BE is Dynamic

8/3/2019 BE is Dynamic

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An Agile Culture?

Niel Nickolaisen

COO, Deseret Book

[email protected]


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Agenda

Introduction

Historical Environment

Todays Environment and Results

The Model

Examples and Caveats


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Introduction

Main Points:

We are in an environment of rapid change and increasing

business and technology complexity.

To be adaptive, we need to pick our battles and

simplify our methods.

The following approach is based on study and

trial and error (and it seems to work).


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Historical Environment

In the good old days . . .

Customers had fairly stable expectations.Technology did NOT drive change.

IT (if it existed) was entirely in the backroom (data

processing).

Technology was, at worst, vertically integrated.


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Todays Environment

Change happens quickly.

Increasing vertical and horizontal complexity.Technology is now involved in many (most?) business

activities.

IT supports almost all known business processes.

Technology is (and it is worse) horizontally integrated.


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Results

What worked yesterday no longer works.

What works today might not work tomorrow.

Between 75 - 90% of all IT projects are challenged.

Technology has undelivered (perhaps because it was

over-promised).

IT Does Not Matter

The high impact benefits are rarely achieved (we

crash on the shores).


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The Reality of Value?

Expected

Benefits

Expected

Costs

Planned

ROI

Real

Benefits

Real

Costs

Actual

ROI


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What Then Do We Do?

Do things differently in order to:

Create an adaptive culture (that can keep pace with

the dynamic marketplace).

Choose our battles (in order to simplify).

Define and use metrics aligned with value.

Align technology both strategically and tacticallywith the business.

Properly allocate resources.


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Methodology

Define and use a decision framework (for example, the

following model).

Filter existing and potential business processes andinitiatives through the framework.

Based on the filtering, prioritize initiatives and changes.

Allocate resources accordingly.

Use adaptive design and implementation methods to deliverresults.

Re-filter and re-prioritize frequently (to match the dynamics

of the marketplace and to resist the urge to complicate).


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As An Aside

If it were only that easy!


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A Possible Decision Framework

Purpose

Use a set of criteria to simplify, filter, and prioritize

decisions about business processes, technology,resource allocation, et cetera.

The following Nickolaisen model seems to work

reasonably well.


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The Model

Market

Differentiating

High

Low

Mission CriticalLow High


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Market

Differentiating

High

Low

Mission CriticalLow High

General Approach

PartnerFocus and

AllocateResources

Who Cares? AchieveParity


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Example of Differentiating and Parity

As a publisher and retailer, Deseret Books differentiating

processes include product development and selection.

Our parity processes include the mechanics of product

development and acquisition (and a lot more).

In our case, WHAT is differentiating, HOW

(the mechanics) is parity.

This approach allows us to pick our battles, simplify plans,

and properly allocate resources.


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Application / Infrastructure Model

Applications(Differentiating and Parity)

Infrastructure(Parity)

IT

Management

Tools(Parity)

Analysis

Tools(Differentiating)

What is the

organizational

analogy?


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CustomerSupply /Fulfillment

Chains

Transaction Core(FIN, MFG, HR,

PR)

Customer

Interface

Supplier /

Fulfillment Interface

Goal is Parity? Goal is Differentiation

Goal is Parity

Applied to Applications

What is the

organizational

analogy?


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CustomerSupply /

Fulfillment

Chains

Transaction Core

Customer

Interface

Supplier /

Fulfillment Interface

What This Means In Practice

Vanilla

Vanilla

Mostly Vanilla

What is the

organizational

analogy?


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Even Within Customer Interface

Example, E-commerce Channel

Registration / Log-in Standard

Shopping Cart StandardPromotions Customize

Ease of Business Customize

Credit Card Processing Standard

User Interface Customize

E-mail Standard

Result 8090% of stack can be standard (and

simple)


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All Together Now


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Example: ERP Software Selection and Implementation

My belief: ERP is an operating system - we maximize thebenefits of the ERP if we select and implement the applicationsas quickly and cleanly as possible.

Mapping business processes onto the model yields parity for ERP-

supported processes.

Adopt business processes to best practices (example drop

shipping).

Associate a measurable value with each proposed

customization or complexity.Ideally (although it has not been done), do a three-weekimplementation.


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ExampleApplication Development

Use a decision framework (I am biased towards the Nickolaisen

model) at a component level to align to and define strategic

purposes and goals.

Do not design to extremes in parity processes (what value

will this provide?)

Use adaptive development methods to achieve the tacticalresults of the development project.


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ExampleApplication Development

Document Management and Collaboration System

Initial Development Budget = $2M and 18 months.

Filtered desired functionality through the model with theresults:

Two differentiating components.

Twenty-seven parity components (re-use or license).Reduced function points from over 7000 to 240.

Final Budget = $350K and 4 months


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Building Strategic and Tactical Plans

Identify all known and desired business processes.

Define filtering criteria (differentiating and mission critical).

Segregate processes onto the quadrants. For processes that aresplit, break into components.

Define current and desired process states.

Perform a weighted gap analysis (gaps between current and

desired states.Identify and prioritize business initiatives (and associated IT

projects).


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Example

Process

Process

Type Evaluation Criteria

Current

Score

Desired

ScoreDifference Weight Score

eCommerce shoppingcart Parity One click shopping

3 3 0 0.5 0

Recall pasttransactions

1 3 2 0.5 1

Price in advance ofcheck out

3 3 0 0.5 0

Track customer acrosschannels

Differentiating/ Parity

Identify customer attransaction site

2 5 3 0.5 1.5

Common businessrules

3 3 0 0.8 0

Shop here, ship there2 5 3 0.8 2.4

Purchasing Parity Three way match 1 3 2 0.5 1

Drop ship to sites4 3 -1 0.3 -0.3

Consolidate sitepurchases to

single order

2 3 1 0.3 0.3


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Differentiating / Parity Criteria Guidelines

Customer facing processes are likely the only real candidates

for differentiation.

Analysis can be differentiating

Value-justify every complexity.

Treat exceptions like exceptions.

There may be significant work to achieve parity.


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What This Requires

At macro and micro levels:

Value-based decision criteria

Consensus (or obedience) on what differentiatesOn-going prioritization process

At a macro level:

Credibility and relationship of trustamong management peers


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Caveats

This changes the culture of the organization.

Changing cultures involves changing behaviors. Changing

behaviors requires leadership (not management).Changing behaviors is a pain, however, the ability to adapt

might be one of our most important characteristics.

What differentiates today can be parity tomorrow (i.e. fast pay).

Constantly evaluate and re-evaluate previous decisionsand priorities.

There are no complexity initiatives (they happen by themselves).

Think in terms of future perfect to define and design phases.


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Summary

I am not sure we have a choice about developing

an adaptive organization.

To be adaptive, we need to have and rigorously use

a metrics-based method for filtering and prioritizing

at both the strategic and tactical levels.

This requires leadership and a methodology!


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Summary

At the 2004 MIT CIO Summit, 88% of the participants rated

corporate agility as highly important. 72% said that IT was

an enabler of corporate agility.

The three fundamentals of effective change management are

Focus, Execution, and Leadership.

- Lou Gerstner

BE is Dynamic

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