FT : Enterprise Agility

Wednesday, November 21, 2007

Agile is what both the latest business strategy and software development methodology aspire to be.  The approach promises a significant break with the habits of the past.  The ideas are discussed extensively within the IT industry but have yet to become mainstream.  Inevitably, it is a case of familiar ideas revamped and repackaged, rather than anything wholly novel.  “There are a lot of companies experimenting with, or about to experiment with, agile software development,” says Steve Gedney, managing director of Borland’s UK operations.  “They want to do it but they’re nervous. It’s so simple in concept that people mistrust it.  It all seems a bit touchy-feely… but anybody who has ever practised an agile technology never wants to go back.”  So what is it all about?  Professor Donald Sull of the London Business School has carried out extensive research on the strategic implications of agility, which he defines as a company’s ability consistently to identify and seize opportunities more quickly and effectively than rivals.  That means abandoning the old style of planning for the future.  “In many domains of human activity, where action must be taken despite uncertainty about the future, there has been a shift towards a more iterative approach, in contrast to a linear approach,” he says.  The key, he thinks, is the way discussions are structured within an organisation.  Agile organisations have managers adept at leading four critical kinds of discussion: making sense of the outside world to spot opportunities as they emerge; making the right choice from the possibilities that present themselves; “making it happen”; and making mid-course corrections as new information becomes available.  In a soon-to-be-published book* he warns: “All too often, though, conversations at companies bog down in an endless series of unproductive meetings in which the usual suspects cover the same ground without making progress…To avoid that, managers should start by asking themselves a simple question: are we having the right kind of conversation?  “Specifically, are we trying to make sense, prioritise, make things happen or revise assumptions?”  Prof Sull argues that Zara, the clothing chain store owned by the Spanish Inditex Group and headquartered in A Coruna, Galicia, is a powerful example of a company which exhibits agile characteristics.  A “fast fashion” house, in recent years it has overtaken the former market leader, Benetton, by spotting trends and rapidly translating them into low cost, well designed and manufactured garments.  Prof Sull says: “Recently, one of my students showed me a dress made by Gucci selling for €1,200 and one made by Zara for €129. I couldn’t tell them apart.”  One factor, he says, is that Zara owns almost all its stores, whereas Benetton operates a franchise system.  The stores act as Zara’s eyes and ears.  “The store managers are talking continually to customers, finding out what they like, why they have brought garments back and relaying this information on a more-or-less weekly basis to the company’s marketing manager in A Coruna.  He also points out that Zara’s design, production and marketing departments are located in the same set of big, open plan offices at headquarters, giving maximum opportunity for conversations and serendipitous meetings.  Garments, furthermore, are produced in Spain rather than lower cost economies allowing new lines to be brought to market with remarkable speed.  Benetton’s supply chain is as efficient as Zara’s, Prof Sull says.  “It is simply less good at seeing the opportunity.” 

Agile software development also rejects the idea of regimented forward planning.  It is the antithesis of the linear or “waterfall” approach – which is how much software is produced today and why so much fails to be fit for purpose.  Typically, systems analysts define user needs and prepare specifications for programmers.  By the time the software has been coded and tested, the users’ needs have often changed.  In the most extreme examples, the software is redundant before it is put into service.  Agile methods are a reaction to the bureaucracy and inflexibility of the waterfall approach.  Large projects are chopped into a series of smaller iterations.  Users and programmers meet frequently to discuss progress and make changes where necessary.  Change is welcomed.  Working software is delivered in weeks, rather than months or years…..So is there no downside to agile development?  Michael Homedy, software engineer with the management consultants Robbins-Gioia, warns that “scope creep” can be a real risk.  It can be difficult to know when to call a halt to new iterations: “Agile typically costs more than a classic waterfall.  “If an agile iteration turns out to be not what the client wants, you risk losing time, money and large chunks of code.”  He concludes that organisations who simply want to migrate a legacy system to newer technology should stick with traditional development methods.  “The risks associated with using agile in a legacy situation outweigh any of the possible benefits,” he says.

Reference : http://www.ft.com/cms/s/0/a988cd86-9759-11dc-9e08-0000779fd2ac,dwp_uuid=4dce8136-4a24-11da-b8b1-0000779e2340.html

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