Scope of this Report
In this paper, we consider the impact of the digital transformation on software development and whether the Agile Scrum approach being used by many organizations to help the software development teams respond more effectively and quickly to business demands can be used more widely in the organization for digital transformation.
We focus on what has been termed “SMAC.” The acronym derived from the names for what many believe to be the driving forces of the latest wave of digital transformation:
- Social media
- Analytics (or “big data”)
It is our belief that Agile principles and methods can be applied throughout an organization to deliver effective digital transformation.
Why do we need to change our approach for Digital Transformation?
Today’s software development, heavily influenced by SMAC, is being driven much more by the needs and capabilities of customers (users) who have been empowered to install, try out and accept or reject incremental functionality throughout their day, inside and outside of work. This is the critical change we see in enterprise software development compared with the last 10 years or more.
Historically, IT has not been focused on delivering value to its customers and though that’s a little harsh, we can certainly say that software development has often been driven by technology and completion date. Put another way, prioritization decisions within IT departments have been more based on: How difficult is the project? How many and which resources will the project require? Who is shouting the loudest to get it?
Organizations don’t have a choice. As an HMG Research blog post in August 2015 pointed out, “As external customers continue to increase their use of digital touchpoints to research and acquire products, companies need to be where their customers are and provide them with the types of experiences that delight customers and keep them coming back.” It’s simply no longer possible to avoid the need for organizational agility in order to recruit and retain customers.
For digital transformation, software development organizations must prioritize their projects, stories and task by customer value. They have started to do this. It is not easy but there are ways to make it easier (e.g. Value Visualization). HMG quoted Red Hat’s CIO Lee Congdon, "The world is shifting from an industrial age to an information age. It's no longer enough to produce great products. Today, companies need the skills and capabilities to connect with their customers. They need the ability to manage their supply chains in real time. Traditional companies are becoming digital companies, and that's a fundamental change," Charlie Asaujo in a private conversation with the authors takes this point further, “… In 5-10 years, 80% of what is in-house today will move out. The transition will be hard work. IT as we know it is dead. Managing the value supply chain will be the future for developers wanting to stay in the business.”
The software development teams in organizations have been able to respond to the need to deliver incremental value to their customers quickly and continuously by adopting the principles of agile and the methodology of scrum. To quote Alan Cameron of DCG, “… scrum can cut through the ambiguity cloud surrounding many traditional projects to provide a clear, frequently renewed focus on value delivery and customer satisfaction.”
However, the biggest challenge of implementing Enterprise Agile for software development is the need to change the organization outside software development, so that the whole body becomes focused on customer needs and demands. Some of the need for change on the periphery of software development, we already knew about. Something as fundamental to Scrum as daily builds require a significant rethink in some organizations. In early –stage scrum implementations it’s not unusual to be told that the IT team require, say, 3 weeks notice to set up the hardware for a new test environment.
How can Agile help Digital Transformation?
So what are the principles that drive an Agile business? We have suggested elsewhere that the Agile Manifesto can be adopted for digital transformation with small changes. Therefore, with due deference to the authors of the original (see “Sources” for attribution), we have amended the manifesto (in italics below) in a way that can be applied to digital transformation, while keeping as much of the original wording as possible:
Manifesto for Agile Digital Transformation
We are uncovering better ways of delivering digital transformation by doing it and helping others do it. Through this work we have come to value:
Individuals and interactions over processes and tools
Working customer value over comprehensive documentation
Customer collaboration over contract negotiation
Responding to change over following a plan
That is, while there is value in the items on the right, we value the items on the left more.
There are twelve principles that support the Agile Manifesto. These too can be modified for applicability to digital transformation:
1. Our highest priority is to satisfy the customer through early and continuous delivery of customer value.
2. Welcome changing requirements, even late in the transformation journey. Agile processes harness change for the customer's competitive advantage.
3. Deliver working customer value frequently, from a couple of weeks to a couple of months, with a preference to the shorter timescale.
