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Hive of activity: Business agility is essential for maintaining adaptable practices in a changing world
Jim Mortleman, Computing Business, 19 June 2008
IT has always been awash with buzzwords, but few have dominated the parlance of senior IT leaders to the extent that ‘business agility’ does today. For the past couple of years, in fact, CIOs and IT leaders have talked about little else.
One reason for the ubiquity of the term is that it neatly encapsulates the need for IT departments to be as responsive as possible to the needs and demands of the business in an ever-changing market.
Agility touches on every aspect of IT leaders’ roles, from ensuring business alignment to enabling innovation, from soft leadership skills to the nitty gritty of technical architecture and process improvement, and from managing relationships to managing risk and costs.
Agility also raises questions about overall organisational structure and governance, and whether IT should even continue to exist as a separate function.
Beyond IT, however, the term is little used although the concepts it represents are still critical. Independent financial services consultant Margaret Smith has in the past held senior corporate leadership positions both within and outside the IT function. "I do not know anyone outside IT who talks about business agility. They just expect it and get extremely frustrated when IT does not deliver it," she says.
Nick Kirkland, chief executive (CEO) of senior IT leaders’ forum CIO Connect, says: "Agility is about ensuring companies have the ability to identify relevant structural changes in the business in a timely fashion and are able to change their business accordingly, in a timely manner and at a reasonable cost."
Peter Cochrane, CEO of independent consultancy Cochrane Associates, puts it more starkly. "If you are not agile, you will die," he says. "This means being able to cope with a non-linear and chaotic world that is accelerating because of technology and the increasing speed of production, communication and trading.
"It means having a flexible and multi-skilled workforce that can respond to the changing demands of customers and the market without undue stress or damage to the core company. It means breaking away from the Dickensian management thinking and processes that have crippled old economies such as the UK and are now having an impact on newer ones such as the US."
Getting in shape
However, addressing such a far-reaching and all-encompassing challenge goes far beyond any quick-fix solution, particularly if you are a large, established company with a weighty legacy of outdated systems, processes and skills. Jon Collins, service director at analyst Freeform Dynamics, says: "Let’s use a simple analogy: elephants cannot dance.
"If they do, it will be a lumbering, precariously slow affair, conducted by a trainer who has spent many months creating learned behaviours with frequent rewards. Similarly, in business, agility does not mean that companies can suddenly leap to their feet and throw themselves into new markets with nary a backward glance."
Collins says a useful way of looking at the problem is in terms of giving yourself the winning edge. "One CIO we spoke to likened it to going to the gym," he says. "Business agility may be the aspiration, but the real goal is the removal of business sluggishness unnecessary bureaucracy and long lead times needed to respond to even the simplest of requests."
The drive for organisational fitness is at the heart of the vast business and IT transformation programmes that many companies have been pursuing for several years. Alan Rodger, senior research analyst at Butler Group, says businesses need to be able to scale resources up and down fast, and as flexibly as needed, whether those resources are technological or human.
"In terms of technology, one of the things that greatly addresses this issue is consolidation, standardisation and virtualisation across the whole scope of IT not just servers, but storage, networks and to a certain extent desktops," he says. "You can also wipe 10 to 50 per cent off significant IT costs by doing this, which creates new opportunities to invest and bring further benefits."
Other key technological aspects to agility include enabling remote and flexible working and adopting the open integration infrastructure typified by web-based service-oriented architecture.
"Business agility does not just apply within the enterprise. It has to be about giving yourself the opportunity to pick up on good things other people are doing, both at the technology level and in terms of being able to forge business partnerships where you can integrate your systems and services with those of other companies," says Rodger.
Power to the people
Rodger adds that in terms of being able to scale your human resources, the simplest approach is outsourcing.
"Business process outsourcing is particularly good for that because you can throw other people’s resources at a problem as long as you have standardised processes and the right kind of outsourcing agreement," he says.
