How do you make business decisions in an agile way?

shamim ahmed.jpgBy Shamim Ahmed

                                                                                    

Shamim Ahmed has over 20 years of experience in large-scale application architecture, design and development, product research and development, large multi-shore project/program management, organizational quality management, and IT consulting.

 

Everyone has gotten the memo that enterprises need to become more agile. But most of the companies I work with don't know how to get there. The biggest challenge customers tell me they have is, "How do I transform my organization and act in an agile manner?" They're mired in the traditional waterfall approach to business planning. It takes a big cultural shift to make business decisions in an agile way, so you don't lose the advantage of time to market.

 

Customers struggle because they have multiple conflicting initiatives, and it's not very easy to determine quickly which initiatives to do and which not to do, particularly in an environment where your business requirements are changing very, very fast. And you're endeavoring to keep up with the competition.

                                                                                                                                    

For example, let's say you create a three-year strategy, and you crystallize a set of initiatives you want to do in the next year. Even while you're finalizing your list, the market moves. You're constantly faced with change. So how do you cope?

                                                                  

Adopt a continuous process                                                                         

In an agile organization, planning is a continuous process, as opposed to something that is disjointed. New ideas are coming in all the time, and that's the way it should be. In HP Software Professional Services Agility Services, this capability is embodied in the “portfolio” level of the enterprise agile maturity model. (There’s a good white paper from Voke Researchabout extending Agile in the organization. In a similar vein, you can also view my webinar on transforming agility across the enterprise.)

                                                                                                                                             

Rather than doing a detailed analysis of an idea, which may take a long time, you rank the relative priority of each idea, so that you end up doing the ones that deliver the most bang for the buck.  We've established four broad metrics to calculate this rank:

 

  • Revenue impact
  • Impact on existing systems
  • Cost of delay (i.e., what do you lose by being later to market?)
  • Cost of implementation

 To determine the highest-priority projects, you take the sum of all the value parameters and divide by the cost of implementation. For example, let's say you've got five competing initiatives, and ten different people from sales, marketing, IT, and implementation teams who vote to determine the relative weight of each of these parameters for each idea. You take these weights and quickly add them up, and you get a number. It's as simple as that. There's no limit on the number of ideas, because an agile organization believes that all ideas are valuable.

 

Building a portfolio backlog

As the funnel gets continuously filled with ideas, people can go and take a look at what works, rank those initiatives, and then have some things bubble up. You can accomplish that first level very quickly, so you know which initiatives merit more attention.

 

At the next stage, those initiatives go into what we call a portfolio backlog, to help you determine which ones you should spend a little bit more time analyzing, maybe a week or two but definitely no more than four weeks.

 

When the portfolio backlog is analyzed, you get another set of calibrated numbers. The same ranking applies, and those ideas become candidates for projects that you will fund. At this stage, you can then determine the scope of work.

 

What's the first step?

Very, very few of my customers are at the portfolio stage of enterprise agile, though one global bank I work with is aspiring to reach it. To get buy-in from management and shift their thinking, I advise customers to start with a mobile or cloud-based customer-facing application that's highly time-sensitive and sensitive to competition.  

                                   

Mobile and cloud systems both force a level of thinking that is very different from the traditional model. In some sense, the organization has already accepted a certain amount of radical change in taking on these projects. So it's easy to propose something new from a portfolio management perspective.

                                                                                                                                                                          

As you mature, you progress to intermediate systems that tie customer-facing applications to back-end operations.

 

For an overview of how to bring agile to every level of your business, view my latest webinar on transforming agility across the enterprise.

 

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Labels: Agility
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