At Nationwide, they have a different and somewhat counter-intuitive philosophy for software development, explains Guru Vasudeva, SVP and CTO of Nationwide. He describes it as sort of a mashup up of agile, lean software development (Lean) and capability maturity model integration (CMMI) philosophies.
“In financial services and insurance, customers don’t really touch and feel our products,” Vasudeva says. “It’s a highly information-centric business, and as a result, system development and maintenance is really the manufacturing part of the organization. To be really good at it, we have embraced Agile, Lean and CMMI philosophies to get good at software engineering, and we have seen significant success with that.”
While many IT professionals would argue that lean, agile and CMMI are mutually exclusive, he says the economic value can be measured and improved compared to the old way of doing software development.
“It’s a completely different way of doing things. People think they know what they want. But, as we have proven over decades of application development, they don’t know what they want. They really know what they want when they see it. The concept of Agile is ‘let’s discover what you desire rather than what you’ve planned.’ That’s a very different way of thinking, and it’s a change for IT associates. We felt that by not only driving the transformation but also adding the economic underpinnings, we could show that this method is better and hold ourselves accountable. What if it’s a bad idea? Then we want to give it up.”
In the past year, Vasudeva says IT has delivered 101 releases and produced $15 million in combined annual savings; 83 percent of delivered projects were better than industry average; 59 percent had zero defects, and they were able to reduced labor costs by $7 per hour through standardization.
To start, Vasudeva suggests changing how people behave by changing what they do, an idea he attributes to John Shook, industrial anthropologist and a thought leader in the Lean community.
The old way was to try to change thinking in order to change behavior. Under the new model, one changes behavior in order to change thinking. For example, by creating a flatter work environment, flexible teams, holding team huddles, short daily meetings and measuring successes.
Agile and standardization can work together, Vasudeva says. And in fact, the best way to scale Agile across the enterprise is to standardize, he says, and one can foster a culture of continuous improvement by empowering the staff to challenge the standards and relentlessly focusing on problem solving.
He also stresses the importance of focusing on economic value and benefit realization by measuring baseline productivity and labor costs and making key metrics visible and embedded into the day to day operations.
Chris McMahon is a senior editor for Insurance Networking News.
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