The Art of Agile IT: How to Blend Legacy & Cloud-Based Solutions

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Agile IT has to operate effectively in two worlds: the legacy world of enterprise applications and systems development lifecycle and the new world of cloud based apps and disruptive technology.

The modern enterprise must figure out how to keep both these worlds together. The legacy world is needed to run existing business operations – it’s not going away anytime soon! The new world is essential to supporting the business acceleration strategy and time-to-market needs.

Yet most businesses, especially large established enterprises have struggled to evolve from Traditional IT to Modern IT. They settle into a passive role with a three to five year reference architecture and lack any flexibility to adjust and iterate to an ever-changing business landscape.

Fortunately, there’s an opportunity to leverage your organic business expansion & inorganic Mergers and Acquisitions practice as a practical way to implement a co-existent IT strategy. In M&A scenarios, smaller acquired companies are often introducing new world solutions. Smart CIOs and CTOs need to drive an accleration strategy to integrate high-growth business lines on the fast track and support them using cloud-based best-of-breed solutions.

M&A integrations can stimulate the executive support and urgency for an agile platform that enables business transformation. This introductory guide walks through the formula for IT to be successful in both worlds.

Today's IT Challenge

Enterprise CIOs are in a bind. Business leaders need them to step up to be strategic business partners and help deliver new growth initiatives. The reality is that IT often acts as a tactical service provider who’s there to keep the lights on and the engine running. The perception is that IT is slow to deliver, operating in three-year planning cycles and prioritizing support for the business lines driving the most revenue.

While IT’s pragmatic approach may have been successful in the past, today’s businesses need IT to be responsive to new challenges and opportunities. They need IT to fuel innovation and identify solutions that can be implemented quickly. Otherwise, the business won’t call on them when there’s a need to take a fresh approach.

The business leader mindset is “Don’t bother asking IT. You know their solution won’t get delivered on time and you won’t get to market fast enough.” IT leaders have to shed their “one size fits all” mindset and be open to new, disruptive technologies. If IT leaders don’t quickly shift their thinking, they’ll get replaced by consultants!

IT has to stop saying “no” to their own business partners. They must build business expertise and provide agile, iterative solutions to gain credibility. IT technologists must stay current on the latest technologies and quit settling with what they know and love.

But there are legitimate constraints on enterprise CIOs:

  • Budget (controlled by the business) – 70-80% of it allocated to maintenance projects and keeping the lights on
  • Multi-year strategic roadmaps the business has already committed to
  • Tendency to avoid solution redundancy, driven by cost-reduction emphasis
  • Reluctance to invest in cloud-based solutions based on risk-averse mind-set
  • A real business need to protect their investments

IT practitioners often understand the need to shift their strategy, but can’t sell it to their CIO/CTO. And the IT leadership team is often reluctant to change given iron-clad licensing agreements for multi-million dollar solutions. So how do you approach the shift in a delicate but assertive way? How do you create a burning urgency to solve the problems that the existing solutions do not solve for?

A new approach is to run in parallel with both a tried and true IT plan to continue running the traditional lines of business while investing in a nimble/agile IT group to run new initiatives. Some solution redundancy is fine. You won’t be able to pace your business without acknowledging it as a fact of doing business.

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MERGERS & ACQUISITIONS FUELING AGILITY

Enterprise businesses are in a constant cycle of acquiring other businesses. Google, for example, has been buying just over a company a week since 2010. They ostensibly use these acquisitions to drive a transformation strategy across their core business and seed new engines of growth. Outside of changing their email addresses, however, many of these newly acquired companies operate in silos.

Corporate Strategy & Development groups make the ultimate decisions on new investments. While IT is consulted during the due diligence process, it’s typically a cursory check and not in-depth enough to really understand the technical integration risks and costs. As a result, enterprises don’t fully integrate their acquisitions to the main business because of disparate business processes and integration constraints. While for product tuck-ins this is a non-issue, acquisitions that focus on accelerating product launches are dramatically affected.

New acquisitions are a ticking clock. It’s all about timing! The best way to ensure success is to offer an immediate integration plan tied to the time of close. If you don’t get a jump on integration in the first 90 days, you lose your competitive advantage and any chance of integration funds tied to the acquisition business case. It’s doubtful that many acquisitions have truly realized the value creation. Why? No integration.

A solution

Many enterprise IT organizations have set up a dedicated M&A IT group. It’s a team solely devoted to acquisition strategy and true integration of application and infrastructure. IT must have a seat at the table to provide actionable due diligence about risk, cost, and an articulated vision of a final product. Building a dedicated M&A IT practice establishes accountability and alignment with Corporate Strategy & Development.

This approach also enables the business to carve out an IT group that is able to deliver agile solutions and eliminate dependency on the slow delivery of the ‘mother ship.’ The M&A team can actually play a big part in employee retention. Lots of startups have strong personalities, strong IP – how do you retain that talent & domain knowledge?

IT can play a huge role in making those team members feel part of a broader IT strategy. After all, it’s not just the product you’re buying, but the people. M&A IT needs to partner with the acquisition’s technical leaders to define the implementation – they need a self-empowering voice.

Implementing an M&A IT Playbook with standardized lean processes from due diligence to functional integration complete (FIC) is an industry best practice. FIC = application and infrastructure integration in alignment with an enterprise’s architecture’s blueprint. Enforce integration at the time of acquisition, otherwise the budget won’t come back. As a result, make FIC legitimate.

This solves for the biggest M&A integration challenges around business priority, business processes, integration complexity, and organizational alignment.

