achieving agility defining agility in an it context

ResearchPublication Date: 20 April 2006 ID Number: G00137819

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Achieving Agility: Defining Agility in an IT Context Daryl C. Plummer, David W. McCoy

The Agility Angle: Agility is the ability of an organization to sense environmental change and respond efficiently and effectively to that change. Note that this includes proactive initiation of change as well. Agility could be described as the ability of an organization to sense or create environmental change and to respond efficiently and effectively to that change. However, in the working world, organizations rarely initiate change without first sensing a requirement to change. Nonetheless, being proactive is a key agility performance indicator.

This baseline research presents a definition, the concept and the drivers of agility and shows how to begin the journey to agile performance through the use of the agility cycle. Agility will be shown as both a technology-powered challenge and an opportunity for enterprises. While technology is central to agile reaction, human resistance to change persists. Many of the most-critical roadblocks to your agile performance will be your people and not your infrastructure.

Key Findings

The new focus on agility is the logical result of the accelerating pace of business change.

IT-enabled agility is an emerging management discipline and not just a new buzzword.

The best approach to agility is through cyclic improvement (the agility cycle).

Technology plays a central role in achieving or restricting agility.

Human actors are the ultimate enablers and inhibitors in any agility strategy.

Predictions

Enterprises must learn how to measure agility in general, and they must make investments to improve their agility. However, best practices for agility will emerge slowly and inconsistently through 2011.

Enterprises that attempt to define and improve agility without clearly understanding IT's role will fail to exploit IT's transformational ability to engineer and measure the steps necessary to develop agility.

Recommendations

Do not throw people or money at projects to randomly improve agility. Instead, apply money to improve IT effectiveness and reduce the day-to-day risk of implementation failure.

Publication Date: 20 April 2006/ID Number: G00137819 Page 2 of 8

2006 Gartner, Inc. and/or its Affiliates. All Rights Reserved.

There is a difference between being fast and being agile. Focus on technologies that allow you to be aware, flexible, productive and adaptive. If required, speed will follow.

Determine the relative contribution to agility that can be derived from different technologies; then employ those specific technologies first that offer the most power to meet your agility needs.

Teach employees how to be agile. Start by providing good tools, and encourage a culture that guides people to see change as a planned part of business processes.

It is important to point out the role of senior management and the executive leaders in achieving agility. IT is a critical component in achieving agility, but the IT department needs guidance from the executive leaders to develop an effective IT strategy that will lead to an agile organization.

The highest level of agility can be achieved by involving a company's business partners and value chain.



ANALYSIS

What You Need to Know: This research offers a baseline understanding of agility. The intent is to:

Establish the new focus on agility as a logical consequence of the accelerating pace of business change

Position IT-enabled agility as an emerging management discipline and not just a new buzzword

Demonstrate that the best approach to agility is through cyclic improvement (the agility cycle)

Affirm and clarify that technology plays a central role in achieving or restricting agility

Reaffirm that human actors are the ultimate enablers and inhibitors in any agility strategy

The new focus on agility is the logical result of the accelerating pace of business change. The business climate continues to get tougher, faster and more challenging. Adapting to change poses a major impediment to achieving market leadership and competitive differentiation, as well as to ensuring survival. The emergence of an "always-on" connected world has brought about a collapse of distance and time as the speed of information exchange has increased worldwide. This collapse is evidenced by the widespread reduction in product life cycles, the reduction in the duration of sustainable differentiation, the increase in competition and the blurring of business boundaries across all industries. The greater information exchange also increases the knowledge, expectations and choices of buyers, thereby tipping the traditional balance of power. The increased power of buyers has forced changes in the cost and pricing models of manufacturers. Where manufacturers or service providers formerly passed their costs on to buyers, they are now forced to lower their production or provision costs to make their products and services attractive to buyers. Buying power is reducing the overall profitability of industries.

As a result of these and other forces, lower profits and rapid change are structural realities for business, exposing weaknesses in every part of the organization: policy, strategy, operations, relationships and infrastructure. Changes in the business environment are outpacing the time it takes an organization to respond. An enterprise that cannot effectively reduce the time required to respond to change invites competitors to grab market share, supersede its position and even unravel its own survival in the market. All of these factors have narrowed the window of opportunity for businesses and are demanding new rules for recognizing opportunities and reacting effectively. Organizations need new ways to identify change and to respond quickly. They are being drawn to a new goal for agility: the ability of an organization to sense environmental change and respond efficiently and effectively to that change.

