hello world!
Published: November 16, 2023

Understanding Operational Excellence And The Continuous Optimization Of IT Operational Efficiency

In today's highly competitive marketplace, organizations need to have the ability to execute effective business strategies consistently and achieve long-term sustainable growth; otherwise, they'll fall behind the competition. Operational efficiency refers to the capability of an organization to consistently deliver high-quality products and services with a culture of leadership and empowered employees while having a cohesive vision of business outcomes and the future.

What Is Operational Excellence?

Operational excellence and operational efficiency are not the same.

Operational efficiency is how products, customer service and customer experience are delivered today and how they can be improved.

Operational excellence is a business strategy about delivering agile and high-quality products and services. However, it is not about reducing costs and increasing productivity. Instead, it is a culture of teamwork, problem-solving and leadership that brings about the desired results.

Goals Of Operational Excellence

Operational excellence aims to deliver high-quality customer service, customer experience and products. The success of operational excellence initiatives depends on tracking these sets of metrics/KPIs.

• Culture-oriented goals. Embracing positive culture, norms and values facilitate efficiency—thus, delivering value to customers by providing quality services while keeping operational costs low. Communicating clearly and allowing employees to resolve issues can enhance organizational culture and employee retention. It can also create an environment where staff members share their ideas and present these to management.

• Operational-oriented goals. Operational excellence involves ongoing adaptation and is flexible and dynamic. Markets and customer demand change, all while innovators introduce new technology. Applying the principles of operational excellence can lead to prioritizing productivity, high-quality products, customer service, performance efficiency and sustainability.

• Financial-oriented goals. Aim to improve sales, revenue, cash flow and margin. These continuous improvements can result in better customer satisfaction, value to the customer and enterprise agility. Ultimately, this can lead to increased revenue, profits, cost optimization and cash flow.

• Exceed customer expectations. Implement a management strategy that strives for consistent and reliable results. Leadership should focus on meeting and exceeding customer expectations.

Everything OpEx®

Challenges Of Achieving Operational Excellence

There are several reasons why operational excellence initiatives fail. Goals may not have been communicated clearly. Initiatives may not have been a priority at the leadership or business level. There may have been a lack of agility to adapt, a lack of unified vision or inadequate resources to manage processes effectively. Organizations may have been equipped with the incorrect technologies, tools and policies.

All of the above may sound familiar to IT decision-makers who struggle with critical issues. If you are in the same boat, then avoid these four blockers for the best results.

• Inability to measure and improve without data. To measure performance, we need data; without data, we cannot measure and make improvements. For example, if we need to measure utilization, we require employees to fill in timesheets—which are not always easy to collect.

• Siloed organization. When an organization is hard siloed, it is hard to break the walls. In a specific case where IT attempted to build a self-service consumption for IT services, we witnessed the issues of a siloed organization firsthand. The engineering team had its priority and did not want to validate the IT services' hybrid cloud consumption model, so it opted for public cloud services instead.

• Culture and communication. Without transparent organizational communication and a culture of accountability, it is hard for the business, management and employees to align on common goals and vision.

• Operational excellence methodologies. There are various methodologies for businesses looking to implement operational excellence initiatives. These include Six Sigma, Kaizen, Lean Management and Shingo Model (commonly used). Therefore, operational business leaders should select the appropriate methodology based on the vision, goals and outcomes for the future success of their companies.

Roadmap For Operational Excellence

• Business goals, vision, culture and communication. Establish business-level goals and objectives, have a good communication strategy, align teams, build a culture of accountability, empower employees, build teams, communicate, assess progress and repeat.

• Data visibility. Organizational-wide data visibility is extremely important, breaking siloed data and planning to have a centralized system that is easier for the entire organization to view the data and act.

Below are the focus areas for the continuous operational excellence execution roadmap.

• Step 1: Assessment. Based on the organization's maturity, classify its assessment into Foundational (siloed org, foundational tools, manual, non-standardized processes, and siloed data), Efficient (cross-functional, advanced tools, automated, leading practices) or Predictive segments (cross-functional, sharing data, advanced data science, and data analytics). Build a roadmap with short-term and long-term strategic tasks and goals, and follow the implementation plan.

• Step 2: Plan. As with any strategy, careful planning is required to achieve the desired business outcomes. Review the assessment outputs, identify the gaps and plan on implementing the tasks with the maximum benefit for the business with lower associated risk.

• Step 3: Implementation. Create an implementation plan, develop a strategy and communicate with key stakeholders, business owners and end users if necessary. Document the score for the identified tasks as well as current challenges and roadblocks. Set standards and start implementing these tasks.

• Step 4: Continuous improvement. Foment a plan to refine the process after identifying and improving tasks. Then, measure the improvements and communicate to the relevant stakeholders and customers. Rinse and repeat.

What Are Operational Excellence Metrics?

Businesses seeking operational excellence need metrics they can track to evaluate performance objectively over time—thus, helping management track their ROI during various stages of improvement in operational efficiency.

At the enterprise level, metrics include the following.

• The number of operational improvement initiatives underway.

• The estimated value of these initiatives.

• Evaluating the risk of failure for each initiative of the entire portfolio and determining the worth of these improvements over a year.

Operational excellence metrics fall under the following categories.

• Efficiency.

• Effectiveness.

• Capacity.

• Productivity.

• Quality.

• Profitability.

• Competitiveness.

• Value.

KPIs for operational excellence by category.

• Customer satisfaction.

• Productivity.

• Culture.

• Information technology.

• Quality.

• Sales efficiency.

• Manufacturing.

• Financial.

The Bottom Line

Operational resilience and the continuous optimization of operational efficiency can allow organizations to compete effectively and execute business strategies consistently as well as achieve long-term sustainable growth.

Contact us today:


Value Driven Approach® - VDS Consulting (vdsconsultinggroup.com)

author avatar
Mike Bolanos

Leave a Reply

Your email address will not be published. Required fields are marked *