ISO 9001:2000 Drives Process Changes at Siemens

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1 Select Q&A, M. Davis Research Note 20 December 2002 ISO 9001:2000 Drives Process Changes at Siemens Siemens Medical Solutions Health Services is an early enterprise vendor adopter of ISO 9001:2000. It has achieved success with the certification, which is driving productive changes to Siemens' processes and culture. Core Topic Healthcare: Critical Healthcare Applications for Business Efficiency and Improvement Key Issue How will vendor applications enable healthcare organizations to respond to market demands for increased efficiency, customer service improvements and cost reductions? Note 1 ISO 9001:2000 Quality Management System Requirements ISO 9001:2000 assesses an enterprise's ability to meet customer and applicable regulatory requirements and, thus, address customer satisfaction. It is now the only standard in the ISO 9000 family, against which third-party certification can be carried (see In October 2000, Siemens Medical Solutions Health Services began a business process re-engineering initiative that targeted business excellence, customer satisfaction and continuous improvement. Siemens Health Services determined that the International Standards Organization (ISO) 9001:2000 standard (see Note 1) was well-suited to its business objective. On 10 August 2001, it achieved ISO 9001:2000 certification, its first major project milestone, with no nonconformances and only 10 months after the project began. Through November 2002, Siemens Health Services migrated its employees to the newly engineered processes, introduced a corporate balanced scorecard, and conducted software and process assessments to continually monitor, improve and evaluate the maturity of its quality management system. In November 2002, Siemens Health Services met its second major milestone when the external ISO auditor recommended that the company maintain its ISO 9001:2000 certification. There were no nonconformances. Gartner submitted written questions to Siemens Health Services regarding the impact that ISO 9001 was having on its business operations. How has ISO 9001 certification changed your software development process? Siemens' response: The Solution Life Cycle, our re-engineered process, starts and ends with the ability to meet customer requirements. Benefits include common processes across our solutions, clearer definition of roles and training requirements, improved flexibility to move developers from one solution to another, and metrics collection to drive continuous improvement. Noteworthy improvements include: Gartner Entire contents 2002 Gartner, Inc. All rights reserved. Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice.

2 More-robust project control and management. There are project plan templates for different types of projects, depending on scope and complexity. Another example of project control is routinely tracking percentages of work completed and remaining against the project schedule. A focus on role-based training. We recommend Project Management Institute certification for all senior project managers. We have 15 quality assurance analysts training to become certified software quality engineers. A more-rigorous, automated, requirement engineering process to identify, track and approve market, customer and technical requirements. We now have two requirements specifications that require approval early in the process market requirements and solution requirements. Requirements can be traced from initial approval through design, testing and validation. Tightening of the review process, which provides greater scrutiny of development deliverables and enables proactive risk management much earlier in the process. Standardized document control and records retention, which promotes reuse and results in productivity improvements. The implementation of more than 200 process improvements in 2002 based on Capability Maturity Model (CMM) assessments, our internal audit program and user feedback. Standardized software management processes and automation across products. Customer-reported defects, which result in model fixes, will be more easily tracked once we complete automation. Project team leaders have reported reduced product enhancement cycles. For example, on one project, three months after general availability, the defect density (a factor of the number of defects related to the complexity and quantity of software) has decreased 2.2 percent. On this same project, the total defect count dropped 72 percent from the prior release. The time needed by developers to fix these defects dropped by 16 percent. Gartner's analysis: ISO 9001 should produce improvements in Siemens Health Services' software development and delivery process. If the company implements ISO 9001 effectively, we expect that improvements will manifest in fewer software "bugs," improved stability for software upgrades and a reduction in customer support calls. Gartner will monitor the company's clients to determine if these improvements are being realized. 20 December

3 How has ISO 9001 changed your internal software quality assurance process? Siemens' response: Re-engineered development processes have formally embedded quality assurance activities earlier and throughout the development life cycle. Planning for quality assurance begins as early as initial business planning. Quality assurance activities include more-frequent user validations and internal reviews of development deliverables, in addition to standardized testing. Improvements include: Reviews (verification activities to assess quality) are conducted at standard project milestones; the results are reported to management. Review teams comprise representatives from various functional areas (for example, sales and support) to ensure that internal and customer requirements are met. Defects are measured at document and code reviews, as well as at all testing phases. We focus on role-based training. We assigned quality assurance to the quality assurance analyst role and have developed training programs to drive analysts to expert levels of competency. We are investigating requiring quality manager certification for our quality and productivity managers. The reduced defect counts that were observed in newly released products is the result of the improved development process, including quality assurance activities. Gartner's analysis: Quality assurance should be embedded in every process. ISO 9001 enforces this practice. When appropriately implemented, the measuring and feedback cycles of the ISO process reduce software bugs and create more stability for product implementation and upgrade processes. Siemens Health Services clients should monitor new software implementations and upgrades to determine if the processes are improving, and if the software has fewer bugs. The ISO process provides a feedback loop for customer input if that doesn't happen. What impact has ISO 9001 certification had on your beta site programs? Siemens' response: Beta customers are identified early in the life cycle (this is part of quality assurance planning), expectations are documented and exit criteria are defined. Software and service quality are evaluated based on customer feedback. For example, 20 December

