In pursuing an agile transformation, CEOs and CIOs can find common ground in five IT shifts that can enable traditional players to compete with digital disrupters.
The rise of digital companies over the past 20 years has forced traditional players across industries to radically rethink their operating models—for greater speed, customer experience, and flexibility. Indeed, while incumbents are struggling with existing processes and technology to adapt their offerings and provide digital services, new digital players are able to quickly offer mobile-first services, which take a couple of minutes and a few clicks to, for example, open a bank account or set up home internet.
Over the past five years, many companies across industries have started to experiment with the benefits of agility—and some of them (banks, telecoms, retailers, and other companies) have even made the move toward enterprise agility, which is based on creating fluid organizations that continually evolve to capture market opportunities while highly engaging their employees. The benefits are straightforward: companies that successfully embrace enterprise agility can improve financial performance by 20–30 percent, according to McKinsey research. This performance is underpinned by a 30–50 percent improvement in operational performance, a customer satisfaction score boost of 10–30 points, and a boost in employee engagement score of 20–30 points. Combined with their existing experience and client base, this enhanced performance in turn helps traditional companies catch up and compete effectively with digital disrupters.
Successful agile organizations—of any size and across industries—take a similar approach to five key elements: strategy, structure, process, people, and technology. And while many companies successfully tackle the first four elements, they often still struggle with technology. In this article, we discuss the common challenges of achieving enterprise agility through the lens of IT and outline five shifts that CEOs and chief information officers (CIOs) can make together to get on the right track, increase the speed of IT by up to ten times, and reduce IT costs to match the level achieved by digital leaders.
Five IT shifts to achieve enterprise agility
Five shifts are required to compete with digital natives: creating truly cross-functional teams with coleadership of business and IT, decoupling core systems, nurturing engineering talent, automating software delivery, and adopting cloud infrastructure. Each of the shifts contributes to enterprise agility through specific business outcomes, addressing objectives of both the CEO and CIO: speed of delivery, customer experience, quality, productivity, and total cost of ownership.
Shift #1: Collaboration: From siloed IT department to cross-functional agile teams
A common complaint among CEOs is that the IT department is like a black hole; they see delayed projects and overrun budgets, and it can be a struggle to measure IT productivity. On the flip side, CIOs note that the business often throws an endless string of new requirements over the fence that IT doesn’t have capacity to deliver, let alone manage the corresponding technical debt. In traditional structures, the process of defining and aligning business and IT requirements can take three to six months before the first line of code is even written.
Overcoming this dichotomy requires shifting the collaboration model away from an isolated IT department and toward cross-functional teams that contain a mix of business-line and IT professionals. By achieving missions with as few handovers as possible, these teams are crucial to increasing the speed of development, launch, and feedback integration. At the core of this model are “BizDevOps” teams of five to nine people that have all the required skills to deliver a mission: business, developing and testing, and site reliability engineering. Business team members include product owners, product experts, and customer experience experts who drive product needs based on the voice of the customer and ROI. Engineers drive production of shippable software on a daily basis, as well as automation to release and operate reliably in production. Daily interaction allows the team to reduce requirements alignment time from months to days or even hours, radically reducing time to market and the need for communicating through bureaucracy.
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