Insight Agile Business Change and Business Agility

Agile Business Change and Business Agility

10 JUL 2012 | Posted in advantages of Agile, agile business change, agile governance, agility, business strategy, delivery capability, enterprise architecture, IT, IT strategy, social CRM, strategic change, usability | Author Alex McLachlan | 1 Comment

Tweet

Mail

Today's highly competitive and rapidly changing markets that see the rise and fall of the likes of Nokia and MySpace places business imperatives on companies. In particular, companies need to be innovative, introducing new products, updating others to react to changes in the market (or predicting or even creating these market changes).

Much has been written on innovation, from the incremental improvements of Toyota and others through the use of Lean methods, to the disruptive innovation exemplified by Steve Jobs and Apple. What is often neglected, however, is that to deliver innovation, it is essential to have an underlying capability of business agility.

In this article, I'll look at what is needed for business agility:

• Customer Insight and Delight: Customer Obsession – the Driving Force for Business Agility
• Flexible IT Platforms: IT Platforms as enablers for Business Agility
• A Supportive Enterprise Architecture: Enterprise Architecture for Business Agility
• Delivery Capability: Bringing Agile to Business Agility - Developing your Delivery Capability
• Suitable Governance: Governance Needs for Business Agility

Customer Obsession – the Driving Force for Business Agility

Much of the approach to business strategy and IT to date has been driven by Finance and Operations' desire for cost savings and efficiencies, from business process optimisation and ERP, to financial consolidation and reporting.

There is growing evidence, however, that there is a shift from cost savings to growth and the customer. And customer obsession is becoming the driving force for business agility. I’ll explain.

Business Strategy Perspective

The traditional Porter 5 Forces model for competitive strategy (competitors, threats from new entrants to the market, threats from substitute products, the bargaining power of buyers and the bargaining power of suppliers) is being questioned in the light of “the social era”, which includes social media, but goes beyond this into general expectations. See for example:

• Recent Harvard Business Review blog post Why Porter's Model No Longer Works
• Forrester webinar Customer Obsession: Imperatives for IT Professionals (subscribed content)

The common theme is that customers will become the focus for strategy – “A customer-obsessed company focuses its strategy, its energy, and its budget on processes that enhance knowledge of and engagement with customers and prioritizes these over maintaining traditional competitive barriers.”

Enterprise priorities are shifting (in emphasis rather than completely) from operations to marketing, products and services. But at the same time marketing, products and services are also changing. In marketing for example, the focus is moving from “broadcast marketing” to social marketing and developing deeper relationships with customers.

What is needed to support Customer Obsession?

These priorities mean that customer experience will king - providing a great experience and developing real-time insight will be of prime importance. The new imperatives are to:

• Keep pace with your customers (and if possible to direct them) – be an Apple rather than a Nokia or Motorola
• Design, architect and deliver for engagement with your customers – see below
• Deliver customer delight – engaging relationship management (personalisation rather than overt marketing), social media/communities where appropriate and engaging content

To give some examples of the different elements of customer delight from our website, our blog posts and insight content (articles, book reviews and videos) give opportunities for providing our website users with engaging content, and features such as our interactive client page, mega drop-down menu in the our services area and book review carousel, add visual interest.

IT Platforms as enablers for Business Agility

Poor IT systems can be a serious impediment to business agility. I've seen many companies hamstrung by IT systems that don't interface to other systems and are difficult to enhance with new features.

So, what should you look for in your IT Platforms to enable business agility?

The starting point is to have flexible IT platforms that:

• Can be easily configured and extended
• Have strong APIs (interfaces) - organisations such as The Guardian are leading the way here with APIs to re-use their content
• Strong roadmaps including emerging standards (such as social, mobile, HTML5)
• Allow rapid deployment, with options to deploy in the cloud for example
• That have a good selection of supporting companies that provide expert implementation services

Two other factors are needed to support the "customer obsession" discussed in the previous section:

• IT systems that support engagement
• Systems that build customer knowledge

IT Systems that Support Engagement

Software needs to be thought of not as code, but as creating experiences and delivering engagement.

There is a move from "systems of record" such as databases to "systems of engagement" - systems that include the context of an on-going communications relationship. These systems of engagement give users value and are focused on the individual.

Another way of expressing this is that we are moving from the age of information to the age of the customer (as described in a book I'm reading at the moment - CRM at the Speed of Light, Fourth Edition: Social CRM 2.0 Strategies, Tools, and Techniques for Engaging Your Customers and also a recent Forrester webinar). This movement puts the power in the hands of the customer and the challenge to companies is to react to this fundamental shift in the market.

Customer engagement is across multiple touch points, including the web, email, social and direct service. IT needs to provide an architecture for providing a consistent message to these touch points.

An example of this shift in the market to flexible platforms from the NFP sector is that many oganisations are moving from membership administration database systems to CRMs such as Microsoft Dynamics CRM and Salesforce and from bespoke content systems to market leading CMS platforms such as Drupal and Sitecore. These systems provide all the capabilities mentioned above and there is a large pool of companies that provide implementation and consulting services.

Building Customer Knowledge

The underlying need for building customer knowledge is to provide the data needed to:

• drive innovation for new products and services
• improve existing services
• support rapid decision making (making the decisions needed for business agility)

Whether this is labelled "big data" or the more traditional business analytics, the key business requirements are for systems (data warehouses) and data analysts to get information and insight out of data.

Enterprise Architecture for Business Agility

Your enterprise architecture needs to support business agility to ensure your competitive position in today's market. Building on some of the themes from the previous section, enterprise architecture is a cornerstone of your organisation's ability to run its business, react to market changes and implement change.