4 feedback from the beta sites is used to immediately improve our training services. Improved software development and quality assurance processes are evident in the beta sites, with fewer defects being found compared to previous releases of the same product. For example, on a recent beta test of an enhancement release, we found that 96 percent of priority issues that were identified between the system test and three months after general availability were discovered by us rather than our customers. This represents a significant increase compared to prior releases, and it heightens our customers' satisfaction with the release. Gartner's analysis: Involving affected business units in the design and development of software as well as testing processes should result in more-stable versions of beta site software. However, this improvement will only be realized if the design of the process accommodates the audit of the process from one phase to the next. Siemens Health Services appears to be on track with the metrics that it has reported. What impact has ISO 9001 certification had on your software implementation process? Siemens' response: An example of product implementation process re-engineering reduced customer and Siemens efforts by 69 percent and 67 percent, respectively. We reduced the implementation fees charged to the customer by 20 percent. These savings were generated by re-engineering and task automation. To reduce cycle time from order approval to delivery for professional service requests, we implemented service levels for customer-approved professional service requests for example, 24 hours for Web-submitted requests and 48 hours for other requests, from request to availability to deploy a service provider to perform the work. Our ability to meet these service levels has improved from 50 percent in April 2002 to 98 percent in July Re-engineering efforts included standardized process definitions, new exception reports and metrics for cycle time and first-pass yield (the measure of how often issues are resolved correctly the first time they are addressed). Based on surveys conducted by our customer relationship management center, customer satisfaction with the implementation scores 4.5 out of 5.0; this is an increase of 19 percent (from a score of 3.57) during the prior one-year period that was measured in September 2001 (prior to the order fulfillment re-engineering process). 20 December

5 Gartner's analysis: More-knowledgeable employees that use standardized processes should result in more-efficient and effective implementations for clients of Siemens Health Services. The metrics provided by the company demonstrate the process improvements that can be achieved when ISO is effectively integrated into the culture and operations of the company. The ability to reduce implementation fees through ISO practices will provide the company with a competitive market advantage. What impact has ISO 9001 certification had on your customer service organization and process? Siemens' response: Historically, our diverse range of products spanned multiple business units and employed unique support processes and toolsets. ISO 9001:2000 confirmed that our process standardization and improvement efforts are on track. Transactional customer satisfaction grading for all issues is stable at 97 percent or higher, with 50 percent of "e-tickets" (customer support issues that require resolution and are sent via the Web) closed per month. This is an increase from a previous operating range of 91 percent to 96 percent, with 17 percent of e- tickets closed per month. First-pass yield has increased to 98 percent, indicating that little rework is required when addressing customer issues. For one product, savings from the fewer customer service staff hours required to address calls was $146,000 during the first several months of general availability. ISO 9001:2000 provides the framework for extending the level of process standardization across other areas of our business, especially at critical integration points among our business processes. Our external ISO auditor reviewed these critical integration points during our recent surveillance audit and found no nonconformances. Examples of how process re-engineering has enhanced our support processes include: Standardization third-level support issue management. For example, by clearly defining the role and responsibilities of third-level support, we ensure that the same support is provided, regardless of which organization is providing the support. Transition from implementation to support. Criteria and signoffs are defined clearly, which provides a more consistent and effective process, and increases customer satisfaction with this transition. Customer satisfaction with model defect management. Customer satisfaction with our management of model defects has increased steadily since we implemented ISO 20 December

6 9001. Recently, we reached an all-time high of 98.2 percent satisfaction with model-defect-related issues. Process training. Standardization of our processes, guidelines and related materials enable better training of our employees regarding how they execute their roles. Online tools. Customers' use of online tools to report (65 percent of new reports) and close (62 percent of all closures) issues has increased to all-time highs. Additionally, on average, more than 15,000 "hits" per month were made on our support knowledge database, an increase from 10,000 per month for the same period in the previous year. We also are beginning to see the results of development reengineering on reduction in support costs. Two recent examples show a reduction in defects (that is, percent of total project defects) compared to previous releases of the same products at three months after general availability (defects decreased 4.3 percent to 2.2 percent, and 1.6 percent to 0.6 percent). A third example shows that no software defects were reported by the customer 30 days after general availability. Opportunities for continuous process improvement include the reduction in issue cycle time. By focusing on (and ultimately decreasing) the elapsed time that is required to resolve an issue, we will continue to deliver quality solutions, service and improved customer satisfaction. Although we do not expect things to be perfect, we believe that the ISO framework provides the structure to support our continued improvement efforts in the pursuit of business excellence. Gartner's analysis: The true indicator of success for Siemens Health Services with ISO certification will be the continued improvement of client satisfaction for implementation, product stability and customer support during the next 12 months. Care delivery organizations should give higher prioritization to IT solutions from vendors that have achieved ISO 9001 certification and have demonstrated consistent product and customer service improvements. Vendors that effectively use ISO 9001 to improve their products and services will realize a competitive advantage vs. vendors that don't. Care delivery organizations should begin to evaluate vendor product and service metrics as part of their request for information and proposal processes. ISO 9001 conformance is not a guarantee of improvement in vendor product or service quality. However, failure to implement this type of process nearly guarantees that there will be no improvement in vendor quality. Gartner encourages vendors to pursue ISO 9001 or CMM certification to improve their products and services. Vendors that use ISO 9001 or the CMM 20 December

7 certifications only as marketing ploys will be exposed and lose their credibility in the market. 20 December