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March 13, 2007

Fast and Pretty, but not Cheap

Normally you'll find an article here instead of a conventional blog posting, but today Michael Hugos, of CIO Insider, caught my attention with his blog posting about agility on his site, Doing Business In Real Time. It definitely warranted a fast reply of comparative and perhaps contrasting views, reproduced here below. (Be sure also to see his Comment following.)

Very often the agility issue comes up in conversations with managers, and there are two interesting and recurring characteristics when it does.

One, it comes up *after* results have been calculated and posted. That is, managers see what already happened and ask "if we had been more agile, would it have made a difference?"

And two, there is tremendous confusion of agility with other ideas including "flexibility", "resilience", and "versatility".

The one-two punch of being reactive and confused makes "agility" something that remains vaguely ambitious as most managers don't know where to start, on which aspect they are really concerned about, or whether it is the right aspect.

Let's call that the worst case scenario. Hugos' article addresses that by outlining "agility" measurements -- which turn out to be what is largely now identified as Operational Performance Management (OPM) -- great stuff that is not the same as "agility" but is the same as "alignment".

I propose that the agility issue comes in when OPM is a strong practice, allowing targets and their pursuit to change in ways that are (here's the punchline):
- easily operationalized...
- with successful change management...
- to realign on time...
- without breaking things.

There, in a nutshell, you have the four points of reference that allow you to spot why your company is or is not agile. It's a process matter.

As for the 2% to 4% financial improvement that Hugos uses to stand for agility, that's a target, interesting as a representation of what ROI might justify the effort to be agile. But knowing where the target is doesn't tell you how to get there. For most managers, it is not so much that being agile will "cause" the percentage increase; instead, the issue is one of "prerequisities" -- namely, the probability of getting the increase without being agile is so poor.

Posted by Malcolm Ryder at March 13, 2007 12:15 PM

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Comments

Hi Malcolm,

You raise some interesting points here and two things come to mind as I read your post. I love the IT profession yet we do have some habits that tend to make business people think we are goofy. One such habit is the habit of creating TLAs (three letter acronyms) all the time. It actually trivializes something when it is reduced to a TLA. Using the TLA of OPM risks making a very important activity seem like just another goofy fad that will blow through like many TLAs before it and in a year or two it will be forgotten (only to be replaced by other TLAs that often mean the same thing - BPM, BAM, BPO, etc. - and only serve to confuse people and confirm others in their opinion that IT folks are indeed goofy).

The other point is that agility is directly tied to the creation of an extra 2-4% in gross profit margins. There is a cause and effect relationship here, not a coincidental or indirect relationship. If agility did not increase profits in business then why go to the trouble of doing it?

I can speak to this extra 2-4% from personal experience. I wrote a column for CIO last summer titled "Show Them the Money" that goes into the ways we used IT and agility to increase our profit margins on what were otherwise very commodity type products.

We in IT are reluctant to commit to meeting business goals. People in sales have to commit to meeting goals that involve a lot of unknowns and things outside their control. People in operations have to commit to meeting goals, people in customer support do so as well. I think IT will gain more respect by committing to specific business goals as well. Agility is something IT can commit to.

Agility means committing to close coordination with sales, operations and customer service to earn the extra 2-4% (and sometimes more!). Are you ready?

Posted by: Michael Hugos at March 13, 2007 4:02 PM

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