- Posted by tid_support
- On 6 March 2017
- 0 Comments
- agility, IT driver, strategy
Agility allows business to respond quickly. As a business driver for IT, it is normally combined with Time to Market. Agility and Time to Market are typical in business with growth strategies. They are less likely to be found in Pension Schemes, local government and hospitals than they are to be found in general market competitive businesses. For these, Agility and Time to Market are critical in the pursuit of ongoing relevance and market share.
How do you improve effective Agility?
Because Agility refers to the businesses ability to respond to market condition, improvements in Agility need to be sought in a number of areas beyond the immediately obvious. If your business is able to change its delivery overnight, that is fantastic, but if there was no need for that change, or there is no demand for it, your efforts are wasted. Effective Agility is the objective, and effective agility requires the right information in the right format to the right people at the right time for best decision making and maximized effectiveness. This information is garnered from market scanners, industry immersion, vertical market knowledge and experience to be able to distinguish between fad, hype and real opportunity.
Developing decoupled systems will improve agility. Decoupled systems allow for business processes to be developed using granular, interchangeable components instead of large, monolithic systems. Look for opportunities to construct a proposition using existing services and functions instead of having to redevelop perpetually. If such modules do not exist, develop or acquire such functions using the smallest objects possible. Systems that do one thing, and only one thing, and are able to do that one thing without knowing anything about the other components that it may be interacting with, are the ideal candidates and should be favoured over other larger, multi-function black box type functions. When the market forces require change, it is considerably cheaper, faster and reliable to replace such items in a process. Such an approach works across most functions in the business too. It may be worth considering moving some of the stages or steps of any process out of the business to maximize agility. Unless the business is a multi-national with many thousands of employees, it may make sense to move payroll administration to an external service provider. Doing so will accommodate legislative changes faster as far as tax deductions and contributions are concerned, compared to having someone internally having to go through the process of understand all the possible permutations. Redeveloping, testing and implementation processes could be simpler too because of the economies of scale the service provider has.
Agility is also supported through the elimination of obstacles to effective and desired change.
Being responsive to market needs requires the entire organization to effectively shimmer in continuous change. To use a metaphor from nature, the business needs to adopt a chameleon like approach to its environment. Each part of the organization is responding to changing conditions and even pre-empting those conditions in order to take advantage. Orchestrating this degree of sustained, effective and dynamic reinvention is a tall order, and seldom seen in practice to be honest. Nonetheless, such responsiveness is what will deliver the promise of high relevance and hopefully profitability to the successful business.
Until then, functional agility may offer advantage over competitors, all else being equal. Production agility, financial agility, marketing agility, promotional agility and resourcing agility are functional areas with bearing on the prospect of high returns in return for effective agility.
Planning for change
Few businesses exist today that do not respond to change. Change is the rejuvenator of the economy and businesses operating within it. It allows for growth and improvement in society. So it stands to reason that above all else, businesses should actively be planning for change. Yet few do, at least not proactively. Instead most business respond reactively to change and miss the bulk of the opportunities the change presents. Kodak, Sony and Nokia are examples of the world’s largest companies with vast resources having lost dominance and in some cases, relevance due to their inability to identify change and to respond to that change promptly and effectively.
What is needed is a construct within each business that is able to identify relevant change and to respond by developing plans of action to accommodate that change, or even better to exploit that change to the company’s advantage. Developing, refining and adopting such a construct is an ongoing exercise within business. It must form of the strategic planning of the organization, but should be developed in such a way that the outcomes of the effort are less significant than the effort itself. This may seem counter intuitive, but the outcomes should be based on a set of circumstances that existed when the exercise was undertaken. Therefore, it should be expected that those outcomes will change when the circumstances change. Business will need to confidence in their process to accept the new outcome, even if the previous outcome has not been fully implemented yet. The outcomes are the required strategic objectives of the business, and these in turn would be used to refine or redevelop functional drivers in order to support the overall strategic goals, with IT being one of those.
So given that this process is an ongoing iterative process that will take some time to see the results from, what can be done in the short term for the business which seeks an improvement in its effective agility, or at least from an IT perspective?
IT as a function is in a great position to facilitate positive organizational change. It could start be ensuring that it is not an inhibitor to change, as well as by addressing one of the fundamental agility issues business will experience, even in the short term, namely bottlenecks.
A very effective tactic for the IT function to pursue in support of an agile strategy, is that of business bottleneck hunter. Identifying and addressing business bottlenecks will be one of the single most important undertakings when developing an agile business. In fact, bottleneck hunting will be the common thread throughout the business and technology, automation and business process optimization will be the match pitches where it will all happen.
The IT function will seek to identify and address bottlenecks within its own function, as well as assist other functions to address bottlenecks in their area of responsibility. Software development methodologies that accommodate fluid trading conditions and that deliver tangible value as early as possible is one obvious area of focus, but so is dynamic infrastructure capacity and services. Being able to quickly upscale one area of the businesses technology reach, while reducing surplus capacity in another area is key. Capacity includes system resources, licenses, human resources, experience, best practices and process maturity to mention but a few. Integration will be high on the list of priorities in the agile business. Being able to leverage and exploit functionality and services not necessarily provided in-house, yet to be able to do so with the same level of confidence and required governance, will set the business apart from its competitors, even in the short term.
