agile it strategy
TRANSCRIPT
WHITE PAPER : AGILE IT STRATEGY
Hans Gillior The Goodwind Company
“Every business is a digital business. You cannot be the best in your industry by not being best at IT”
This White Paper has been produced by The Goodwind Company and focus on Agile IT Strategy. The paper is describing the background, workings and unique selling points of the Agile IT Strategy. Note that Agile IT Strategy framework is a framework developed in 2014 based on the extensive experience and knowledge of Hans Gillior. It is an attempt to build a framework aligned to digitalization trend, increased unpredictability and need for business strategy alignment. The Agile IT Strategy framework is inspired by Agile Software Development (SCRUM), Value Discipline management theories (Michael Treacy and Fred Wiersema) and SOA (Service Oriented Architecture) to allow an iterative approach where strategic IT components are exchangeable and easily implemented for optimal business value. For further questions or comments, please do not hesitate to contact The Goodwind Company. Hans Gillior The Goodwind Company [email protected]
WHITE PAPER AGILE IT STRATEGY : INTRODUCTION
© Property of The Goodwind Company – All rights reserved
WHITE PAPER AGILE IT STRATEGY: BACKGROUND
¢ Current IT Strategy frameworks are based on the hypothesis of a stable business environment with low rate of technical innovation and changing customer behavior. Nothing is further from the truth!
¢ The level of agile IT governance need to be correlated with the dynamics in the industry. The more dynamic the industry, the more dynamic governance structure is needed. The time perspective is of essence for success in the digital environment.
¢ The digitalization trend in driven by technical innovation, meaning that IT plays a pivotal role in addressing the new digital business environment. Today, most IT organizations are not invited to corporate strategic discussions since IT cannot justify their existence as value creator.
Background
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With a predictability of 9 months in a specific industry, the IT strategy is only valid that same period – then it has to be validated !
TO BE SUCCESSFUL IN THE DIGITAL ERA, IT IS NECESSARY TO APPLY A NEW AGILE APPROACH TO IT STRATEGY
Definition: The optimization of IT capabilities to achieve high level of productivity in IT organization (assuming stable environment) Traditional IT Strategy
Definition: The optimization of IT capabilities to achieve high level of value creation in value chain in digital (unpredictable) times. Agile IT Strategy
Definition: The optimization of corporate capabilities to achieve high customer experience and customer engagement. Digital Strategy
IT Output Value Input Trim Bus Vend
• Governance • Methodology • Leadership • Processes • etc
IT business Value stream: IT Productivity
IT Effectiveness
expectations
Value creation
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Variable demand!
Phase 1 Operational
Stability
Phase 2 Operational Excellence
Phase 3 IT Business
Steering
Phase 4 IT Business
Agility
Phase 5 Digital Innovation
IT O
rgan
izat
iona
l Ste
erin
g M
atur
ity
Speed 1 Long waves
(> 24 months)
Speed 2 Moving atoms
(12-24 months)
Speed 3 Moving bits
(6-12 months)
Speed 4 Digital fields (< 6 months)
Performance Barrier
Perform
ance Alignment
Industry Dynamics
IT Maturity Matrix (Gillior, 2014)
AGILE IT STRATEGY IS REQUIRED IN MOST INDUSTRY SPEEDS AND GOVERNANCE STRUCTURE TO RESPOND TO NEW DIGITAL LANDSCAPE
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Target area for Agile IT Strategy
Target area for Traditional. IT
Strategy
THE GOODWIND COMPANY HAS DEVELOPED FIVE PRINCIPLES OF AGILE IT STRATEGY TO SUPPORT IT SUCCESS IN DIGITAL ERA
¢ The IT Strategy needed to be iterated (revised) every 6 months to ensure that optimal business value was created.
¢ The development (and revision) of the IT strategy should take maximum 4 weeks!
¢ The IT strategy need to be describe, in a focused and agile way, the role of IT, clear strategic direction and principles to support optimal investments, communication, and business value.
¢ Success is based on an agile culture with high degree of learning, self-governance, and trust.
¢ High level of engagement from leaders and employees to drive continuous transformation.
