1. Leveraging CMM and Six Sigma Francesca Pratt March 11, 2003 Payment Solutions SEPG

2. Payment Solutions SEPG March 11, 20032 Objectives n Describe the importance for aligning the CMM and Six Sigma for First Data n Provide a basic understanding of how the CMM and Six Sigma support each other n Provide examples of how a First Data’s IT organization is integrating the initiatives

3. Payment Solutions SEPG March 11, 20033 Background n Payment Solutions (IT) introduced its CMM Initiative in 1999 – Focus was to merge the multiple cultures and processes from several IT organizations that were acquired into one organization – To be able to determine capability of the organization to meet the business needs – Achieved Level 2 in October 2001 – Next formal assessment scheduled for September 2003 for Level 3

4. Payment Solutions SEPG March 11, 20034 Background n First Data introduced the Six Sigma Initiative in 2000 to build a premiere organization – Measurement is its foundation that determines the success and focus for the organization – Focus on Customer Values (Voice of the Customer) and how to deliver – Work to ensure value is delivered when needed and continuously improve our ability to do so

5. Payment Solutions SEPG March 11, 20035 Background n To be successful with the CMM Initiative the following needed to be addressed: – Need to market the CMM at the corporate level to address the perception of conflicting initiatives – Need for strong Senior Management to fight off and maintain the CMM Initiative

6. Payment Solutions SEPG March 11, 20036 CMM vs. Six Sigma n CMM is: – A common-sense application of process management and quality improvement concepts to software development and maintenance – A community-developed guide – A model for organizational improvement – The underlying structure for reliable and consistent CMM-based appraisal methods

7. Payment Solutions SEPG March 11, 20037 CMM vs. Six Sigma n CMM has evolutionary paths that increases an organization’s software process maturity in stages – These stages are ordered so that improvement at each stage provide a foundation on which to build improvements undertaken at the next stage

8. Payment Solutions SEPG March 11, 20038 CMM Capability Levels

9. Payment Solutions SEPG March 11, 20039 CMM vs. Six Sigma n Six Sigma is: – A business process that allows companies to drastically improve their bottom line by designing and monitoring everyday business activities in ways that minimize waste and resources while increasing customer satisfaction – It provides specific methods to re-create the process so that defects and errors never arise in the first place

10. Payment Solutions SEPG March 11, 200310 CMM vs. Six Sigma n Six Sigma is: – Is a disciplined process of applying business problem solving tools – The acronym DMAIC provides the sequence which is the heart of the Six Sigma Method n Define- the business opportunity n Measure- the process current state n Analyze - determine root cause n Improve- eliminate waste and variation n Control- evidence of sustained results

11. Collect baseline data on defects and possible causal factors Plot defect data over time and analyze for special causes Describe current process Do Pareto analysis (if appropriate) Create & stratify frequency plots Validate the Measurement System efine Measure the Current Situation ACDB ©2000 Oriel Incorporated. All Rights Reserved. DMAIC Road Map easure Develop charter Understand the Voice of the Customer S U P P L I E R S C U S T O M E R S OutputsInputsProcess Define the Project Map the process Analyze Improve ControlDefine Measure Hypothesis Testing Draft charter Discuss/revise charter SponsorTeam LeaderTeam Members Review & approve charter Select project Coach

12. Payment Solutions SEPG March 11, 200312 nalyze mprovemprove Collect new data on indicator measured in Step 2 (Current Sit.) Redraw relevant Before and After plots Quantify the benefits of the improvement Evaluate methods and results; determine appropriate actions $$$$ Improve: Evaluate Results Control: Standardize Effective Methods Train Develop and document standard practices Ongoing monitoring Build process for updating procedures Communicate to others in the organization Summarize learnings Make recommendations for future plans Learnings Recommendations Results next Plan DoCheck Act Control: Communicate Results & Future Plans Develop a focused problem statement Brainstorm potential causes Statistical methods to quantify cause- effect relationships Collect data to verify selected causes Organize potential causes Analyze Causes Effect Cause Made the Sale Did Not Make the Sale Time With Customer (in minutes) 51015202530354045505560>60 51015202530354045505560>60 Hypothesis Testing Scatter Plots and Regression Analysis ontrol Brainstorm many possible solutions to identified root causes Identify & weight criteria Evaluate (rank) solution alternatives Select one or more alternatives Develop plans Pilot then implement plans Reduce Call Transfers Update extension lists ID 1 2 3 4 5 6 7 8 9 Dept supv. update job responsibility lists Mark responsibilities on phone ext. list Update names and extension numbers Revise auto-attendant Assemble team Examine data Decide what options should be given Pilot and test new language Task Name 5/316/76/146/21 MAY JUNE 6/28 Calvin, Max, Sheryl Maria Calvin Team, TBD Plan DoCheck Act Improve: Implement Solutions ©2000 Oriel Incorporated. All Rights Reserved. Verify Root Causes Experiment Trial implement Collect additional data