4. Business people and digital transformation agents must work together daily throughout the project.
5. Build projects around motivated individuals. Give them the environment and support they need, and trust them to get the job done.
6. The most efficient and effective method of conveying information to and within a digital transformation team is face-to-face conversation.
7. Working customer applications are the primary measure of progress.
8. Agile processes promote sustainable digital transformation. The sponsors, digital transformation agents, and users should be able to maintain a constant pace indefinitely.
9. Continuous attention to customer value and best practice enhances agility.
10. Simplicity – the art of maximizing the amount of work not done--is essential.
11. The best digital transformations emerge from self-organizing teams.
12. At regular intervals, the team reflects on how to become more effective, then tunes and adjusts its behavior accordingly.
We have discussed this topic before on our website and there has been some justifiable push back against taking too simplistic a view of adapting a methodology developed to solve a set of challenges in one context to solve a different set of challenges in a different context. For example, on our blog, Ally Gill said, “…When we start talking about business transformation we're onto a whole different topic and a completely different set of people's needs which must be addressed. More importantly, the complexity of an organization needs to be considered as a critical factor - something that is less of an issue in developing software.” We agree and Arpan Pal has highlighted six areas of complexity (in the context of the “internet of things”) where the needs of digital transformation initiatives overlap with but extend beyond the considerations of simply developing the solution software:
- Ease of Development
We believe that the modified manifesto is a valid statement of intent that can be used to drive digital transformation, despite the acknowledged difficulties pointed out above.
While the agile philosophy puts customer satisfaction and the delivery of customer value among the highest priorities for the development team, scrum is a great technique for ensuring that things can actually be delivered quickly and often in a changing environment. This is how the scrum teams in software development can help whole organizations to make these changes.
Scrum succeeds by establishing a disciplined process around solving just enough of the customers’ needs to enable the customer to give more feedback and who better to coach and mentor the teams doing the transformation in the rest of the organization than the software scrum teams themselves.
In our current world where customers are continuously exposed to new ideas and new capabilities, the digital transformation within any organization must be driven by fast responses to customer feedback. Scrum, within the context provided by the agile manifesto, is the ideal controlled, disciplined but highly responsive methodology to implement digital transformation.
Most elements of Scrum can be applied to transformations outside software development. Product Backlogs (or maybe Transformation Backlogs?), tightly time-boxed Sprints (or iterations), Product
(Transformation?) Owners, Scrum Teams, Sprint Reviews and Sprint Planning Meetings are all pretty much essential. Daily Standups can be overkill on more strategic initiatives but certainly some sort of progress and impediment reporting is appropriate on a regular schedule during the sprint (weekly on a 4-week sprint works well). Scrum Masters can be a less important role perhaps combined with Product Owner depending on the team.
For us here at DCG, this is no theoretical proposal because we use scrum techniques ourselves for implementing strategic initiatives. We use scrum in our consulting contracts to help our clients manage their own transformations. For example, for a client needing to introduce better IT Governance and Measurement, we used an agile approach to help the senior management team identify and prioritize a program backlog. We were happy when they concluded that the value delivered in the first six transformation sprints was sufficient and that no further sprints were needed.
Applied with care, digital transformation initiatives can benefit from an approach based on the, slightly modified, principles of the Agile Manifesto and Scrum. Agile tells us to deliver
working customer value frequently, from a couple of weeks to a couple of months, with a preference to the shorter timescale. Scrum establishes a disciplined process around solving just enough of the customers’ needs to enable the customer to give more feedback.
Customer value-focused organizations, which are Agile throughout are best placed to meet the challenges of digital transformation in the age of SMAC.
- Value Visualization, www.valuevisualization.com.
- HMG Research, http://www.hmgstrategy.com/blog/article.asp?articleID=213
- Alan Cameron, blog post Monday May 18, 2015, www.davidconsultinggroup.com
- Ally Gill May 19, 2015 - responding to Alan Cameron blog post of previous day, cited above.
- Arpan Pal, writing in IEEE’s IT Pro (May/June 2015)
- Better IT Governance and Measurement,