However, care should be taken to avoid painting the business into a corner. It may seem like the pragmatic option at that point in time, but agility is all about the businesses ability to respond to change. Taking the apparent pragmatic route today, may result in being unable to respond to critical change promptly tomorrow. There are many examples of such cases.
Bottlenecks are caused by the misalignment of different functions in the business. Such misalignment may come about as one department is implementing improvements to its own function, while another department is not, or may be lagging behind due to its own priorities. Consider the result of the sales department implements online ordering, but the accounts department is unable to process online orders without human intervention. Or if the dispatch department is unable to provide online automated status updates regarding the delivery of the goods.
Good program management practices will highlight these scenarios before they become a reality and help ensure the organizational goals are met.
During tough economic conditions, it is not unusual for business to scale back on unused capacity and resources in an attempt to reduce overheads. Perhaps the business believes that the best course of action during such times is to reduce underutilized resources and wait it out. Being able to do so, is already a positive action and one that would have required a degree of effective agility in itself. A common difficulty businesses face is that of disposing of such resources because of the knock on effect on the balance sheet, and their ability to scale up again when needed. The longer the period of consolidation, the harder it may be for the business to scale up again, in terms of capital, necessary expertise and of the inevitable misalignment between departments over a protracted period of stagnation.
Sourcing capacity from external sources is a great way to remain responsive and to in a position to maximize the opportunities presenting themselves.
Own goal bottlenecks
A popular accounting system developed in the ‘90s in South Africa was developed using a reasonably obscure database engine, which for the single user stand-alone system may have been sufficient. However, this decision has come to cost the company a great deal of effort, cost and frustration, to itself as well as its customers, as this apparent pragmatic decision made the move to multi-user systems all but a failure. Inconsistent behavior, complex support and frustration experienced by their customer base stood in the path of international success for this company, to the extent where foreign based accounting systems are making penetration in a local market which could have been the undeniable home advantage for the company in question. While their market share in South Africa is respectable, their failure to accommodate for and embrace change, has left them as a participant instead of dominator. Furthermore, it took the company years longer than necessary to begin offering online versions of their system, which had the potential to minimize the impact of their previous poor decisions. The moral of the story is that the company failed to identify and address bottlenecks that would ultimately inhibit their ability to respond, and secondly that they had no proactive means of anticipating even near term change as it was happening or to effectively respond to it before their market had been eroded. Even their late to market attempt is beset with problems and their clients find that the online versions of their systems do not offer the same degree of functionality than the older system did.
Another business finds itself competing in a very competitive steel industry. The business is progressive and invests healthy sums of resources into its systems after finding that years of misaligned investment had led to their business processes suffering. Within a reasonably short period of time, their stability issues had been addressed, the real bottlenecks are identifiable and addressable and their ability to develop strong value propositions for their clients was higher than ever before. Industrial saws facilitate their proposition to the clients, and allow them to offer precision customization when it comes to their product set. The drive to keep meeting the needs of their customers is certainly a positive attribute. The single minded approach to improving services and offering solutions to their clients’ problems sets them apart in their market.
Unfortunately, such single minded pursuits sometimes lead to seemingly pragmatic decisions rather than strategic decisions. The business purchases a collection of saws able to cut thick sheets of metal. These saws are controlled by computer systems that guide the head of the saw in order to cut precisely and to minimize wastage on the sheet of very expensive metal. The issue is that the saws are controlled by computer systems running ‘retired’ versions of a Windows operating system. The operating system had already become unsupported by Microsoft, and as a result become a liability in the business. Support for the systems was going to become harder to find and more expensive on a monthly basis. Even though the saw manufacturer assures the client that they will support the platforms, the saw manufacturer is based in Europe, and the business is in South Africa. The decision to implement new expensive systems using discontinued operating systems in order to meet a need in the short term, will become an expensive and time consuming decision when new functionality is required to meet the next need. Here is an example of a bottleneck in a business process which was introduced with the best of intentions, but will develop into a multi-facetted bottleneck before long.
Effective Agility is an ongoing process. There is no end to it, just as there is no end to the change our businesses face every day. If our businesses intend weathering the storm of change, we need to become good at change. We need to become good at anticipating the effect of change, we need to become good at identifying relevant change and we need to become good at responding effectively to that change. To stay relevant, we need to respond with the market we find ourselves participating in.
Agility as an IT driver will have IT examine the business and help identify cost effective means to improve department, inter-departmental and organizational effective agility. The agile business is not going to be the business in survival mode. The agile business is going to be the business looking to improve its market position and looking to respond to opportunities that a changing landscape has to offer. So it will need to foster and entrench change in its very core. It will need to assess the market in an ongoing basis (market scanner, technology radar, competitor scanner, etc), it will need to remove existing and developing bottlenecks in its processes and it must avoid falling into traps of convenience or pragmatism in favour of sustainable responsiveness.
With effective agility as a driver, IT would
- Reduce complexity,
- Improve maturity,
- Remove bottlenecks, and
- Favour dynamic capacity over fixed capacity.
Download a PDF version of this document here.
Mornay Durant March 2017