Features
Feature
Be nimble
and quick
Agile enterprises can heighten their advantage in an ever-changing business environment.
by David A. Kelly
Attaining and maintaining competitive advantage doesn’t ever get easier. In fact, economic pressures, marketplace uncertainty, greater complexity of business and global competition will always be at play against your best efforts. Yet it’s possible to succeed long term when you’re prepared to dynamically and rapidly adapt to every new challenge.
That’s where enterprise agility comes in.
“Enterprise agility is the ability of an organization to sense environmental change and respond effectively and efficiently to that change,” says David McCoy, a vice president and fellow at Gartner. “You have to build agility into your organization. With everything you buy and every business process you put in place, you’re either helping build agility or you’re decreasing agility.”
Greater agility starts with knowledge, visibility and solutions that enable organizations to process data faster so that they can respond effectively—and profitably—to unexpected changes in the business environment.
The payback is threefold. Organizations gain greater understanding into their operations and customer needs. They are able to manage and overcome increasing complexity, in order to profit while others founder. And perhaps most importantly, they can foster innovation, allowing them to capture new opportunities.
The vision
Agility isn’t really a new concept—successful organizations have long altered their products and services to fit dynamic times. What is new is the dramatic urgency forcing companies to respond rapidly to business change.
“Business cycles are more compressed than ever before,” says Neeli Bendapudi, professor of marketing at Ohio State University. “Timely information is extraordinarily crucial.”
Enterprises can’t simply come up with annual plans and expect to execute them without adjustment. Instead, planning must be continuous—fed by real-time data and analysis.
“You need as much real-time data as you can obtain, because we no longer have the luxury of a report coming in today about what happened three months ago, and then taking another three months to figure out where the marketplace is going,” Bendapudi says. “Organizations need information today to respond to today’s challenges and changes.”
Companies not only need adaptability and flexibility, but they also have to foster the capability and capacity to be agile in their decision making. This requires information to give insight, the ability to make a decision quickly, and the knowledge to take action with confidence.
“Customer perspective is critically important for enterprise agility,” Bendapudi says. “If an organization doesn’t have a way to capture its customers’ value to the business—and across lines of business—how will it ever be able to differentiate and provide better value to those customers? The only way is for the senior management across all lines of business to see the value that a specific customer brings to the enterprise.”
“Enterprise agility is the ability of an organization to sense environmental change and respond effectively and efficiently to that change.”
—David McCoy, Gartner
Adapt or fail
The alternative to fostering agility is not pretty. Simply staying put and doing things the way they’ve always been done will quickly leave companies in the dust.
McCoy offers a hypothetical example of a credit card company that isn’t agile. One day, seemingly out of nowhere, a large number of customers start canceling their cards. Because the company doesn’t have an agile IT infrastructure, it has no way to flag or analyze this unusual occurrence on the fly. When the reports finally come out the next week, management realizes the company lost more than 1,600 customers. Further analysis shows they canceled because of an erroneous advertisement that stated their cards’ interest rates were being raised to 31%, instead of the actual 13%.
“In that situation, an agile organization would have been able to immediately identify unusual cancellation activities. That would have allowed it to respond more quickly,” McCoy says. “To be agile you have to have timely information and be aware of changes, you then have to be able to do something productive with that information, and you have to have the flexibility or adaptability to select—or create—an appropriate business response.”
In short, organizations need to build agility into their business processes and IT infrastructure if they want to have the understanding, flexibility, responsiveness and ingenuity to survive.
Business implications
By increasing IT and corporate agility, enterprises can gain three specific benefits, including improved vision, an increase in effectiveness in the midst of complexity and opportunities for greater innovation.
1. Greater understanding
An agile enterprise has a clearer line of sight into business metrics, performance and decisions. This results in more effective business processes; better and faster decisions; the ability to identify business inflection points, changes and opportunities before competition; and more. Agility enables an organization to provide access to consistent and comprehensive information in a role-specific context, so that employees or partners can do their jobs faster, more efficiently, and with better and timely information.
VISIBILITY EMPOWERS:
J D Williams
J D Williams & Co. Ltd., the UK’s leading direct home shopping company, was unable to capture online customer browsing and purchasing behavior to gain insight into how consumers were shopping within its multi-channel business. By using an enterprise data warehouse, the firm created cross-channel visibility and integrated online customer behavior data with its off-line data. The solution has enabled targeted personalized recovery campaigns from true abandoned purchases.
Missouri Department of Revenue
More US states are turning to data warehousing solutions to analyze detailed information from many different database sources—and cross-match it to identify non-filed and underpaid delinquent taxes. These systems compare millions of tax-collection records in minutes and detect opportunities and patterns that have led to huge revenues. The Missouri Department of Revenue has recovered more than $94 million based on leads generated from its data warehouse, with $2.2 million coming in one 14-day period.
