Leveraging Agile beyond software creation for courageous disruption in the digital space: KPMG’s Markus Steinbrecher on organizations taking Agile to the next level.
Curated by Helena Herrero L.
The agile CIO: Mastering digital disruption
Agile software development has been around for many years and has changed the way organizations develop new solutions. In the Digital Disruption we face today, it is time to extend the “agile” approach beyond software development and start a new way of how organizations create strategies and manage transformations.
“The majority of CIOs (58 percent) and almost half of the CEOs (43 percent) are involved or very involved in their firm’s digital business strategy, but only a small number are actively leading the effort.” As the key findings in KPMG´s CIO Advisory survey show, the trends and changes following the digital disruption are widely recognized but lack direction in driving the change forward. On the other hand, many organizations are using agile software development (e.g. SCRUM) and realize, that they still struggle with the large IT projects they have.
In this article I show how organizations are moving to a more flexible way of transforming their business. I will first look at three key processes of business transformation and examine how they change in a digital world: 1. Strategy and transformation; 2. Portfolio Management; 3. Enterprise Architecture.
I then show four key steps successful organization´s have taken to start and lead the change.
Questioning the status-quo
There are two key aspects of digital disruption that are at the center of why we need to question the status-quo. First, predicting the future has become virtually impossible. No organization can make a valid assumption on what their products, markets and clients will look like in 3-5 years. Second, changes in technology are happening so quickly, organizations have months rather than years to react. So, does it make sense to spend months on developing detailed strategies with market analysis, customer segmentation, etc. for an unknown future? Is the current approach for yearly project planning and multi-year implementations still feasible?
Changing factors in digital disruption
1. Strategy and transformation – don`t make plans, experiment on ideas
Organizations are increasingly moving away from the traditional approach of detailed strategy and planning followed but one large transformation, towards a more flexible approach. In this approach, the strategy clearly states the direction and focuses on the benefits to be achieved (“why”). This sets the scene for an ideation process, that identifies and prioritizes “what” exactly should be done. The best ideas are moved towards pilot stage, tested and if the benefits are not there, discarded. This does not mean that the strategy is less important. It means to reduce the effort and time of planning every detail before moving to the real transformation. As a result, steering can effectively be done on a quarterly rather than a yearly basis.
Experiments instead of plans
2. Portfolio Management – allow 25% of your projects to fail
“Half the money I spend on advertising is wasted; the trouble is I don`t know which one.” Some of the ideas planned in an agile organization will not make it to the final stage and will be cancelled after piloting. Given the amount of project overruns and large projects that fail after years of implementation today, this is actually good news. This way you are able to identify the real winners and move efforts in the right direction. It requires an environment though, that effectively evaluates ideas and treats “failed” projects as a necessary step in an overall learning process.
3. Enterprise Architecture (EA) – build small teams, alignment will follow
Alignment of business and IT is one of the evergreens of the past with many challenges and many efforts to address them. Enterprise Architecture (EA) is one of the disciplines aiming to close this gap. Many organizations have put a lot of sweat and tears into establishing it in their organization and only a few have realized real benefits.
We believe that digital disruption will also change the focus of how we architect enterprises fundamentally. Looking towards the technology side of EA, it is now time to really make IT-as-a-service happen and realize many of the hypes we have seen in the past (e.g. Service-oriented-Architecture). Facing the business side of EA, the alignment of business and IT will be driven through establishing smaller teams. Those teams will make the plans (.i.e. architect the enterprise) in close collaboration and there will naturally be a much smaller gap between them. This will increase competencies of EA in the business, where it belonged all along.
Architecting the enterprise
Lead the change – four key steps
Successful CIO´s have managed to drive the conversation of digital disruption in their organization, engage the business and communicate the change within their own IT organization. There are of course many different approaches but four key steps prevail:
Step 1 – the team: build an A-Team that understands the digital disruption and covers (at least) the business strategy, business front-office, digital technologies and software development.
Step 2 – the bigger picture: Put them in a room, align on the objectives and direction and give them time to think.
Step 3 – the reality check: Validate the ideas and assess the current capabilities of your IT to fulfill pilot candidates.
Step 4 – the pilot: push towards pilots (minimal viable products), use a green-field approach and test the results.
With increasing experience of these small teams doing pilot´s and stronger involvement of the business, the shift from “big bang” IT projects to small and successful solutions might just become a reality.