy solutions.

AM

RESULTS Total Savings Estimated by Deputy Director = $2M to $3M from 2003-2007.

ITIL Areas A = Availability Management, CaM = Capacity Management , CtM = Continuity Management, FM = Financial Management, SLM = Service Level Management

Table 1. Examples of Approaches and Their Use in the OCTO DC Project

College of Science Department of

StatisticsApproach Description or Example Use 1ITIL Areas

Pareto Chart Used to identify dominant issues / defect causes. All

Fishbone Diagram Also called Cause-and-Effect Diagrams display “effects” representing a problem or an opportunity with the “causes” being real or potential drivers of the effect.

All

SWOT All ITIL areas were assessed for strengths, weaknesses, opportunities and threats with motivations being improvement or leverage of strengths, diminution of weaknesses, welcoming opportunities, and countermanding threats.

All

Benchmarking Benchmarking of South Dakota Bureau of Information Technology and private sector ISPs. CtM

Chi-Square Tests of homogeneity examined whether differing approaches yielded similar results and tests of independence explored CTQ-Enabler relationships.

AM, CaM, CtM, SLM

Correlation & Regression Used to explore, assess, characterize and exploit CTQ-Enabler relationships. SLM

Design of Experiments (DOE)

DOE approaches included experiments with operating parameters, critical elements, or both. Operating parameters are enablers (X’s) that vary in amount while critical elements are enablers (X’s) that differ in type or categorically. Screening and factorial designs were used.

AM, CtM, SLM

SPC Charts Statistical Process Control Charts recommended or used included p charts, I-MR charts, and X-bar and R charts to (directly) control the X’s, hence indirectly the CTQs.

AM, CaM, CtM, SLM

RESULTS Total Savings Estimated by Deputy Director = $2M to $3M from 2003-2007.

ITIL Areas A = Availability Management, CaM = Capacity Management , CtM = Continuity Management, FM = Financial Management, SLM = Service Level Management

Table 1. Examples of Approaches and Their Use in the OCTO DC Project(continued)

College of Science Department of

StatisticsReferences on Six Sigma at OCTO:

Mission Critical: Six Sigma and Business Excellence for Information Technology.Rick L. Edgeman, David I. Bigio, and Thomas A. Ferleman (2005 expected)World Class Applications of Six Sigma: Case Studies from Manufacturing and Service IndustriesElsevier Science, Oxford, UK. Jiju Anthony & Mohammed Zairi, Editors. – BOOK CHAPTER

Six Sigma or Business Excellence: Strategic and Tactical Examination of IT Service Level Management at the Office of the Chief Technology Officer of Washington, DC. (Invited Contribution)Quality & Reliability Engineering International, Vol. 21, No. & pp. pending, 2005 Rick L. Edgeman, David Bigio and Thomas Ferleman

Six Sigma Availability Management of Information Technology in the Office of the Chief Technology Officer of Washington, DC. Total Quality Management, Vol. 15, No. 5/6, 2004.David Bigio, Rick L. Edgeman and Thomas Ferleman

General Six Sigma References:

Edgeman, R. and Bigio, D. (2004). “Six Sigma as Metaphor: Heresy or Holy Writ?” Quality Progress, Vol. 37, No. 1, 25-30.

Six Sigma in Communities of Care: Improved Care via Institutionalized GeniusBusiness Briefing: Global Healthcare 2002, Vol. 2, 46-49 (Invited Contribution)World Medical Association – 53rd General Assembly. London, UK. – Rick L. Edgeman – BOOK CHAPTER

Klefsjö, B., Wiklund, H., and Edgeman, R. (2001). “Six Sigma Seen as a Methodology for Total Quality Management”, Measuring Business Excellence, Vol. 5, No. 2, 31-35.

The Six Sigma Handbook Expanded and Revised. Thomas Pyzdek (2003). McGraw-Hill, New York.