IT-enabled agility is an emerging management discipline, not just a new buzzword. Agility is more than a buzzword posing as a panacea. Properly understood, it is an emerging management discipline worthy of focus and investment. When mastered, a management discipline offers rewards, including increased market share, competitive value and above all survival. The ability to be agile to sense and respond to change to meet evolving organizational goals can enable enterprises to:

Provide up-to-the-minute information that can be used to make quality decisions and take action



Change strategic direction as market conditions change

Reduce exposure to high-risk markets

Respond to rapid shifts in competitive challenges with new infrastructure capabilities and support

Leverage new technologies, platforms and environments, such as the Web, for competitive advantage

Identify new market opportunities before competitors do

Create innovative products or services before competitors do

Better understand customer wants and needs

Test new ventures, products or service offerings with lower risk

Identify weak and underperforming business units more quickly

Agility is a simple concept, often used to describe graceful and effective movement (such as the movement of dancers, athletes, surgeons and animals). However, when agility is applied to business operational settings, other concepts must be defined and brought into perspective. Awareness, flexibility, adaptability and productivity (see Figure 1) are key enablers of agility. Applied to enterprise settings:

Awareness is a measure of whether the enterprise knows the necessary information and activities that drive its agility.

Flexibility is the ability to react to change that was expected to happen.

Adaptability is the ability to react to change that was not expected.

Productivity is simply efficiency of operation.



Figure 1. Agility Enablers

Flexibility

Adaptability

ConfrontingExpected Change

The Right Options

ConfrontingUnexpected Change

The Right Reactions

Awareness

Productivity

Executing WellDay-To-Day

The Right ProcessesAnd Operations

Knowing WhatIs Going On

The Right Information

Agility

137819-1 Source: Gartner (April 2006)

Each of these related concepts severely impacts agility. Further, each of these concepts is often a key indicator of the value that IT contributes to agility. As an example, technologies that support information flow determine how well the enterprise can tell what is happening (awareness). Connectivity and access are also key to distributing and accessing the right quantity and scope of information as well as to providing access to processes and systems. Development allows an enterprise to implement new options and to develop effective solutions (productivity and flexibility). Finally, integration and interoperability are the hallmarks of agility technologies, because they enable flexible interaction between systems, enterprises and people. Agility is more than a buzzword, and as a legitimate management discipline, it will require alignment between management of the business (for example, process operations and strategy experts) and management of the IT organization, which is inextricably tied to the business. Enterprises that attempt to define and improve agility without clearly understanding IT's role will be missing an opportunity to exploit IT's ability to engineer and measure the steps necessary to develop agility. IT-enabled agility, as a management discipline, must cast a wide net to gather in its key participants.

The best approach to agility is through cyclic improvement (the agility cycle). Agility is best characterized by a cycle consisting of a series of five steps that are executed as an organization reacts to changes in the business environment (see Figure 2).



Figure 2. The Agility Cycle

Communicate Decide

Act Strategize

Sense

137819-2 Source: Gartner (April 2006)

The agility cycle is a continuous set of processes or steps that all organizations must go through to effectively identify and respond to changing business conditions. This set of processes must occur in the organization as a whole and as micro-processes at all levels and across the organization on a continual basis. These steps include:

Sense Is the organization able to monitor and detect significant changes in its business environment?

Strategize Is the organization able to develop alternative potential plans and directives to respond to the change?

Decide Can the organization determine which of many alternative plans is the most effective and commit to those directives?

Communicate Does the organization consistently and comprehensively ensure the proper notification and understanding of key directives to all relevant personnel internal and external to the enterprise?

Act Does the organization produce results efficiently that respond to business change and meet market demands effectively?

Organizations may be stronger in some steps of the agility cycle and weaker in others. For example, a major corporation may be strong in its ability to sense changes to the business because it has a large, internationally dispersed workforce. However, the same organization may be weak in its ability to act based on distribution of skills, a complex and rigid infrastructure, or a myriad of other reasons. As with many other disciplines and management practices (for example, business process management), a cyclical model of continuous improvement is a best-practice approach.

