Why Fragile to Agile?

 

In a sentence, we chose this name as it encapsulates our value proposition to you; that we promise to transform your organisation from a fragile one to an agile one. So what do we mean by “a fragile organisation” and “an agile organisation”?

Fragile Incorporated

It is our perhaps controversial assertion that all organisations today are inherently fragile. Our primary argument for this assertion is that the vast majority of organisations exhibit one or more of the following characteristics:

  • The interface between Business and Information Technology is broken. It is best characterised as “throw it over the fence” and  is far from a collaborative and seamless process for implementing change
  • It is difficult to change processes  as they are embedded in code/applications
  • The cost of IT is ever increasing but it is not clear if this is due to increased coverage and/or complexity or whether it is waste/inefficiency?
  • The rate of change execution is falling – it seems that every year less and less change is possible
  • The speed of change execution is falling – it is taking longer every year to make a change of the same magnitude
  • Solutions are frequently delivered that don’t match intent – “It’s exactly what we asked for but not what we need”
  • Projects are frequently late and/or over cost and/or do not deliver expected benefits
  • The time to market for new products is increasing
  • It is unclear where it makes sense to buy and where it makes sense to build solutions
  • There is misalignment of Technology and/or People Design with Business Design.  As this is our definition of the role of Enterprise Architecture naturally we believe the root cause of this issue lies with an organisation’s Enterprise Architecture function. In order of decreasing severity this is down to having no Enterprise Architecture; Enterprise Architecture  as an Information Technology only function; Business Process based Enterprise Architecture and/or detached Enterprise Architecture not embedded in the process of delivering change (often referred to as “Ivory Tower” Enterprise Architecture)
  • IT governance in general is an issue and architectural governance is almost non-existent
  • There is no clear understanding of where it makes sense to share functions across Business Units and where retaining individual capability is critical to competitive advantage – lots of duplicated functionality (business and IT) but it is unclear whether this is an issue or not
  • In-sourcing/out-sourcing any given function is costly and time consuming
  • Mergers and Acquisitions – generally a nightmare and can destroy shareholder value.  “Merger of Equals” even worse – which functions “win” from which merger partner?
  • Prioritisation and investment processes ad-hoc and problematic – Is IT spend maximising the value of this constrained resource to your business?

However, even if you are amongst the very few organisations that do not exhibit any of the above characteristics we would still contend that your organisation is inherently fragile simply because it is now possible to design and build Agile Incorporated. Unless you are already well on the way to this transformation yourself then you are exposed to the significant risk that someone else in your industry segment will execute this transformation successfully before you. The major competitive advantage their agility and significantly reduced cost base will provide them over your organisation will make your organisation fragile by comparison.

Before we examine the characteristics of Agile Incorporated it is worth discussing one of the above points, the interface between business and information technology, in more detail. In the majority of organisations today the design of change is siloed. Business first designs its aspects of the change and then tries to document, usually in the form of a requirements document, the Information Technology changes required to support the change. It then “throws these over the fence” to Information Technologists who then spend a lot of their time trying to understand the nature of the business change, essentially revisiting all the same ground as already covered by the business design team. In our view this approach is fundamentally flawed. The following diagram illustrates the change design process at Fragile Incorporated:

Finally, if you are not yet convinced that there are significant problems in the delivery of business change involving Information Technology (the majority of business change today) then consider these sobering statistics:

  • $80 -145 billion per year is spent on failed and cancelled projects (The Standish Group
    International, Inc.)
  • 25% – 40% of all spending on projects is wasted as a result of re-work (Carnegie Mellon)
  • 50% are rolled back out of production (Gartner)
  • 40% of problems are found by end users (Gartner)
  • Poorly defined applications have led to a persistent miscommunication between business
    and IT. This contributes to a 66% project failure rate for these applications, costing U.S.
    businesses at least $30 billion every year (Forrester Research)
  • 60% – 80% of project failures can be attributed directly to poor requirements gathering,
    analysis, and management (Meta Group)
  • Nearly two thirds of all IT projects fail or run into trouble.