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THE NEW IT MINDSET: 4 BASIC PRINCIPLES

These are keys to establishing an Agile IT organization. IT leaders need to shift to a proactive mindset versus a passive one. Don’t wait for your next directive!

1. Position yourself as a strategic business partner, NOT a service provider.

This is not business as usual. You’re there to partner with the business to innovate and identify new solutions. Be creative and think outside of the proverbial box. Every potential solution doesn’t need to fit all the corporate standards. And some redundancy is ok. You need to be iterative and test, take risks and learn often.

2. Know the business better than the business.

Be proactive in understanding your business needs and defining solutions to meet those needs. Quit passively awaiting a detailed requirements specification from your business partner. This is a collaborative effort and IT is just as accountable as the business to ensure solutions proposed meet business needs and align with aggressive timelines.

The traditional approach of collecting requirements from the business and then proposing solutions is too slow and the business and IT often get caught in the mode of trying to capture every last possible use case. For new go-to-market initiatives, the business does not know what they want or where to start. Given the pace of transformation, the process needs to change from capturing requirements to a more iterative approach.

3. Commercial best-of-breed cloud-based solutions are the only path if you want to hit your aggressive time-to-market goals.

On-premise solutions are a known entity and hardware is cheap so it’s easy to build out and scale. It’s easy to want to build and customize your own solution but that approach takes too long and uses development resources in an area that’s likely not your core competency.

Cloud-based solutions may not seem like the long-term strategic play, but today’s SaaS applications are built to meet the highest enterprise performance, availability and security demands and they can seamlessly integrate with your existing solutions.

4. IT needs a two-pronged approach – one that maintains your traditional IT & the other that enables growth and innovation.

You will need to balance these and manage the complexities of both. There will be contention between the two worlds and you’ll wrestle with when to keep them apart and when to share resources and learnings. The key is to keep them separate while ensuring a longer term integration strategy. The need for a platform enabling transformation will never go away.

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SHIFTING PEOPLE, PROCESS, AND TECHNOLOGY

Transforming your IT organization and how you enable the business involves a well-thought plan and well-orchestrated execution across several key areas. How does IT provide real value to the decision making?

I. People

Your people are your most important asset and always a sensitive topic. Human investment and the importance of retention and career development is frequently overlooked.

The question of where your IT and engineering core competency lies is an important one. CIOs and CTOs need to make the decision as to where they invest their valuable resources.

Build vs Buy? It’s surprising this is still an issue. Do you want to build the next great app or build a supporting solution someone else has already built?

Businesses may think they have the best expertise or unique requirements a commercial offering can’t possibly solve. Or it’s cheaper. Ultimately IT wants to retain their talent, their existence, their value.

IT should not invest in building where there are already commercially available best-of-breed solutions! You should invest your engineering talent in your products and your IT talent in streamlining internal business systems and infrastructure.

You’ll also need to consider redeploying headcount who are involved in manual process operations (e.g. generating recurring invoices). There is a solution for all manual processing. Implement a solution that enables automating processes. Do more with less.

When a project ROI is built around the plan to ‘remove manual processing,’ does it mean reducing headcount or redeploying staff to other more important projects? It’s a threatening issue that can fracture organizational trust and effectiveness.

II. Process

You’ll have to run things differently in an agile IT organization to make decisions, course correct and execute faster. The biggest challenges aren’t around the systems but instead in redefining lean business processes to align with the new business model.

Governance around systems of choice and corporate standards is critical. This may sound like corporate IT, but even within an agile IT environment it’s critical to enforce process standardization and prevent rogue efforts.

IT practitioners are technologists. They want to jump to the solution. They need to step back and establish a thorough understanding of the business before throwing a solution at it. It’s important to set appropriate expectations and deliver on business commitments.

III. Technology

The system is the end-result. What does the final agile IT product look like? e.g. At Dell, they were transforming their business from a hardware-centric organization to a leading end-to-end solutions provider. Twenty years ago, Dell revolutionized the PC industry around a “build-to-order” model. Dell’s commerce was built around one-time “build to order” transactions and lacked the ability to streamline billing for subscription services.

But how would Dell handle recurring revenue through new licensing models, services, upgrades and renewals? Traditional ERP systems can’t handle these complexities. Some of the key areas of new business growth that would require new technology solutions:

  • Recurring software license models (co-term, rev rec, automated)
  • Services and solutions
  • Cloud (IaaS and SaaS apps)

Like at Dell, many enterprises seek out platforms that bolster their backend legacy ERP systems to enable continuous business transformation centered on the recurring customer relationship.

A cloud based solution = a business acceleration strategy.

CONCLUSION

In an environment of strategic acceleration and transformation, the new Enterprise has to successfully operate in both the legacy and Agile IT worlds. The perception of IT needs to dramatically shift from being a service provider to a business partner. As the CIO or CTO you can’t fully achieve your business’ needs by extending your existing legacy systems. Transparency is key! You need to admit to the capability gaps and be open to transformational solutions that may be required to meet those gaps.

Your business has changed – introducing new requirements for capabilities that your legacy systems don’t and should not support. You aren’t required to rip and replace your legacy systems. It should be a clean co-existence strategy that allows for IT to implement and leverage best-of-breed solutions. The legacy platforms can and should continue to run your day-to-day business operations for the foreseeable future while parallel investment in new platforms of growth and innovation are required to maintain a competitive edge.

Companies are being forced to not disrupt acquisitions so as to not have a negative impact on their business. The time is now for IT to step up and have real answers and solutions to enabling acquisition integrations and continued organic business growth.

An Agile IT platform is required to fuel innovation and support the business acceleration strategy.

What’s your business acceleration strategy?

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