"Companies need to partner with businesses that can give them that sort of flexibility. Skills shortages in the IT department will become an increasing problem and in many cases retraining is not the best option, given the time and investment that it takes. For a growing number of firms, I think outsourcing is the only realistic option."
But to be successful, such transformation programmes need to address not just technology and processes, but people and relationships as well. The real barriers to agility are not technological but cultural. As Smith says: "When you look at any post-implementation review of a large programme where the benefits have not been realised, it is not generally the technology that is the problem, it is the change management side of things," she says. "IT people are great at changing things for others, but they are often not so good at changing themselves."
One critical success factor is ensuring that IT and the business are in alignment. For this to be achieved, the two areas need to think as one. IT has to anticipate business changes, understand what the business needs and wants, then explain the IT implications and options in a way that is both relevant to and understood by the business.
It is primarily about having good interpersonal skills that allow you to build and maintain relationships, and listen and communicate effectively.
This fact is well understood by leading IT directors. Nick Kirkland says when CIO Connect polled its members last year, 97 per cent of CIOs said they believe the partnership between IT and the business was critical to obtaining business agility, but only 27 per cent thought their company had the culture and processes in place to encourage that relationship in an agile way. "The most important factor in that was people," he says.
At the top management levels, alignment is no longer seen as a problem. Another recent CIO Connect survey found 90 per cent of senior IT leaders said they had regular two-way contact with board members about how IT and the business could deliver the most value together, and 88 per cent said they had the personal backing of the CEO or an executive director.
However, alignment goes beyond the senior levels the same strong, mutual relationships need to be in place throughout the business. In an attempt to close the divide, many IT departments are rebranding themselves; ditching the
‘IT’ tag and talking instead about service and business support. Whatever you are called, however, it is crucial to ensure people at all levels in IT have the necessary skills to forge business IT relationships - see box, above.
Quick to catch on
Alignment is only one step on the path to agility. Companies also need the ability to improve processes, products and services fast and effectively. This is an area CIOs understand well and all the top-tier firms are addressing. It is partly about processes and technology, but again the key to success is ensuring your people whether they work in business or IT functions continually think about potential improvements and innovations, and have both the ability and motivation to contribute their ideas.
Richard Wyatt-Haines, owner of business consultancy Performance Insight and author of the book Align IT: Business Impact Through IT, says success is largely down to good leadership.
"The problem is that many individuals are hardwired into old ways of thinking and do not have the ability to respond quickly enough," he says. "You need to develop an entrepreneurial, opportunistic culture, where people feel free to make productive suggestions without being shot down and with some sense that senior managers will listen to and act upon those suggestions. It is the senior IT and business leaders who are responsible for that culture, so they are the ones who have to make it happen."
CIOs vary in their approach to improvement and innovation. Some, such as Gideon Kay, IT and transformation director at Haden Building Management, favour formal methodologies such as Six Sigma to enable continuous improvement, and dedicated processes and groups for generating, assessing and implementing potential innovations.
Others, such as Jos Creese, CIO of Hampshire County Council, say formalised methodologies and processes can be stifling, and instead prefer a more informal culture of innovation and improvement. Both approaches can work, as can a combination of the two. The right strategy for a particular company will depend on the personal leadership style of senior managers and the existing culture of the workforce.
But while innovation is crucial, agility is not about being at the bleeding edge of technology. Large companies cannot generally afford to take the same risks with new and unproven technologies that entrepreneurial startups can.
However, they should scan the market and be able to respond quickly when they see an opportunity to improve services, products, processes, productivity or efficiency.
As one CIO Connect survey respondent put it: "For us, agility is not about being an innovation leader, it is about being a fast follower." In other words, it is not about being first, it is about being fit. As CIO Connect’s Kirkland says: "Businesses need to move quickly when opportunities arise or when facing problems caused by uncertain variables. What is important is being sufficiently responsive in this fast-changing world."