Technology plays a central role in achieving or restricting agility. To effectively navigate the dynamic market conditions that have given rise to the new focus on agility, organizations often



must make major business transformations, change business direction, re-engineer business processes, and accelerate performance and execution. They must have this transformation readily enabled through the leveraged use of technology supported by their enterprise architectures and IT infrastructures. An organization's agile performance must be proactively managed from a single, unifying, overarching business architecture that optimizes IT investments, leverages the organization's main sources of competitive advantage, and supports dynamically changing organizational goals and priorities.

Best practices often provide great value to an enterprise. With agility, the same will be seen. However, no set of best practices for agility will likely be applied consistently from enterprise to enterprise or from year to year. The reason for this is that agility means different things to different people, and the factors that contribute to agility can vary, depending on the situation. Technology facilitates and enables agility in the organization. However, it is not the case that only specific arrangements of certain technologies facilitate agility. Rather, each organization will have a different set of business challenges and a unique architectural footprint that will require different technology deployment strategies to support and enhance agility.

A common belief is that, to improve their agility, enterprises must purchase new technology. This is not true. The ability to be agile also involves optimized use of established technologies. In addition, reducing the failure rate of an IT organization in implementing solutions can improve agility as much as the addition of a new technology or a new business process. Stronger effectiveness in IT improves an enterprise's ability to be agile because it potentially means that fewer people, less money and less time must be allocated to solve a particular problem. Alternately, IT organizations with high risk of failure in project implementations will reduce overall agility, because failure will tend to increase the need to spend money or to poorly allocate people and time to solve problems. In short, the ideal architecture will entail the appropriate and unique mix of technologies (old and new) and organizational best practices to enable an organization to be aware of the changing business environment, be flexible enough to handle a wide range of alternative conditions and actions, and be efficient and effective in producing results.

Human actors are the ultimate enablers (and inhibitors) in any agility strategy. Agility is all about reacting to change. Therefore, the best agility practices will often involve sophisticated and mature change management. However, change management is difficult to do well. The key to change management is recognizing and understanding the changes that are occurring, determining what has to be done, and translating that into actions that realize tangible results while maintaining the cultural values of the organization. In a world of accelerating change, businesses must develop cultures that embrace change and that value the potential flow of evolving opportunity that change creates for the organization. This is typically countercultural for most organizations that traditionally reward reliable, proven and repetitive execution that maximizes stability. The challenge for most organizations will be in creating an environment that recognizes and rewards those who leverage change and even proactively cause or shape it. It is somewhat easy to deploy technologies that impact agility positively, and many technology best practices will emerge over time. However, as with most of IT, the human actors are the ultimate enablers and inhibitors in any strategy. For agility to succeed as a management discipline, care must be taken to define agility in human terms and not in terms of bloodless automatons. The resulting human-centric best practices will be critical to a proper understanding and exploitation of agility.

Be agile. IT-enabled agility is an emerging management discipline. While heavily powered by technology, agility is ultimately a human-centric effort and must be introduced with care and sophisticated change management. The drivers that created the new focus on agility are not going away; they are only going to get worse. Sensing environmental change and responding efficiently and effectively to that change are not new goals. However, transforming the act from a chaotic and haphazard effort into an IT-enabled management discipline is what agility is all about.



In conclusion, enterprises much recognize and treat IT-enabled agility as an emerging management discipline. They must understand the tools and techniques of agility (that is, the agility cycle), and they must be prepared to teach and institute agility best practices as they emerge. Managers must be trained on agility concepts, and they must review their wins and losses as they attempt to be agile. As in all management disciplines, learning comes from doing, and doing sometimes means failing. While agility will emerge as a management discipline, it will not be a universal discipline, practiced in the same way by each enterprise. Agility and innovation are still close partners. Enterprises should expect to leverage best practices from their peers and industries, but should also remember that agility is an effort that works best when customized to the enterprise's specific capabilities and needs.

This research is part of a set of related research pieces. See "Defining, Cultivating and Measuring Enterprise Agility" for an overview.

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achieving agility defining agility in an it context

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