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BUSINESS COMPETITIVENESS IS CREATED BY POWERING THE IT STRATEGIC PYRAMID WHERE ALL COMPONENTS ARE ALIGNED WITH CHANGE FORCES
Hans Gillior • 13/05/2013
7 •
Vision & Mission
IT strategy
IT Strategic themes
Guiding principles
KPIs
Business demand
IT performance
Disruptive trends
Defines the overall purpose and long term goal (creation of business value) of the IT organization. (STATIC)
Defines how to achieve the strategic objectives (business value). The Value Disciplines are used to define IT strategy.
Defines the key prioritizes contained in the IT strategy.
Defines the principles for governing the IT organization (Architecture, PPM, Resource Allocation principles, etc) (DYNAMIC)
Defines the performance measurements to ensure that the IT strategy is achieved.
The idea of the Agile IT Strategy framework is to populate the different pyramid levels with generic strategy components that
easily can be exchanges and implemented.
“The unpredictable future will cause the content of the pyramid to change – and is only valid 6-12 months”
Business Value
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INTRODUCTION: IT STRATEGY (LEVEL 2) DEFINING THE ROLE OF THE IT ORGANIZATION AND HOW IT DELIVERS OPTIMAL VALUE
Operational Excellence Superb operations and execution often providing a reasonable quality at low price. The focus is on efficiency, streamlining operations, no-frills, Supply Chain Management and Large Volume counts.
Customer Intimacy Excel in customer attention and customer service. Focus is on CRM, Product Delivery (Tailored), deliver products and services on time and above customer expectations, life time value concepts, reliability, being close to customers.
Product Leadership Very strong on innovation, brand marketing, and operations in dynamic markets. Focus is on development, innovation, design, time to market, high margins in short time frame.
OE
CI PL
INTRODUCTION: GENERIC STRATEGIC THEMES (LEVEL 3) 17 GENERIC THEMES – RESULTS IN OVER 4,000 COMBINATIONS (3 THEMES AT A TIME)
Operational Excellence Customer Intimacy Product Leadership Management
Operational Stability
Operational Excellence
IT Service Quality
IT Methods & Tools
IT Sourcing Excellence
Business IT Agility
Value Chain Optimization
IT Investment
IT User Experience
IT Innovation
IT Marketing
Digital Awareness & Development
IT Governance
Organization Vitalization
Leadership & Culture
Competence & Skills
IT Management Excellence
Each strategic theme has pre-defined purpose and objective, and suggested activities and KPIs.
DEFINITIONS: OPERATIONAL EXCELLENCE IT Strategy Strategic Theme Definition Objectives
Operational Excellence
Operational Stability A strategic theme to build IT and corporate brand by reducing incidents and effects of customer experience
Reduction in business critical incidents (business effects) through operational stability
Operational Excellence A strategic theme to improve cost and risk efficiency of the IT operating model
Increased productivity (output/input)
IT Service Quality Excellence
A strategic theme to optimize the value of IT services (quality, price and time)
Optimizing the efficiency and effectiveness of IT Services
IT Sourcing Excellence A strategic theme to source IT services in an optimal way (value perspective)
Outstanding vendor relationship and optimal value of IT external spend
Methods and Tools A strategic theme to strengthen methodology and tool capabilities in the IT organization
Methods and Tools supporting best class IT management and governance
THE STRATEGIC THEMES NEED TO BE COMBINED FROM CURRENT MATURITY LEVEL AND HOW TO MOVE UPWARDS ONE LEVEL NEED TO BE SECURED BEFORE MOVING UPWARDS.
(5) D
igita
l In
nova
tion
(4) B
us. I
T A
gilit
y (3
) Bus
. IT
Ste
erin
g (2
) Ope
rat.
Exc
elle
nce
(1) O
pera
t. S
tabi
lity
Operational Stability
Operational Excellence IT Service Quality
IT Methods & Tools
IT Sourcing Excellence
IT Investment Value Chain Optimization
Business IT Agility
IT Innovation Digital Awareness & Development
IT Marketing
IT User Experience
IT G
over
nanc
e Tr
ansi
tion
Org
aniz
atio
n Vi
taliz
atio
n
Lead
ersh
ip &
Cul
ture
Com
pete
nce
& S
kills
IT M
anag
emen
t Exc
elle
nce
COMPANY STRATEGY CHARTER Vision
Great European IT Performer IT Strategy
Customer Intimacy
IT Strategic Themes & KPIs
Operational Stability 1.
