How Agile is Your Company?

December 20, 2004

How Agile is Your Company?

How Agile is Your Company?

By Fern B. Halper, Principal

HP Services has announced an agility index designed to help determine how prepared companies are to become adaptive.

Introduction

All organizations want to be able to react to changes – including opportunities and threats in time to make a difference. These organizations must be able to anticipate market changes, customer requirements, and be prepared to innovate in order to stay ahead of the pack. This requirement is not new. What is new is the speed of change, the amount of information available, and the number of applications that support business strategy. Hurwitz & Associates refers to companies that have the infrastructure and processes in place to be agile and respond quickly to change as Dynamically Responsive Organizations. Of course, if you asked 100 companies if they thought agility was important, the vast majority would say yes. But, are they willing to employ a systematic approach to determine how agile they are currently and make the changes necessary to become more agile? HP Services believes that they will and has developed a fairly sophisticated agility index to help.

Measuring Company Agility

HP services organization believes that measuring agility is the first step in becoming an adaptive enterprise. In conjunction with INSEAD, a global business academic institution based in Fontainebleau, France, HP Services has developed an agility index. This index is based on data that they have gathered from 300 customers in four vertical markets: Telecom, Financial Services, Manufacturing, and IT service providers. The focus of the index is on process agility. At least twenty processes per industry have been analyzed along three dimensions to provide a baseline for companies to measure how responsive they are to change. The dimensions that HP Services includes in the index are time, range, and ease. Time is the amount of time to effect change. Range is the breadth of the change across an organization. Ease measures the effort involved in effecting change. Additionally, some Economic Value Added (EVA) oriented measures are included in the index. What does the index show? For example, HP has found that Financial Services organizations are weak across all three index dimensions in terms of personalizing customer interfaces, but are strong in capturing order brokerage information in terms of process agility. Manufacturing companies are strong across all three dimensions in coordinating IT across business units.

HP Services has also seen that a main cause of agility problems is misalignment between IT system capabilities and business processes. How does the assessment work? A company contracts with HP Services to conduct an assessment. The assessment consists of series questionnaires that are filled out by both the business unit and the IT organization. The data are aggregated and compared against the benchmark data. In this way companies can determine how agile they are relative to their peers. This helps companies understand their strengths and areas for improvement in order to become more “adaptive”.

The Value of Measuring Agility

Hurwitz & Associates strongly believes in robust measurement systems. If something is important to a company, then it should be measured. Too many companies are perpetually in the dark regarding how their software and processes are functioning. Of course, a measurement system is worthless if companies are not willing to take the next step. A typical flow might look something like this: Benchmark against competitors Understand where the company can improve in order to be competitive. Map a plan for change. The old saying if you don’t know where you are then all roads look good applies here. Implement new infrastructure and processes After a period of time, revisit the agility index Quantify the impact of being more agile at a technical and business level. We are not aware of another agility assessment tool quite like this one. HP Services has taken the first step in helping companies determine how agile they are. HP Services can then help them implement an infrastructure that can facilitate reaching their goals. The next step HP will have to take is to provide additional services that will help company’s measure how their processes have improved and the business impact of these changes. A side benefit of this process will be to demonstrate the value of IT to the business.

 

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About Fern Halper

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