13. Payment Solutions SEPG March 11, 200313 CMM vs. Six Sigma CMM n Identifies process improvement opportunities for a specific organization n Senior Manager is the sponsor n SEPG Manager is the project manager for all process improvements n Focus on analyzing, mapping, improving, and measuring in the organization as a whole n Timeframe is 2-3 years for each level rating n Primary goal is continuous process improvement with results contributing to reduction in cycle time and reduction in defects Six Sigma n Identifies a specific opportunity for improvement n Champion is the business owner and sponsor n Blackbelt is the project manager of a specific improvement project n Greenbelt is a subject matter expert n Focus on analyzing, mapping, improving, and measuring the one specified process n Timeframe is 4-6 months for a project n Primary goal is $$$ saving

14. Payment Solutions SEPG March 11, 200314 CMM vs. Six Sigma n Leveraging Opportunities – Level 3 organizations establish process standards that are the foundations to begin to measure process effectiveness and can use the Six Sigma measurement tools to collect and analyze the data – Process mapping are tools used in both – Six Sigma methodology can be used to achieve CMM Level 4 goals and activities

15. Payment Solutions SEPG March 11, 200315 Applying Six Sigma Process Management – Analyze data to determine process improvement opportunities – Apply the DMAIC lifecycle to determine root cause and solution – SEPG required skill is Six Sigma methodology which is achieved via Green Belt certification SEPGDocumented Processes Metrics & Measures

16. Payment Solutions SEPG March 11, 200316 Inputs Detail Process Steps Outputs Six Sigma – SIPOC standard Documented Processes Process Mapping – Adopt the SIPOC standard for mapping the organizations standard processes – Establishes the foundation for the DMAIC lifecycle and supports common terminology between the CMM and Six Sigma Initiatives Applying Six Sigma

17. Payment Solutions SEPG March 11, 200317 Applying Six Sigma n Leverage Six Sigma Methodology to align to the corporate initiative and achieve Level 4 (without even trying) – At Level 3, measurements have been defined and collected systematically – At Level 4, decisions are made based on data collected n Common measurement n Data analysis

18. Payment Solutions SEPG March 11, 200318 Applying Six Sigma n Six Sigma Methodology addresses the Key Process Areas for Level 4 – Software Quality Management – Quantitative Process Management

19. Payment Solutions SEPG March 11, 200319 Applying Six Sigma n Quantitative Process Management KPA – Purpose is to control the process performance of the software project quantitatively – Involves: n establishing goals for process performance n measuring the performance of the project n analyzing these measurements n making adjustments to maintain process performance within acceptable limits

20. Payment Solutions SEPG March 11, 200320 n An important concern is identifying variations in performance that are not within the normal range of process performance – “extraordinary” events outside the bounds of process capability Applying Six Sigma Control Chart With Special Causes Identify the problem in the process

21. Payment Solutions SEPG March 11, 200321 Applying Six Sigma n Taking Corrective Action at Level 4 – Quantitative Process Management focuses on the process – Process capability is quantitatively known – When performance falls outside the limits n identify the reason n take corrective action when appropriate

22. Payment Solutions SEPG March 11, 200322 Applying Six Sigma n The Meaning of Quantitative Control – Quantitative Control in the CMM implies any quantitative or statistically based technique – The words “statistical” and “quantitative” imply data – Data reflect facts – Fact-based management results in objective decisions

23. Payment Solutions SEPG March 11, 200323 Applying Six Sigma n Basic Statistics – Quantitative, or statistical, techniques need not be sophisticated to be useful – Pareto analysis, for example, is fairly simple – Quantitative techniques do require n measurable data n consistent data collection n defined, comparable measurements

24. Payment Solutions SEPG March 11, 200324 Applying Six Sigma n Software Quality Management KPA – Purpose is to develop a quantitative understanding of the quality of the project’s software products and achieve specific quality goals – Involves n defining quality goals for the software products n establishing plans to achieve these goals n monitoring and adjusting software plans, software work products, activities, and quality goals to satisfy the needs and desires of customer and end-user

25. Payment Solutions SEPG March 11, 200325 Applying Six Sigma n Building High-Quality Products – Software Quality Management focuses on the product – Measurable quality goals for the product are defined – The product is “ready” when the goals are achieved

26. Payment Solutions SEPG March 11, 200326 Applying Six Sigma n Quality Evolves – At Level 2, the focus of quality is “conformance to requirements” – By Level 4, there is an emphasis on understanding the needs of the – customer – end users – organization (supplier) – Ultimately, the customer determines what quality is or is not – Total Quality Management revolves around customer satisfaction

27. Payment Solutions SEPG March 11, 200327 Applying Six Sigma n Other areas that are being addressed: – Developed a standard SDLC to support the Six Sigma Methodology when the solution involves technology – Leveraging the “Voice of the Customer” methods to improve the current requirements process

28. Payment Solutions SEPG March 11, 200328 Summary n CMM and Six Sigma are not conflicting methodologies n CMM Level 3 provides the foundation for integrating Six Sigma in an efficient manner n Using the Six Sigma methodology supports CMM Level 4

29. Payment Solutions SEPG March 11, 200329 Questions ?? francesca.pratt@firstdata.com