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Q&A with David Anderson on Enterprise Services Planning

| by Ben Linders Follow 6 Followers on Nov 11, 2015. Estimated reading time: 6 minutes |

Enterprise Services Planning is a way of planning, scheduling, sequencing, and selecting work for professional services. It extends Kanban for enterprise-wide service improvement.

David Anderson will give a keynote presentation about Enterprise Services Planning at the Lean Kanban Benelux 2015 conference. The conference will be held in Heeze, The Netherlands, on November 13, 2015:

Lean Kanban Benelux is part of the Global Conference Series of events dedicated to the adoption of Modern Management Methods that enable organizational evolution and boost business competitiveness. We are committed to inspiring, creating and spreading ideas, real world experience and practical guidance that help managers at any level make better decisions.

InfoQ is covering this conference with news, Q&A, write-ups and articles.

InfoQ interviewed Anderson about what Enterprise Services Planning (ESP) aims to deliver, how it can be used to manage risks, how cost of delay can be used inside ESP, and why feedback loops are important in ESP.

InfoQ: Can you briefly describe Enterprise Services Planning, what it is and what it aims to deliver?

Anderson: One way to describe ESP is that it extends Kanban to all professional services in an organization. However, many people believe that Kanban is merely a visual management technique and while this doesn’t do justice to Kanban and the value of deferred commitment and limiting WIP to improve service delivery, the idea of visual management for the wider enterprise wouldn’t do justice to ESP either.

ESP is "MRP for intangible goods". It is a way of planning, scheduling, sequencing, and selecting work for professional services including all forms of knowledge work and creative work. Planning includes insuring sufficient capacity is available, providing a booking system, identifying and managing risks and dependencies, and forecasting outcomes. Most of ESP can be encapsulated in algorithms. ESP as a concept can be implemented with software. As such the vision for ESP is "AI for knowledge work". ESP systems will recommend what to start, when to start it, which order to start things, and how to hedge risk across a portfolio or product mix.

InfoQ: Can you please elaborate on how you can scale out Kanban across the organization using ESP?

Anderson: ESP will deliver improved business agility, one service at a time. The enabler is to be able to see your organization as an ecosystem of interdependent services that can be improved. We improve these services by "kanban"izing them and then we optimize the economic performance of the network by using ESP to plan, schedule, sequence and select the work that will flow through that network of services.

InfoQ: Can you elaborate how ESP can be used to manage risks?

Anderson: Risk management techniques are key to effective management of businesses. Risk assessment and profiling is a key element of the ESP framework. Understanding risk helps us hedge it with capacity allocation and also manage it in other ways by scheduling, sequencing and selecting work correctly to tailor our risk exposure according to our propensity for risk taking and our tolerance of the gap between expectations and actual outcomes.

For example, an IT service may have a quantity of irrefutable work, perhaps as a consequence of problems in production. The arrival of the irrefutable work may be random or come in bursts within a time window of a production release. The irrefutable work may also be urgent and require an expedite class of service. If we wish to avoid disrupting other work and breaking promises on other work with a tangible and understood cost of delay, then we need to hedge the risk of the irrefutable , urgent work with intangible cost of delay work – work which is important but not urgent and can be delayed if necessary. So we hedge the risk of urgent, irrefutable work by allocating capacity in the system to the important but not urgent work. This capacity allocation is a risk hedge. We can implement risk hedges like this all over a network of systems in order to improve customer satisfaction with service delivery.

InfoQ: Joshua Arnold explained in the Q&A& how Cost of Delay can be used to quantify value and urgency. Can you give an example how Cost of Delay can be used inside of ESP?

Anderson: Cost of delay is a dimension of risk which we cover thoroughly in ESP and use to facilitate scheduling and selection decisions. However, the Joshua Arnold material that focuses on quantifying cost of delay as a constant rate, is really quiet simplistic and narrow. It is too easy to demonstrate that there are many instances where cost of delay is not a constant rate. It is more important to understand the nature of the overall impact of doing something or not doing it. To do this we need to understand the shape of the utility function, the units in which we measure utility, the order of magnitude of that utility or impact, and the time period over which it stretches. In addition, we need to understand the option expiry date which indicates how long we have before we must make a decision to commit to or discard an idea. By doing all this we develop a nuanced understanding of cost of delay that greatly improves our ability to manage risk and provide logical input to scheduling, sequencing and selection decisions. Treating Cost of Delay as a constant rate leads to poor quality decision making similar to trying to prioritize by return on investment. Two items with the same overall cost of delay may actually have different sensitivity to schedule uncertainty or different option expiry dates and hence varying urgency in when we need to make a decision and when we need to start them in order to optimize the exploitation of our capability.

We like to think of ESP as a collection of simple but powerful ideas.

InfoQ: Can you briefly describe the feedback loops that ESP uses.

Anderson: ESP uses the 7 feedback mechanisms from the Kanban Method. Collectively these are known as the Kanban Cadences: Replenishment; Kanban; and Delivery Planning meetings; with Service Delivery; Risk; Operations; and Strategy reviews. The first 3 meetings are focused on insuring service delivery against customer expectations, and the later 4 reviews are focused on improving the process. Another way to look at the set of 7 is that Replenishment and Strategy Review are about "doing the right thing" while the other 5 Kanban & Delivery Planning meetings with Service Delivery, Risk and Operations Reviews being focused on "doing it right, and doing it better".

InfoQ: Why is feedback so important?

Anderson: It’s important to recognize that your business is an ecosystem of interdependent services. As such it is complex. Trying to produce a grand design to solve all the challenges of such a business is likely to produce a brittle process that isn’t robust and resilient to changes in external conditions or factors beyond control of the business planners and strategists.

Designing and maintaining brittle grand process frameworks is expensive, and a lot of "busy work". It’s avoidable! To deal with complexity and to be robust and resilient in the face of complexity requires an adaptive capability. Your organization needs the ability to sense and respond - to comprehend current conditions and to make adjustments to internal processes in order to cope with changing external conditions.

InfoQ: If readers want to know more about ESP, where can they go?

Anderson: For the past year we’ve been offering ESP training to private clients. I’ve presented overviews of ESP at a number of events this year and those presentations and videos are online - slideshare.net/agilemanageris a good resource for these.

For 2016 we are organizing a series of Executive Summits - 1-day conferences. The first is in London in January and the second will be in San Diego in May. Details are at http://esp.leankanban.com. Gradually we will build out this new web site to provide a comprehensive set of resources on ESP.

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