By Alexander Becker, COO of Serviceware SE
In the last few years, businesses have had to adapt to a new era characterized by volatility, uncertainty, complexity, and ambiguity (VUCA)[i]. The pace of digital transformation, evolving customer preferences and tough economic conditions are fundamentally challenging established ways of working across multiple sectors.
It is commonly accepted that where there is unpredictability, business agility is essential. Companies need to be prepared for all eventualities and be ready to respond by adjusting their strategy and operations at all times—and quickly. But while more than 60% of business leaders understand that organizational resilience will only become more important in the future, many say they don’t feel that their organizations are well prepared for the external shocks that may emerge over the coming yearsii.
Agility… more than a buzzword
‘Agility’ has become a bit of a buzzword for businesses worldwide, but for those looking to become truly agile, what does it actually mean? Increasingly, organizations can no longer afford to be reactive. Instead, they must anticipate market changes and respond ahead of time. For example, if a competitor enters the market with a similar offer, an agile company can respond by developing a new product or service that differentiates itself from the competition. Another key benefit of agility is the ability to meet evolving customer preferences. Today’s consumers expect a high level of service and convenience, and companies that can respond quickly are more likely to retain their loyalty. For instance, an agile company should be able to quickly launch a new product or service in response to customer feedback, whereas a less agile company may take months or even years to implement such changes.
Essentially enterprise agility is a paradigm shift away from multilayered reporting structures, rigid annual budgeting, compliance-oriented culture and the separation of business and technology. Traditionally businesses have looked solely to IT for agility when they should be looking at the whole organization. ‘An agile transformation looks throughout the organization to find specific areas where an agile operating model can unlock value’, according to McKinseyiii. Because this requires an approach that is more transformational than traditional, agility cannot be built using legacy systems and approaches of the past. Businesses must look beyond agile methodologies within the confines of IT to encompass the whole enterprise – they must develop responsiveness to customer needs, market trends and opportunities across all facets of the organization.
Unlocking business agility with DevOps and cloud
Adopting agility brings significant advantages to businesses, but what does it take to initiate agile transformation? For many organizations, innovative technology and the rapid adoption of DevOps and cloud-based infrastructures have proven essential, enabling companies not just to stay afloat, but to be nimble even in the roughest of climates.
Rapidly moving markets and constantly changing business conditions require development teams to work closely with operations and end-users in a flexible, agile manner. DevOps and cloud technology combine to improve enterprise agility by enabling organizations to develop, test, and deploy software quickly and efficiently. The iterative process allows for implementing new features and updates, often driven by customer feedback. This means organizations can quickly serve evolving customer needs and preferences by continuously introducing enhancements. In addition, through implementing DevOps practices, organizations can significantly reduce the chance of system failures and downtime, resulting in improved availability and uninterrupted access to their offerings for customers. This ultimately, leads to better customer experience, operational efficiency and cost savings.
While these challenging times have made the benefits of cloud, i.e. scalability, flexibility, and automation, even more attractive, they’ve also put the timing and success of that migration under greater pressure. For the CIO and CFO, this challenge also presents an opportunity. The IT and financial teams are instrumental in making sure that a business has the tools it needs at its disposal to lead digital transformation, steer through uncertainty, and embrace a culture with agility at its core. To get value from the cloud, businesses need effective governance, financial transparency, and agile budgeting processes.
Achieving agility with financial management
At a time where cost inefficiency is simply not an option, CIOs should be doing all they can to plan their journeys before they’ve even begun. The creation of a business case, supported by effective financial management tools providing real-time insight and management across a company’s cost data, is a great place to start. With boundaries between projects and operations merging, the big questions are: How do CIOs manage projects from a financial point of view? And how do CFOs make the projects agile?
When it comes to managing budgets and cost control, CIOs need an integrated system which enables and promotes collaboration with the CFO at the same time. Traditional project performance management is about setting up and managing IT projects (also known as the build part of IT). However, IT needs to be constantly operational, maintained and kept up to date (also known as the run part of IT). There should be a correlation between both ‘build’ and ‘run’ phases. If certain aspects have already been considered in the build, businesses can save costs in the run phase of services for the entire organization. In order to achieve this, businesses need visibility into the tasks, and IT Financial Management (ITFM) data must become a key part of project performance management. A sophisticated Technology Business Management platform will help businesses predict any repercussions early on and provide a holistic overview of the project.
Cost management is always crucial, but especially in times of economic uncertainty, where budgets are subject to closer scrutiny and managers are under greater pressure to demonstrate ROI. The ability to manage expenses and gain insight from data to improve processes is more important than ever. It’s not quite as easy as just picking and using one of the many software tools in the market, IT costs should be continuously reviewed and expanded upon. An ongoing dialogue between the CIO and CFO will allow a more accurate examination of these costs.
Pivoting towards success
While today’s business climate certainly feels like a survival test of the fittest, a CFO’s goal should not just be to survive, but to thrive. To take advantage of emerging opportunities, business leaders need to move beyond the rigid approaches of the past by embracing the agility needed to respond to customer demands, whilst also remaining competitive.
As we’ve learned in the last couple of years , it’s crucial now more than ever that businesses implement the appropriate control tools to survive in an agile world. Manual processes, lack of alignment and insufficient technology spend – due to siloed decision making – can leave businesses with an incomplete understanding of the fully-loaded cost of technology decisions. This disconnect between strategy and operations undermines both credibility and trust. Equal access to information and processes gives CIOs and CFOs a common foundation to make rapid and confident decisions.
[i] Wright. G, (n.d). VUCA (volatility, uncertainty, complexity and ambiguity), TechTarget https://www.techtarget.com/whatis/definition/VUCA-volatility-uncertainty-complexity-and-ambiguity
[i][i] Company, M (2023) The State of Organizations 2023, McKinsey & Company https://www.mckinsey.com/~/media/mckinsey/business%20functions/people%20and%20organizational%20performance/our%20insights/the%20state%20of%20organizations%202023/the-state-of-organizations-2023.pdf
[i][i][i] Company, M (n.d). Enterprise Agility, McKinsey & Company, https://www.mckinsey.com/capabilities/people-and-organizational-performance/how-we-help-clients/enterprise-agility