DirecTV
DirecTV, one of the largest USsatellite TV providers, had limited capability to anticipate and respond to pending customer cancellation requests in real time. By deploying a data warehouse solution, the company was able to roll out intraday reporting across the enterprise, enabling 700 users and more than 100 call center workers to actively contact and save high-risk customers, reducing the churn of these high-risk customers by an estimated 10%.
2. Increased effectiveness
Agility isn’t just about greater vision. It entails taking immediate action based on accurate information to deal effectively with shifting and complex situations. An agile enterprise moves quickly once it has identified changes, market opportunities or other important information. It turns visibility into concrete actions that alter business processes, policies and strategies. In short, agility empowers organizations to execute initiatives systematically to achieve optimal decision making at all levels.
CAPABILITY DELIVERS:
Airlines Reporting Corporation
Airlines Reporting Corporation (ARC), an airline-owned technology solutions company, sought to modernize and simplify labor-intensive business processes. By developing an advanced data management infrastructure, it streamlined operations, reduced costs and provided a greater line of sight into the settlement process for its airline clients. ARC reduced its operating expenses by more than $12.5 million, ticket fraud by 78.2% and operating expenses by $2.24 million over three years.
Harvard Pilgrim Health Care
Harvard Pilgrim Health Care, a non-profit health plan provider serving more than 1 million members, turned to a data warehouse platform to enable timely insight into medical trends and cost drivers. The solution provides insight to better business decisions. With the new platform, Harvard Pilgrim saved $1 million in infrastructure costs while improving performance—running some reports that had taken days in just minutes.
3. Inspire innovation
Increasing enterprise agility also enables organizations to leverage information, knowledge and practices from across its supply chain to create game-changing solutions to business challenges. It fosters greater innovation and ingenuity. Organizations can not only keep existing products and services competitive, but also create and successfully introduce new ones.
INGENUITY REDEFINES:
Enterprise Rent-A-Car
Enterprise Rent-A-Car leveraged a data warehouse solution to develop its Automated Rental Management System (ARMS®). Designed to improve customer satisfaction, the system identifies inefficiencies through the analysis of multiple types of data, including the length of time a customer’s car is in the shop for service. This information is critical to insurance companies and repair shops, as well as Enterprise Rent-A-Car.
AT&T Mobility
AT&T Mobility leveraged its data warehouse platform to help identify and migrate customers to more profitable plans based on analysis of their call-detail records and location. Subscribers who roamed excessively were profiled by handset purchase and home address and moved to more appropriate plans to protect profitability. In addition, a subscriber-reporting system captures daily changes affecting customers, providing 1,000-plus users with fast, self-service, subscriber-level views and automated key metrics.
Building a foundation
Building a more agile enterprise requires an ongoing combination of the right technology with the right types of people and processes to enable responsive solutions.
“Business process improvement is one of the best ways to affect agility as a company,” says Daryl Plummer, group vice president and fellow at Gartner. “These days, it’s more important to focus on building systems for change rather than on building systems that will last.”
Establishing agile processes and technologies is not a one-and-done endeavor.
“Agility will always be a continual effort,” McCoy says. “While it may be OK today, your goal is to make it better and better over time. You need to make sure that you’re improving vis-a-vis your past performance and that you’re competitive within your industry framework.”
Technology solutions are an important component of building an agile enterprise—they affect what’s possible and practical. Instead of being tied to a single way of analyzing data, organizations with the foresight to deploy a data warehouse will have the flexibility to adapt easily and quickly to shifting market conditions.
They won’t be locked into a pre-determined view of their customers, industry or key products. Rather, an enterprise that builds applications and business intelligence (BI) on top of a flexible architecture can rapidly redefine any of those categories and analyze existing data from a new context when the business environment changes. This enables organizations to:
- Access all data, in the right context, at the right time
- Analyze that data dynamically
- Scale the system to fit needs and conduct analysis in a high-performance environment
- Pursue analyses that aren’t necessarily pre-defined, to make unexpected decisions quickly and correctly
“The types of technologies that allow organizations to be agile include BI, knowledge management and enterprise information management solutions,” Plummer says. “You need technologies and solutions that enable you to efficiently shift from one state to another based on information.”
Opportunity for growth
Enterprise agility isn’t an end point but rather an ongoing endeavor that enables organizations to optimize existing—and future—investments in people, processes and technology.
“Agility is really continuous process improvement,” Plummer says. “You need to have the real-time visibility into processes and people—including customers—to be agile enough to deliver what’s needed at the right time.”
As organizations strive for greater enterprise agility, they’ll better comprehend operations and customer needs, effectively manage complexity to turn information into actionable decisions, and innovate to capture new opportunities in an ever-shifting business environment.
David A. Kelly is a Boston-based freelance writer who specializes in business, technology and travel writing.
Photo illustration by Randall Nelson