Operational Exc. 2.
Value Chain Opt. 3.
IT Methods & Tools 4.
IT Leadership 5.
Current IT Maturity Level
Operational Excellence (level 2) • Creating value by providing stable and cost
efficient IT services to internal customers
Last review date: June 21, 2014 Next review data: Dec. 21, 2014
IT Strategy Performance
O.S.
O.E.
VCO
Satisfactory Excellence Weak
% Availability BCA
Total IT Cost
Value of IT
99.5%
-10.0%
5.0 pt
98.3%
-3.5%
4.3 pt
IT SWOT analysis
Strength Weakness
Opportunity Threat
• Value Chain Cooperation
• Corporate Values
• Strong finances
• Instability in key systems
• High IT Complexity
• Weak IT processes and maturity
• New technology (cloud, Big data, etc)
• EDC set-up (outsourcing)
• Market leader position
• Demand on IT Cost reduction
• Turmoil in financial market
• Changing customer behavior
Level of predictability
9 months predictability (speed 3: moving bits)
The Performance Management Cycle (plan–do–check–act) is an iterative four-step management method used in business for the control and continuous improvement of processes and products.
Definition
ENTERPRISE PERFORMANCE MANAGEMENT IS AN ITERATIVE TOOL TO CONTINUOUSLY ALIGNING THE AGILE IT STRATEGY PYRAMID
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Plan
Do
Check
Act
Plan phase: Defining the strategy of the period and means for execution • Strategic planning process • Guiding Principles • KPI and target setting process
Do phase: Execution of strategy leveraging resources • IT Service delivery • Process improvements • Resource optimization
Check phase: Study the actual results and compare against the expected results to ascertain any differences. • Management reporting • Performance Analysis • Root cause analysis • Performance dialogues
Act phase: Request corrective actions on significant differences between actual and planned results. • Adjusting goals and strategy • Communication • Reward and Celebrate
Business Results
Business & IT Knowledge
Resources
The EPM cycle need to be iterated in the same speed as the level of predictability (speed) in the industry
Hans Gillior • 25/02/2013
14 •
WHITE PAPER AGILE IT STRATEGY: WHY CHOOSE THE GOODWIND COMPANY?
¢ The Agile IT Strategy framework is a unique (only in market) framework to address the increasing digitalization and unpredictability in many industries.
¢ The Agile IT Strategy framework provides speed to the IT strategy work eliminating expensive consultants and internal frustration.
¢ IT Organizations implementing the framework has displayed an 15% increase in value creation in value chain and changed IT Business culture
¢ Comments from Business after implementation
“Why have IT not done this before?”
(Business Strategy Manager – Nordea Bank AB)
Uniqueness!
© Property of The Goodwind Company – All rights reserved
Background • Increased digitalization and
unpredictability with new customer behavior and technical evolution is demanding a new role of IT and new agile IT strategy – based on an unpredictable environment.
The purpose of the workshop is to test the current IT strategy set-up against the Agile IT Strategy principles. How well is the current IT Strategy set-up supporting corporate success in digital era?
• Level of predictability in industry • Iteration of IT strategy review • Lead time of IT strategy
development and review • Focus of IT strategy content • Degree of learning, self-governing
and trust • Level of engagement in IT
department
Approach The conceptual workshop is an attempt to test the current IT strategy against some of the Agile IT Strategy principles and develop a high level roadmap going forward. Agenda (example): 10:00 – 10:20 Introduction to framework 10:20 – 11:00 Discussion around the level of predictability in industry (what is changing?) 11:30 – 12:15 Lead-time and iteration of IT Strategy (context) 12:15 – 13:00 Lunch break 13:00 – 13:45 Focus and agility of IT Strategy (content) 13:45 – 14:45 Conclusions & Actions 14:45 – 15:00 Wrap-up Including facilitation and documentation
Price
Price: 30,000 SEK excluded VAT
Agile IT Strategy Framework Conceptual workshop to understand the framework
Benefits Key benefits: • A clear understanding of the
validity of the current IT strategy and strategic planning process on a high level to meet increased digitalization and unpredictability.
• The diagnostics test will provide the basis for a roadmap to how to align IT strategy to new digital era.
