I recently finished reading Moneyball, the Michael Lewis bestseller and slightly above-average Hollywood movie. It struck me how great baseball minds could be so off in their focus on the right metrics to win baseball games. And by now you know the story — paying too much for high batting averages with insufficient focus where it counts —metrics that correlate with scoring runs, like on-base percentage. Not nearly as dramatic — but business is having its own “Moneyball” experience with way too much focus on traditional metrics like productivity and quality and not enough on customer experience and, most importantly, agility.
Agility is the ability to execute change without sacrificing customer experience, quality, and productivity and is “the” struggle for mature enterprises and what makes them most vulnerable to digital disruption. Enterprises routinely cite the incredible length of time to get almost any change made. I’ve worked at large companies and it’s just assumed that things move slowly, bureaucratically, and inefficiently. But why do so many just accept this? For one thing, poor agility undermines the value of other collected BPM metrics. Strong customer experience metrics are useless if you can’t respond to them in a timely manner, and so is enhanced productivity if it only results in producing out-of-date products or services faster.
In our Forrsights Business Decision-Makers Survey, Q4 2011, we asked business technology leaders to rate IT’s ability to establish an architecture that can accommodate changes to business strategy. While 45% of IT rated its ability positively, only 30% of business respondents did. Clearly, both think there is room for improvement, but business is more concerned about it.
So are we agile? Only 21% of enterprise architects in our September 2011 Global State Of Enterprise Architecture Online Survey reported being even modestly agile, so I think we all know the answer.
What do we do about it? Continue to focus on technology standardization and cost reduction? Give up on that and focus on tactical business needs? Gridlock in the middle because we can’t make the business case to invest in agility? This is the struggle EA organizations face today.
To act with agility, firms must create a foundation for it, and three barriers can get in the way:
Brittle processes and legacy systems. We all know it this one; the current state mess of processes that cannot adapt to change and legacy systems where everything is connected to everything else, so even the smallest changes have broad impacts. Techniques to overcome this barrier include partitioning the problem into digestible pieces to show incremental progress and short-term payoff.
I just recently had a conversation with Peter Hinssen, one of our keynote speakers at Forrester’s colocated CIO Forum and EA Forum in Las Vegas (May 3-4) and our EMEA CIO Forum and EA Forum in Paris (June 19-20).
Peter is both a dynamic speaker and a provocative thought-leader on the rapidly changing relationship of technology, business, and “the business function called IT.” Here’s a short summary of this conversation — and a preview of what he will be talking about at our forums.
On “The New Normal”:
Technology has stopped being “technology,” and digital has just become “normal”: We’ve entered the world of the “New Normal.” The rate of change of the technology world has become the beat to which markets transform. But the rate of change “outside” companies is now faster than the internal velocity of organizations. But how will companies evolve to cope with the changes as a result of the New Normal? How will organizations evolve to respond quickly enough when markets turn into networks of intelligence?
Speed and agility are at the heart of business today — and, unfortunately, those are two areas in which IT is falling short. Two trends — neither of which is going away anytime soon — are impacting this increased need. Consumerization is rapidly changing the expectations of today’s information workers. In too many instances that we care to acknowledge, your employees are using faster, more agile solutions at home than they are at the office. On top of that, businesses are under an increased demand to change.
Enterprise architects are in a unique position to be change agents for their businesses — if they aggressively change the way they work with the business. Join us at our Enterprise Architecture forums — May 3 to 4 in Las Vegas and June 19 to 20 in Paris — for practical guidance on how to connect EA with your business’ bottom line.
You already know it. Technology is completely pervasive in our lives, and in how businesses operate. It’s pervasive in how business execs think — they know that every change they make has a technology aspect to it. As my colleague Randy Heffner says, “It’s no longer enough to say that technology supports business. Today, your business is embodied in its technology.”
You already know it. The pace of change in our highly interconnected and interdependent world is increasing — and along with this are the opportunities and risks which change brings. From emerging markets to new social platforms such as Pinterest, business leaders are finding they can’t assume stable business models and environments anymore. Gone are the days of three-year strategic plans — the mantra now is: “How quickly can we sense and respond to new opportunities and threats? How quickly can we shift our business for these changes?”
Forrester has long advocated adoption of a “business technology” approach to replace traditional IT. “BT” recognizes the fundamental role information technology plays in all aspects of business – and the need for business decision-makers to be deeply involved in setting technology strategy, priorities, and even delivering solutions. But how does this tight coupling of business and technology decision-making actually work?
My colleague Alexander Peters and I have just witnessed a situation that illustrates that having the right organizational structure and technology-savvy businesspeople is crucial to a BT transition.
The organization developed an IT strategy 10 years ago based on three best practices:
Major business processes would be implemented on a single, modern, flexible platform.
The platform would employ SOA to ensure that it could adapt to unforeseen needs.
The platform would run in the consolidated, scalable, and efficient data center of a service provider.
Today, the organization has not yet achieved its top goal of a single platform for all of its major processes. It has a new SOA/Java environment, but it processes a little more than half of the required workload. Older systems do the rest. Most disturbing:
The development investment has been many times greater than expected at the outset.
The annual cost of IT operations doubled versus the baseline.
System reliability went down with the new environment.
Like many movements before it, IT is rapidly evolving to an industrial model. A process or profession becomes industrialized when it matures from an art form to a widespread, repeatable function with predictable result and accelerated by technology to achieve far higher levels of productivity. Results must be deterministic (trustworthy) and execution must be fast and nimble, two related but different qualities. Customer satisfaction need not be addressed directly because reliability and speed result in lower costs and higher satisfaction.
IT should learn from agriculture and manufacturing, which have perfected industrialization. In agriculture, productivity is orders of magnitude better. Genetic engineering made crops resistant to pests and environmental extremes such as droughts while simultaneously improving consistency. The industrialized evolution of farming means we can feed an expanding population with fewer farmers. It has benefits in nearly every facet of agricultural production.
Manufacturing process improvements like the assembly line and just-in-time manufacturing combined with automation and statistical quality control to ensure that we can make products faster and more consistently, at a lower cost. Most of the products we use could not exist without an industrialized model.