Enterprise architecture is traditionally seen as all about IT systems and interfaces. However, as Chris Potts says in his book RecrEAtion, enterprise architecture needs to be approached from the viewpoint of users and services. This is also reflected in the recent McKinsey article - Are you making the most of your company's 'software layer'? - the central theme of which is that companies need to ensure that users interact with all their touch points (email, website, social media, etc) consistently and seamlessly.

The core of this is to provide a coherent external experience of your brand and services, to deliver digital engagement and create experiences for your users. This means ensuring consistency of description, consistency of message and consistency of use of knowledge of the customer.

Turning to the IT side of this, and building on what I said in my last post, your IT architecture needs to support engagement and enable agility:

• Your core systems, normally the CRM and website CMS, supported by the ERP/finance system, need to be set up to provide this coherent external experience. Normally, this means that they are integrated so that your knowledge of the customer is used across all the touch points. There are some variations on the architectural theme here - for example:
  • If your business doesn’t have a CRM, you might utilise a WEM system (Web Engagement Marketing/Management - a CMS with personalisation, customer tracking and email) such as Sitecore or EPiServer.
  • If an ERP system is your central business system, you might have your customer relationship data in the ERP.
  • If your business is centred around collaboration and document management, you might focus on SharePoint or Alfresco as a central element of your architecture.
• Your architecture actively supports change, for example, using a Service-Oriented Architecture (SOA) and open standards. These make it easier to modify services and add new services.
• You utilise methods for the rapid build, test and deployment of new products and services - using APIs, automated testing and the cloud as appropriate.
• Business reporting supports customer engagement and your business strategy. This will normally comprise Business Intelligence to "slice and dice" your customer data, together with metrics that include lead and lag measures for the different elements of your strategy.

Bringing Agile to Business Agility - Developing your Delivery Capability

I've been very careful in this article, to separate the terms "Agile" and "Business Agility". In this section, I'll link the two, showing why Agile [IT development methods] are important for Business Agility [providing organisations with the flexibility and speed of reaction to implement change in response to market changes].

The Advantages of Agile

A recent Forrester report - Justify Agile With Shorter, Faster Development (subscribed content) - gives some good statistics for the advantages of using Agile:

• 32% increase in development speed
• 46% improvement in quality (through continued iteration)
• 43% more delivery of change (technical debt)
• 38% improvement in satisfaction from business users
• 37% better business / IT alignment

And some other recent reports added:

• 37% time to market improvement
• 16% productivity increase (from reduction of defects)

Why Agile is a perfect fit for Business Agility

The figures above show why Agile is the prefect fit for organisations that want business agility:

• Better alignment of IT with the business
• Better time to market
• Better delivery of change

As well as these high-level metrics, the incremental delivery that is an integral part of Agile gives the flexibility and reactivity to be able to prioritise and implement new ideas rapidly, a crucial element of business agility - for more on this see my next post on Governance.

Agile is a particularly natural fit in the world of digital media, to give this flexibility and to keep pace with customers' needs and what can be fairly fleeting opportunities. As Forrester reports - "Agile development is de rigueur in digital projects".

Agile is also gaining traction in markets that have been the bastion of waterfall approaches such as Government IT - see Using Agile in Government Agencies and Delivering Agile in Government; Learning Lessons from the Commercial Sector. The Government sees Agile as being able to cut through a number of the problems of waterfall development such as inflexibility and delayed RoI.

Delivery Capability - Build Your [Own] Software Competency

An important corollary here is that Business Agility relies on having the capability to deliver change and particularly to deliver IT-enabled change.

It is also interesting to note that the likes of Forrester are pointing towards the need for internal delivery capabilities, supported by external expertise, as opposed to complete outsourcing of all IT, which was the trend until recently.

The skills needed include:

• User experience (UX) expertise - personas, customer journeys, A/B testing
• Solution / enterprise architects - you cannot deliver the above by just buying the technologies; you need to build an architecture around them
• Design and development - using appropriate IT platforms

Governance Needs for Business Agility

Business agility also requires the right governance processes. Organisations wanting business agility without taking on board and implementing appropriate governance methods are likely to fail to achieve the benefits that business agility can bring.

In this section I'll address the governance needs of business agility, both at the executive level and at the programme management office (PMO) level.

Executive-Level Governance

The senior management team / executives have to take ultimate ownership and responsibility for business agility because:

• The change programmes that underpin business agility need executive level sponsors
• The executive team needs to prioritise the prospective changes as they are the appropriate group to evaluate business priorities and likely business value
• They own the business strategy that is the starting point for the business priorities

The team (or a sub-committee of) need to meet regularly to prioritise the set of change projects and change proposals that have been tabled for the next round of change. It is important that the frequency of the prioritisation meetings matches the speed of reaction needed to take advantage of opportunities that arise (or that there is a process for getting a rapid re-evaluation is an urgent opportunity arises).

Organisations using Agile (as recommended above) often use these methods to prioritise the next sprints for major programmes.

PMO-Level Governance

The PMO's governance processes support the executive-level governance and manage the change projects:

• Translating the priorities set by the executive team into action on the business change projects
• Reporting on progress
• Being accountable for value realisation

These governance processes need to "fit" with the development processes being used. Where Agile methods are used, some have found this to be challenging, but there are approaches to providing suitable governance.

In addition to the above, the PMO needs to manage the skill set and capabilities for the current and probable future change projects, and more broadly for the needs of business agility. This is likely need to include customer insight, software competency and business analytics.

---

I hope you've found this useful. Any questions or comments?