The Six Sigma methodology, while not new, is becoming more relevant to IT organizations as IT becomes more process and service driven.
Six Sigma is about people and processes. The Six Sigma methodology helps CIOs shift their focus from an internal view to an external view of how the IT architecture is affecting customers.
Within an organization, Six Sigma has the potential to improve the quality and reduce the costs of IT operations. In addition, Six Sigma can connect measurement systems to strategic objectives and help companies focus on the initiatives that will drive the most value for the customer.
Learn more below about the costs, certification options and customer-service benefits of using the Six Sigma methodology in the enterprise.
What is Six Sigma?
Six Sigma is a methodology used to focus an organization on reducing variations and errors in processes and driving quality improvement. Developed at Motorola Inc. in the early 1980s, it became well known in the '90s, when GE CEO Jack Welch evangelized it. The Six Sigma methodology works with any type of well-understood process with proven steps and metrics, such as the IT Infrastructure Library, COBIT and others.
Originally, most Six Sigma adherents were manufacturing companies, which were largely process driven. However, in recent years Six Sigma has taken off in more service-oriented industries like financial services, health care and insurance.
There are various Six Sigma levels. The standard metric for Six Sigma is 3.4 defects per million opportunities. So for instance, for every 1 million transactions that go through a system, you could have 3.4 errors and still achieve "six sigmas" -- a measurement that comes from a technical term used in statistics. However, not all companies need to achieve six sigmas. Four or five sigmas might be enough, and six can be something to strive for over time.
- Learn more about the history and evolution of Six Sigma.
What are the costs and savings of using Six Sigma?
To justify the cost of using the Six Sigma methodology, "you must consider the cost of quality or the cost of doing something wrong," said Chris Lindstrom, managing partner at Ceptara Corp., a Mill Creek, Wash.-based management consulting and training firm that employs Lean and Six Sigma experts and project managers.
The costs of implementing a Six Sigma methodology are in tools and people. There are costs involved in training staff and providing them with Six Sigma certifications or otherwise hiring an outside consultant with expertise in the tools and processes. Six Sigma software and tools are also available to help implement the methodology.
Some companies have seen impressive cost savings from implementing the Six Sigma methodology. One example is Vytra Health Plans, a New York-based HMO. The company has used Six Sigma since 1997 and most recently reduced call center costs by more than $500,000 (16%).
Vytra wanted to improve customer service without increasing costs. However, the company couldn't accurately measure the real cost of each customer and call.
To remedy this problem, the Six Sigma team at Vytra -- led by the company's Black Belt chief technology officer -- implemented an Activity Information Modeling (AIM) tool. Using AIM with its Six Sigma methodology, Vytra was able to collect enough data points over a four-week period to determine actual costs of each call, by call type, product, line of business and customer type. These results helped the company identify which lines of business cost more than others and why and develop plans for new procedures and re-pricing strategies.
United Airlines is another company that has implemented Six Sigma and seen huge improvements in customer service satisfaction as a result.
Following a monthly customer survey in 2007, the company discovered customer satisfaction with United's customer relations process was below goal.
A team selected a Six Sigma problem-solving approach called DMAIC -- define, measure, analyze, improve and control -- to identify key metrics affecting customer satisfaction and understand the defects and root causes of the negative comments.
As a result of the project, negative comments were reduced by 71% and customer service satisfaction overall was improved significantly.
- Read more about the winners of The Global Six Sigma & Business Improvement Awards.
What Six Sigma software and tools are available?
Six Sigma software is available for support with statistical and process analysis, program management and project collaboration. Some players and offerings in the market include Microsoft Visio, IBM WebSphere Business Modeler, SigmaXL, Statistica and JMP.
Pricing for Six Sigma software varies. For instance, statistical analysis software from SigmaXL starts at $199 per license. Business process modeling and analysis software like IBM's WebSphere Business Modeler costs $10,700 for a license.
- Check out a list of more Six Sigma software providers.
What is a Six Sigma black belt?
There are four levels of Six Sigma certification and training. The first and most basic is the Green Belt. This level provides an introduction to the tools of Six Sigma and is geared toward the business or IT professional who participates in or owns a small-scale project with a potential a few thousand dollars to $10,000 in savings.
The next level of Six Sigma certification is the Black Belt. A Black Belt receives additional training and can work in any situation that involves Six Sigma, including mentoring a Green Belt. Training for Black Belts goes into more depth on designing experiments and scientific methods.
The final two levels of certification are Master and Champion. People at these levels have completely mastered the art of Six Sigma and have the certification to not only practice the methodology, but also mentor and teach it.
Six Sigma certification and training costs $500 for an individual Green Belt and up to $10,000 for advanced Black Belt certification.
- For more information on the Six Sigma training and certification, visit the American Society for Quality.
How does Six Sigma improve customer service?
Six Sigma is all about the customer. "The start and end point is always the voice of the customer," said Jack Probst, managing consultant at Pink Elephant. "It [Six Sigma] focuses on what the customer wants and needs."
Six Sigma can improve customer service by reducing variations in the customer's experience. "People don't like change. They like predictability," Lindstrom said. Customers who are satisfied will come back. A well-run process with few to no errors on the back end will ensure better customer service and satisfaction on the front end.
For example, if your goal is to close a deal on the first sales call, anything that doesn't close then is considered a defect. Six Sigma helps you define these types of defects, figure out how to improve them and put measurements in place to track and ensure the improvements are working.
- Read how one industry is striving to improve customer service with Six Sigma.
What is the difference between Lean and Six Sigma?
Six Sigma is a very disciplined methodology that focuses on ensuring the needs of the customer are met consistently over time through quality and lack of errors.
Lean Sigma, on the other hand, focuses on eliminating waste in processes. Lean, as a strategy, relies on five principles: adding value to the customer; aligning capabilities to services; bringing processes into the flow, without interruptions; letting customers pull value from services; and pursuing perfection.
"Lean doesn't mean everything skinnier," clarified Alexander Peters, a principal analyst at Forrester Research Inc. in Cambridge, Mass. "It's just about delivering exactly what you're supposed to, not more or less."
Lean, like Six Sigma, took off initially in the manufacturing industry. However, today both are being adopted more in service industries. And as IT becomes more of a service industry, IT organizations are starting to see the benefits of using Lean to add value to the business.
- Read more about Lean in Forrester's article, "Applying Lean Thinking to IT."
Let us know what you think about the story; email firstname.lastname@example.org.