The Business Value of Technology Is Changing
The function of technology is changing, with companies elevating technology’s role to drive product differentiation in the market. Businesses originally adopted technology to automate manual tasks and drive cost efficiencies. Value was measured in the ability for IT organizations to reduce the cost of business operations. Today, increased expectations for technology to support revenue growth is driving a change in technology’s role and elevating its profile within a company. According to Accenture Strategy research, nine out of ten executives agree that that their organization’s growth strategy is technology driven1. Value is now being measured by technology’s ability to increase a customer’s willingness to pay for products and services. This change is bringing technology out of the back office and into the business as a strategic asset.
Companies that successfully utilize technology as a strategic asset for market differentiation are looking at operations in a new way. Instead of building organizational units to meet economies of scale with tight control over IT scope, businesses are becoming responsive to changes in customer demand, and taking proactive steps to stay ahead of competitors. Successful companies are agile across the enterprise.
Keys to Success for Transformation
An agile enterprise is characterized by the ability to drive value through increasing customers’ willingness to pay for its products and services over those of competitors. Nearly half of consumers (48 percent) expect the companies with which they engage to know more about them and their preferences2, and 80 percent of organizations agree companies need to understand not just where people are today, but where they want to be – and shape the technology to act as their guide3.Yet even with the increased demand for customer-facing technology, only 21 percent of organizations report having a predominantly agile org structure4.
With the customer at the center, companies that have primarily used technology for cost efficiency require a transformation of their operating model. Accenture Strategy recommends three keys to success:
1. First, structure around a customer-oriented product portfolio
To create customer value, a company must first be able to state why customers would be willing to pay for their products and services versus their competitors. This requires defining who your customers are, how they are segmented and what is the unique value proposition for each customer. Once you have defined what value you want to achieve by customer, you can then align your technologies and business capabilities into a portfolio of products that will deliver that value. This will require restructuring the operating model and organization, anchoring around products. Tying technology products to customer value will set the direction on how technology will create value.
2. Next, evolve the budgeting model
Once you have defined your product portfolio, the next step is to define how success will be measured. Define the business key performance indicators that each product team must meet, and the budget you are willing to put toward meeting those objectives. This will align team incentives with the business objectives. To allow for the flexibility required to be truly agile, budget for capacity at the product level—rather than funding projects—and manage value at the product portfolio level.
3. Finally, transform delivery to a product management model
Once the organization understands the new direction, build out a product portfolio management capability to empower investment decisions, and hold product teams accountable for results. Start to define the ways of working across process, governance and organization to incorporate agile methodologies into delivery, and build new skill sets that span technology and business. Grow your understanding of your customers’ needs through building cross-skilled teams that are specialized in their customer knowledge and industry expertise. These teams should provide end-to-end delivery and be fully accountable for delivering results5.
The Evolution to an Agile Enterprise Requires New Ways of Working.
Transforming a company to become an agile enterprise requires changes to culture, operating model/structure, process, organization, governance and funding—for both business and IT.
Source: Accenture Strategy, 2017
When done right; however, agility comes with several benefits. Implementing an agile methodology can improve productivity, enhance quality and shorten time-to-market. The real benefit of an agile enterprise, though, is the ability to position technology as a strategic asset that will differentiate your company from your competitors. Make sure your transformation to an agile enterprise includes all three keys to success.