• This is a unique diagnostics provided by The Goodwind Company.
Property of The Goodwind Company – all rights reserved
IT Strategy Diagnostics
Traditional IT Strategy
Agile IT Strategy
1. Iteration of IT strategy review
2. Lead-time of IT strategy review & dev.
3. Focus of IT Strategy (content)
5. Degree of learning, self-governing and trust
6. Level of engagement in IT organization
X. Level of unpredictability in industry
4. Agility of IT Strategy content
9 months
Conclusion: There is a need to improve the IT Strategy methodology and focus. It is currently not supporting the increased level of digitalization and unpredictability.
THE GOODWIND COMPANY OFFERS A NUMBER OF SERVICES TO SET UP AGILE IT STRATEGY IN IT ORGANIZATIONS
ValueMiner Tool • ValueMiner is a SaaS tool for structuring IT objectives.
The method and tool builds a consensus in management team about the current situation and challenges (objectives, obstacles, solution, deliveries)
• Tool to facilitate strategic discussions in-house without expensive consultants.
Agile IT Strategy • The Goodwind Company offers to develop an Agile IT
Strategy based on generic IT Strategy components
Dynamic Scaorecard Design • The Goodwind Company provides a best-in-class
framework to develop Dynamic Scorecards – adjusted to high dynamics in industry.
• The Dynamic Scorecard includes method to measure and develop Value of IT.
• Value of IT is a framework to measure the value creation in the value chain. based on business expectations. Case show increase of 15% per year.
Status Common IT KPIs 2013 Period Unit of measure T=Target A=Actual
Baseline FY 2012
Q1 Q2 Q3 Q4 FY 2013 Comments
Operational Stability
Number of incidents Q Total disturbance time (unique incidents sev 1+2) in mission critical applications (separate list) [hours]
T 651 651 651 651 2 604 Board IT KPI: Target = 20%
A 3 257
Operational Risk (Disaster Recovery Plans) Q
Test of Disaster Recovery Plans for Business Critical Applications T 70% 80% 90% 100% 100% Target = 100% Grade 5 BCA
A 61%Operational Excellence
Maturity Levels (actuals) QScope: PPM, APM, Architecture, Software Processes,Testing, I&O and Risk Q2: Self assessment Q4: External assessment
T 2,1 2,5 2,5 Board IT KPI, Target = 0,8 point increase in 12 months
A 1,72
Total IT Cost Cap Q
Total IT Cost allocated to Receiver as combination of Development, Maintenance, Operations, Common Infrastructure and Management OH cost (without capitalisations/amortizations)
T Delivered by Timo Jalamo
AIT Forum Cooperation
IT Forum Cooperation Q The level (1-5) of cooperation in IT Forum T
A N/A
• The offer is combined with setting up methods and tools to achieve continuous alignment of Agile IT Strategy over time (continuous iteration)
.”
EPM Diagnostics • The Goodwind Company provides an unique tool to
quickly and graphical evaluate the Enterprise Performance Management capabilities in an IT organization. It results in a roadmap for Performance Management Excellence PLAN PROCESS: SCORECARD (EXAMPLE)
Process Policies, guidelines and frameworks (including governance)
Processes & tools
Culture & behavior
Information platform
People, skills and competence
In planning calendar
Environmental scanning (int./ext./dynamics)
Strategic positioning & scenario
Strategy & vision formulation
Governance of IT (Guiding principles per governance function)
KPI setting process (including target setting)
Financial planning
Grade No of Greens
Score
7 32 - 36
6 27 - 32
5 22 – 26
4 17 - 22
3 12 - 17
2 6 - 12
1 0 - 6
Outcome Comments
Key issues: • Limited skills and competences in filed of Strategic planning
• Immaturity in strategic planning process (conceptual level)
• Need to establish functional planning calendar
• Tools and processes are working fairly well
16p
• EPM diagnostics combines three different views in diagnostics
1) Industry dynamics 2) EPM capabilities 3) Change capabilities
Vision & Mission
IT strategy
IT Strategic themes
Guiding principles
KPIs
Hans Gillior • 13/05/2013
17 •
Hans Gillior Founder & CEO Email: [email protected] Telephone: +46 768 643778 Blog: hansgillior.wordpress.com Web: www.thegoodwindcompany.se