Formula one racing is the pinnacle of motor sports. The courses are demanding and the F1 cars are fast and maneuverable. CEOs often claim their enterprises are like F1 cars. The truth is many have built cars, or even old school buses, for the main straight only. Try changing direction too fast and the enterprise will crash and burn at the first corner.
What are the real characteristics of enterprise agility and what is the best way for the CIO to contribute?
What is agility?
Agility is a complex management concept. To an enthusiast, quick, light and nimble in movement, and quick, clever and acute in devising and understanding distinguish the agile from the rigid.
For agile enterprises, their people, factories and capital must be fleet of foot, ready at a moment's notice to be redeployed in pursuit of a new opportunity. Their management, who are restless and relentless thinkers, must stand ready, at the drop of a hat, to discard their old business orthodoxies and embrace the new.
In the real world, it's hard for enterprises of any size, and their management, to be this balletic. In the real world, this level of ceaseless change would shake an enterprise to pieces. In the real world, agility is a careful balance between institutionalised control and carefully choreographed redeployment.
Little wonder then that many executives see agility being achieved through specific decisions. Executives see agility achieved by creating independent business units to edge closer to key customers and markets. Technologists see agility achieved through technologies such as web services. Others see agility in mergers and acquisitions.
These views each have a grain of truth, but none captures the entirety of agility.
Enterprise agility is something you earn and build through your enterprise decisions and investments. There is no out-of-the-box agility despite what technology vendors and consultants say.
Agility is increased or decreased by management actions and attitudes. It is a characteristic that defines the quality of your enterprise, or how ready your organisation is to launch and support a new product. It is the ability to change when needed with cost and risk under control.
Agility's strategic value comes from its ability to support competitive advantage. Enterprises that can readily change without incurring unnecessary cost preserve their sources of competitive advantage. Because agility cannot be bought or sold, advantage attained through agility is sustainable over time.
How to get started
Rigidity, complexity and lack of visibility prevent an enterprise from being agile. The CIO can reduce each of these agility 'evils'.
The first thing the agility-seeking CIO needs to do is to identify processes, capabilities and assets that are sources of competitive advantage.
The CIO must then free such processes from any restrictions that may prevent opportunities from being exploited. In other words, focus on areas with the biggest payoff.
This demands a strengthening of IS staff's technical and leadership skills, and ensuring that IS processes are up to the job. After all, agility must be built into design and test processes in a repeatable way.
The owners of these processes must ensure that potential changes in scale of operation, organisational structure or technology will not break repeatable patterns. For example, enterprises that embark on their first offshoring program may feel considerable strain.
Beyond the scope of IS, change management and project management are common agility bottlenecks.
Jim Collins, author of the book Good To Great, said that good-to-great companies paid scant attention to managing change, motivating people or creating alignment. This suggests that agility has little to do with large change management projects, and more to do with limiting the negative impact of change.
The next agility 'to-do' is to build an architecture that allows best-of-breed components in areas such as enterprise resource planning (ERP) and customer relationship management (CRM) without compromising architectural integrity. Smart decisions about the type and level of integration between systems makes a difference to IT being seen as a contributor and an obstacle to change.
For business and IT assets, capabilities and processes that are not sources of competitive advantage, agility comes from getting the dead money out of them so that it can be spent somewhere else.
The key to doing this is to standardise, consolidate, share and build scalability where applicable. Finance, IT infrastructure and facilities management functions are common targets.
Finally, there's a need for management to be quick, clever and acute in devising and understanding. The CIO can help here too.
While adaptability and simplicity contribute to the 'agile body' of the enterprise, visibility contributes to the 'agile mind'. Visibility means unlocking the value of information by putting it in the hands of those who can get value from it, in a usable format.
Three types of visibility help with agility: Operational, knowledge sharing and business decision-making.
Operational visibility is about rapidly identifying trends and issues in day-to-day operational processes. Business activity monitoring (BAM) technology helps with this, whether standalone or embedded in brokers, rules engines or other enterprise software.
For commodity business processes, BAM alerts based on efficiency trends can help manage costs and spot expensive process exceptions as the enterprise changes. For processes that are sources of advantage, BAM should help spot opportunities to further that advantage.
Knowledge sharing through knowledge management initiatives and collaboration tools helps institutionalise best practices and enhance business value. Knowledge management has become a major competitive differentiator and the core of organisations' business strategies.
Business decision-making visibility is achieved by providing externally and internally sourced market insight information to senior executives. But visibility is not only about technology. It also involves establishing a culture that values information and communication. This is referred to as 'information orientation'.
Strike a balance
As CIO you may not be able to turn your enterprise into a Formula One race car. You may not be able to live up to the enthusiast's belief that anything less than the whole enterprise being quick, light and nimble in movement, and also quick, clever and acute in devising and understanding, is just rigidity lite. Indeed, you may fall far short of that ideal.
The good news is that you may want to. In the real world, it is far better to strike that careful balance between institutionalised control and careful change.
Agility is not free. Even if agility initiatives release cash in the medium to long term, they require investment upfront.
To succeed, the CIO must learn to pursue agility selectively. The ideal selection can only be achieved by engaging the business better at all levels to build a detailed picture of agility needs and to communicate the IS contribution.
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