Agile Incorporated

The passion for Fragile to Agile is to make real the hitherto elusive promise of a truly agile business. So what does a truly agile business look like? In our view it is one that exhibits the following characteristics:

  • You can decide which part of the value chain you wish to participate in on a product by product basis
  • You can make changes to your business processes in less than a tenth of the time
  • You can dynamically in-source or outsource a given capability, or change outsourcers without impacting the process – plug and play enterprise
  • You can flexibly respond to any emerging disaggregation trends in your industry segment
  • You have real-time visibility into what is occurring in your business right up to the moment
  • You understand your business as an engineered system so you can optimise it with confidence
  • You can add new communication channels, e.g. iPad, Second Life etc., without requiring major system changes – just developing the additional logic for the new  channel
  • You have a systematic way of identifying duplication/waste in the business – across people, process and technology
  • You can dynamically flex capacity to address peaks in load
  • You have confidence in your change process as change projects always deliver on intent and the maximum deviation on time and cost from business case is 25%
  • Everyone understands their role and has clear accountability against which they are measured – non-performers (teams or individuals) easily identified
  • You can change the implementation of a service without impacting processes that consume it – plug and play Information Technology solutions
  • You can manage employees and/or service providers by outcomes empowering them to improve how they deliver that service for you with confidence, provided what they deliver doesn’t change
  • You have a significantly lower cost to income ratio (less than half what it is today)
  • You have abolished a significant percentage of all “Back Office” accommodation needs and as a result of these employees being able to work at home the majority of the time you have become an employer of choice

All of the above characteristics mean that Agile Incorporated is at least 100% better than Fragile Incorporated when it comes to implementing change. By that we mean that implementing change costs less than half as much as the most efficient company today and time to market is at least twice as quick. It is our belief that far from being ambitious this is the bare minimum that can be expected.  Furthermore, the cost and time to market improvements are the tip of the iceberg.

Let’s look at the interface between Business and Information Technology by way of a more detailed example of the contrast between Fragile Incorporated and Agile Incorporated. Rather than the “over the fence” model described above for Fragile Incorporated, in our view change must be co-designed if the myriad of problems encountered in most Information Technology projects today are to be addressed. There are unique aspects of the design that may only involve business design, for example marketing strategy, and aspects that only involve technology design, e.g. infrastructure sizing.  However there is an ever increasing percentage of the design of change that involves both business and technology design that must be aligned if the change is to be successfully implemented. The following diagram illustrates the change design process at Agile Incorporated:

Transforming from Fragile to Agile

It is our contention, and in this we are by no means alone, that an agile business is built upon a foundation of dynamic business processes underpinned by flexible services. Achieving the former is the remit of the Business Process Management (BPM) and Lean Manufacturing disciplines; achieving the latter is the domain of Services Based Business design and Service Oriented Architecture (SOA). In fact it is our belief that adopting either a BPM or SOA strategy without the other will at best achieve incremental improvement and certainly cannot deliver a truly agile business.

It is also a commonly held belief that neither BPM nor SOA can be delivered without an architectural approach to design and implementation. What is unique to our approach is that our Integrated Architecture Framework has been designed with this in mind and is uniquely suited to supporting a BPM/SOA strategy. More importantly we have brought the discipline of Business Capability Modelling to bear on the issue of how to actually design an agile business, a non-trivial task for anything but the most simple of businesses.

Finally, you need to have a clearly articulated strategy and your architecture, process and services design, covering business, people and technology design domains, all have to be aligned and designed with that strategy in mind, for the hitherto elusive promise of a truly agile business to be realised.

This is encapsulated in the following diagram we refer to as our Agility Pyramid:

Our unique approach of using a Business Capability Model based approach to designing a dramatically more agile version of your organisation enables an engineering based approach to answering the key design questions that need to be answered, and the answer is unique to every organisation, if BPM and SOA are to deliver on their combined promise:

  • Where the boundary between processes and services should be drawn
  • Where top down process re-engineering stops (BPR) and bottom up continuous improvement (Lean Manufacturing) starts
  • What is the correct granularity for services?
  • Where and at what level organisational wide control is enforced and where is local autonomy required?
  • Are you building the services right?
  • Are you building the right services?

By way of summary, following the agility pyramid model the following are the key shifts in our view required at each layer of the pyramid to transform your organisation from fragile to agile:

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