An F1 car or the old school bus?
Andrew Rowsell-Jones, Vice-president and Research
Director for Gartners CIO Executive Programmes, says that CEOs may think
their organisations are as agile as F1 racing cars but in reality not
all of them are.
Formula 1 racing is the pinnacle of motor sports. The racecourses
are the most demanding in the world and F1 cars are fast and manoeuvrable.
CEOs often claim that their enterprise is like an F1 car,
but in reality many have built a car for only the main straight. Try to change
direction too fast and youre in trouble. Worse still, they may think a
bit like the emperor, that they are driving an F1 car when in reality theyre
really driving an old school bus.
In either scenario, the enterprise will crash and burn at the first corner.
So the question is, what are the real characteristics of enterprise agility
and what is the best way for the CIO to contribute to them?
WHAT IS AGILITY?
Enterprise agility is something
you earn and build through your enterprise decisions and investments.
It is not something you can buy 'out-of-the-box' despite what technology
vendors and consultants might say
Agility is a complex and often misunderstood management concept. To an enthusiast
it means quick, light and nimble in movement, and quick, clever and acute in
devising and understanding. These characteristics distinguish the agile from
For agile enterprises, their people, factories and capital must be fleet of
foot and ready at a moments notice to be redeployed in pursuit of a new
opportunity. Their management, the restless and relentless thinkers, must stand
ready, at the drop of a hat, to discard their old business orthodoxies and embrace
In the real world, its hard for enterprises of any size, and their management,
to be this flexible. 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.
Technologists see agility being achieved through technologies such as Web services.
Others see agility in terms of buying capabilities through mergers or 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. It is not something you can buy out-of-the-box
despite what technology vendors and consultants might say.
Why? Because agility is a characteristic that defines the quality of your enterpriseor
in other words, how ready your organisation is to launch and support a new product.
Agility is therefore increased or decreased by management actions and attitudes.
For example, investing in skills and knowledge enables the workforce to become
WHY IS AGILITY IMPORTANT?
Enterprise agility is defined as the ability to change when needed with managed
cost and risk.
Agilitys strategic value comes from its ability to support competitive
advantage. Agile enterprises that can readily change without incurring unnecessary
cost can preserve their sources of competitive advantage. For example, this
can be a supply chain capability in the face of evolving technology and market
needs. Since agility cannot be bought or sold, advantage attained through agility
is sustainable over time.
In many enterprises, there is tension between agility and IT, because new initiatives
clash with the realities of application development and efficient IT operations.
Unsurprisingly, this leads some to view IT as rigid, unresponsive and therefore
at odds with enterprise agility. This is more a myth supported by ITs
current role in enterprise processes than a reality of IT potential.
Astute CIOs recognise that IT is often the first point when strategies and plans
developed out-of-the-box face the reality of implementation. Yet CEOs and strategists
are surprised when new plans that they thought could be implemented in weeks
require months of application changes. CEOs increase enterprise agility when
they involve the CIO in the decision-making process from the beginning.
AGILITY AND CORPORATE DNA
Jim Collins, author of the book Good To Great, says that good-to-great companies
pay 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. Incrementalism,
guided by culture and a long-term view, win out over quick win strategies.
Our research agreeswith some surprising evidence. For example, popular
opinion has it that to be agile a CIO has to spend more on infrastructure then
his non-agile peers. This is not the case. A question in the Gartner 2005 EXP
CIO Survey asked CIOs about the need for rapid change in their enterprise. Those
who rated agility as very high importance spend an average of only
32 percent of their budget on infrastructure whereas their non-agility-focussed
peers spend 44 percent.
So what do agility-focussed CIOs spend their money on? They spend 18 percent
of their IT budget on strategic initiatives compared to 10 percent spent by
non-agility-focussed peers. These initiatives often enhance enterprise agility.
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
distinguish between processes, capabilities and assets that are sources of competitive
advantage, and those that are not. The competitive advantage ones are key.
He or she must then free and enable these processes from restrictions
that may prevent opportunities from being exploited. In other words, focus the
agility efforts where theres the biggest pay-off.
This demands a strengthening of the IS staffs 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 and ideally optimising
way. It is part of the DNA.
THE NEXT TO-DO
The next agility to-do is to build an architecture that allows best-of-breed
components in areas such as ERP and CRM without compromising architectural integrity.
Smart decision making about the type and level of integration between systems
makes the difference between IT being seen as a contributor rather than as 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 in scalability where it is needed. Common commodities in enterprises
are administrative processes such as finance, accounting, facilities management,
and IT infrastructure.
More generally, the enterprise toolkit for commoditisation includes process
improvement initiatives, creating process centres of excellence, and business
process outsourcing. It must also include movement toward real-time infrastructure,
IT service management initiatives, IT Infrastructure Library (ITIL) and strategic
sourcing of IT services.
Finally, theres the 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 stand-alone 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 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 called information
orientation. As CIO you may not be able to turn your enterprise into a
Formula 1 race car. You may not be able to live up to the enthusiasts
belief that anything less than the whole enterprise being quick, light and nimble
in movement, and quick, clever and acute in devising and understanding, is just
rigidity. 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 pursue
agility selectively. The 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.