Is enterprise agility related to business strategy? Is it the same as digital transformation? Or is it about flexibility? Here is an explainer
Enterprise agility (EA) is a company’s ability to outperform the competition and drive growth by learning and adapting when confronted with foreseen and unforeseen circumstances, dilemmas, crises, and complex problems.
That’s a broad definition.
Let’s use a metaphor. How fast does information move from the edge of your organization to the center? Just like a gymnast, an agile organization needs close connections between its senses and its ‘muscles’. This can be achieved by pushing the power out to the edge of the organization. Or by smoothing the pathways of information to the center. This is achievable with the technologies of today--especially with the rise of the API economy.
When we talk about projects and enterprise agility, it is about the ability to quickly organize and make the best use of the resources within the organization to deliver those projects. An enterprise being able to structure itself in a way that allows quick deployment of the right people to the projects; being able to establish governance practices that allow both quick and delegated decision-making; and standardizing key processes (creating a stable backbone) where everyone is talking in the same language--all these are factors that lead to an increase in agility and performance.
Not quite. Digital transformation is mostly about adapting your business offering to a digital era. The considerations are more strategic. We talk about catering to digitally savvy customers and omnichannel customer engagement. Once you have decided on a business strategy, however, the question that naturally arises is, ‘How do we go about it?
EA deals with the ‘nuts’ and ‘bolts’ of this adaptive ability. The considerations are more technical. We speak of Intra-departmental APIs, rapid app-building platforms, and collaborative micro-apps. You could say digital transformation is about the market-facing side and enterprise agility is more inward-looking. EA is what allows the enterprise to ‘do’ something about market needs. EA is about organizational mechanics.
A lot of people, when they think of how they design the organization, immediately gravitate towards the management hierarchy—the lines and boxes. But that’s just one small element of how you set up the organization. The structure also includes governance and how you set up committees; how they can approve things and make which decisions; which authorities get delegated; what is contained in a role and what people get to decide. This is all part of the structure. But the org chart actually comes in the way of making real-world business decisions. Not infrequently, teams need to network, collaborate, and form task forces to get things done. Add to that the fact that enterprises have global footprints now. IT is the big deal here. Without IT, the question of enterprise agility simply doesn’t arise.
Gartner, IDC, Forrester
By 2018, 35% of IT resources will be spent to support the creation of new digital revenue streams and by 2020, almost 50% of IT budgets will be tied to digital transformation initiatives.
A greater reliance on digital will bring new challenges: The typical IT organization will spend up to 30% of its budget on risk, security, and compliance by 2017, and will allocate 10% of IT staff to these functions.