1 © The Economist Intelligence Unit Limited 2016

Executives would like to see IT take the lead in improving organisational agility, but to do so requires the ability to manage change in the face of complexity

I n the digital economy, market conditions change fast. Ever-increasing customer expectations, new regulatory requirements and market disruption by digitally native

start-ups contribute to a pace of change that is only accelerating.

As a result, every organisation must confront the challenge of responding to shifting conditions seamlessly. That requires the ability to adapt both quickly and effectively to new market realities. In the context of digital transformation, agility means constantly adapting products, services and processes in response to circumstances as they evolve.

There is a widespread recognition of the importance of agility. In a global survey of 812 executives, conducted by The Economist Intelligence Unit (EIU) and sponsored by SAP, 39% of respondents see improving agility as being critical to the success of their digital initiatives.

Respondents from the healthcare sector are most likely to view agility in this light, with 47% of respondents identifying it as a critical success factor. This suggests that respondents in that industry are especially frustrated with their current inflexibility.

The IT department plays a critical role in enabling agility. If the IT system is unable to keep up with rapidly changing priorities and remains bogged down by the maintenance of legacy systems, then it cannot support the evolving demands of the business.

An article from the Economist Intelligence Unit

2 © The Economist Intelligence Unit Limited 2016

However, only 11% of respondents believe their IT team plays a leadership role in achieving this mission-critical objective. Over half (58%) say that the IT department makes an active but supporting contribution to agility, and one-quarter (26%) say that IT has a passive supporting role.

This is a situation that many executives believe must change: 39% overall say that in an ideal world the IT department would have a leading role in improving agility, although this view is more common among IT executives (43%) than among other functions (36%).

Overcoming complexity

IT departments are beginning to address the issue. Of the 400 IT executives included in the survey, 17% have adopted Agile software development to support their company’s digital initiatives, while 15% have adopted DevOps, in which software development and IT operations are converged. Both methods are designed to support agility by allowing IT projects to be rolled out incrementally and iteratively, responding to user feedback and evolving business requirements.

“Speed and agility are huge themes for us,” says Bill Murphy, CIO at hotel chain Hilton Worldwide. “We’ve migrated towards an Agile methodology for software development because we can’t survive in today’s market by spending three to four months addressing a small change [in software]. We can’t go through the traditional waterfall. We have to be able to react to business needs quicker, we have to deliver quicker, we have to experiment quicker. That requires a different mode of adoption.”

The UK’s Driver and Vehicle Licensing Agency (DVLA), where IT systems have been run through outsourcing deals with systems integrators for the past 20 years, shares this ambition. The DVLA has now begun to bring IT back in-house to create a more agile

Achieving agility

Which of the following capabilities are most important to the success ofyour organisation’s current digital initiatives? (% of respondents who reply 'improving our organisational agility')

Energy &natural

resources

High tech/technology/

software

HealthcarePublic sector/government

Consumerproducts

RetailFinancialservices

28%

36% 36%40%

47%

39% 39%

Source: The Economist Intelligence Unit.

3 © The Economist Intelligence Unit Limited 2016

operating model and approach to service delivery, with IT and the business working in partnership.

But as the DVLA found when introducing its View Driving Licence solution, which provides an online application and renewal process for driving licences, achieving agility is easier said than done, especially when confronted with a complex estate of legacy systems. “That project took quite a long time, which doesn’t feel very agile, but we had a lot of barriers to overcome,” recalls the DVLA’s technology lead John Bramer. “We needed to integrate with the existing systems, so working out how that happened took a long time.”

Change management is a particular challenge, he adds. “It’s a very old, complex, tightly coupled, integrated, spaghetti-and-meatball infrastructure, which means that change is very slow because a change somewhere can affect something else.”

Nevertheless, digital change management is fi rmly within the IT department’s remit: 46% of respondents to the EIU survey say that managing change resulting from digital technology is one of the IT function’s key contributions to digital initiatives. This fi gure is especially high among technology companies (52%), where time to market in a highly competitive industry is critical, but low among public-sector organisations (36%), where conservatism and resistance to change are common.

According to David Doherty, director of ICT at Ofcom, the UK’s communications regulator, IT leaders should be encouraging their peers in the business to take more responsibility for their agility for the processes they own.

Often, business units will complain that they do not have as much control over their processes as they would like, he says, but balk when they are confronted with the prospect of taking full ownership of them. Delivering the agility that business units need therefore requires that the IT department speaks the same language as the business units. “We have to work with them and with their culture,” says Mr Doherty, “and get under the skin.”

IT is in a diffi cult position when it comes to agility. Everyone can see the rapid evolution of digital technology, and their eagerness to pursue the opportunities it presents is understandable. But few understand the complexity of successfully integrating new digital systems into the business. Nevertheless, IT leaders must fi nd a way to overcome this complexity, so that their business can keep pace with the speed of digital innovation.

Achieving agility

About this article:

Digitising IT is a research programme by The Economist Intelligence Unit, sponsored by SAP. This article draws on a multinational survey of 812 senior executives, conducted in March 2016. Just under half of the respondents (49%) are senior IT executives, while the remainder represent a range of other functions. Respondents are drawn from a range of industries and from countries in Europe, Asia, North America and Latin America.