Often, competitive environments change faster than a firm’s responding processes and decision making abilities. Most organizations fail at executing strategies designed to improve their position in the market.
Often, competitive environments change faster than a firm’s responding processes and decision making abilities. Most organizations fail at executing strategies designed to improve their position in the market. They lack business agility. Conversely, High Performance Organizations (HPO) reach for high agility so that they can identify change, respond optimally and set the pace in their industry.
The term, agility, has assumed different meanings in the software industry. When technology vendors speak of agility, they usually describe methods and forms of software that instantly change a component such as a business rule or process. Business rules software suites have button-press redeployment of rules in engines. Similarly, business processes can be easily redeployed. When software methodologists speak of agility, they describe rapid application development techniques such as Scrum. While useful, these things are not business agility.
Business agility is the ability of a business enterprise to run profitably in a rapidly changing and fragmenting global market environment by producing quality, high-performance, and customer-targeted goods and services. Government agility is the ability to run efficiently and responsively within a changing local or global economic, political or natural environment. In business and government, agility includes the ability to rapidly adapt to shifting policies, regulations, and mandates.
Firms do not lightly decide to become business agile. They adopt core practices that empower agility. Among these practices is enterprise maturity. There are three practices in enterprise maturity:1. Continuous, top-down assessment or audit of the understanding, capabilities, cohesiveness and adaptability of business models, strategies and operations2. Coupling to an understanding of the gap between what is needed for growth or stability3. A flexible plan to close that gap
The enterprise maturity mindset is an understanding of the characteristics and abilities of the next maturity vector and an intention to reach it. One maturity vector is a motivational aspect of the enterprise maturity. For instance, an important vector of processes is the business integrity of the process. A maturity vector for process integrity describes the ability of the firm to finish process cycles and meet the promises to customers, partners and stakeholders.
So, enterprise maturity is as much process as state. Although there are maturity models for business strategy and business models, we will focus on enterprise architecture, business processes, and decision management. Business processes and decisions arise from the firm’s business models, strategies and operations.
In the classic book ‘Enterprise Architecture as Strategy’, Ross – and others – define maturity in enterprise architecture with three practices. First, policies for process integration are decided by the types of organizations. Organizations select the amount of standardization for process. For instance, firms that run as a loose federation of cooperative bodies might standardize through aggregate accounting reports. Here, every corporate entity decides on processes and financial reports provide the desired standardization. Firms that seek tight controls might need broad process standardization. Next, firms create a context for execution. A one-page diagram describes how the firm creates value across business areas. Third, the firm advances in architectural maturity to levels set by the integration policies. In ‘Enterprise Architecture as Strategy’, maturity levels start with standardization and advance to ‘Business Components’.
In most firms, architecture, business processes and the supporting decision can be at different development stages in different lines of business. In some groups of processes, the maturity level is at a lower, management focus. Others are more robust. Our collective experience with business process management and business rules approaches has improved maturity in many areas. I have worked with firms advancing their maturity in enterprise architecture, business processes and decision management. All firms’ maturity converges at a point – the business agility they need to compete in their sector. To reach the business agility of an HPO, they need maturity in these three areas.
As enterprise maturity in process and decision has advanced, firms incorporate business agility into their business architecture. Business agility has many ingredients. Conceptually, business agility is the selection of agility types that meet the challenges created by agility factors. For instance, one agility type is the range of business volume at which the business is run profitably. Firms should model and predict the market demand, an agility factor. They adjust resources with an agility type.
Prediction of the effects of business decisions is the hallmark of the fourth phase of Barbra von Halle’s KPI’s rules maturity model. By late in the second phase of process maturity, firms have integrated activity cost accounting with their processes. Without the mature management and technology of BPM and Decision Management, firms must rely on intensive manual intervention to reach business agility. In other words, without BPM, it will be difficult for them to:• Change policies that govern important business decisions, decisions and business rules would not be first-class citizens in corporate strategy.• Align operational processes to adapt to changes in economic demand. Process cycle costs cannot be easily or accurately assigned. • Build business services that can be reassembled into new products and services to support new top line revenue growth.
Many firms intend to move to the proper enterprise maturity levels to become an HPO. The enterprise maturity mindset does not dictate that every aspect of the enterprise is needlessly promoted to the greatest level possible. A firm can adopt different goals for different business areas. The good news is that, at all levels, firms gain benefits from improving maturity levels.
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