Business-agile enterprise

Business-agile enterprise (B-AE) is a field of study of different business & IT methods that work together to create an agile and competitive business model.

Overview[edit]

Business-agile enterprise (B-AE) is an amalgam of different business & IT methods that work synergistically to create an agile and competitive business model. These disciplines include business technology management, service-oriented architecture, IT governance, SOA governance, IT portfolio management, business process management, Control objectives for information and related technology (CobiT), enterprise architecture, business architecture, project management, Information Technology Infrastructure Library, ITIL V3 (Alignment of IT to business), IT service management, information management, matrix management, and business process modeling.

Business-agile enterprise improves financial measurements such as margins, profitability, time to market, revenue growth, earnings per share, ebitda (earnings before interest, taxes, depreciation & amortization, return on equity), return on assets, and return on investments.

Agile companies make more money with less resources and lower costs.

Research programs[edit]

Business Technology Management Institute, Agility research[edit]

Business Technology Management Institute (BTM) ^[1] conducted 5 years of business agility research across 50 industries worldwide. Their document, "Business Technology Convergence Index," summarizes the financial benefits a firm can accrue in converging their business & IT groups.^[2]

Agile companies have converged their business & IT worlds and higher revenue growth and net margins relative to their industry groups.

Annual Revenue Growth – 12% growth vs 4% for their industry groups
Average Annual Earnings per Share – 36% growth vs 7% for their industry groups

Agile Companies not only grow at a faster pace than their peers, but they also exhibit consistently greater returns than those of their direct competitors.^[2]

Earnings before interest, taxes, depreciation & amortization – 6% higher EBITDA than those delivered by their industry groups
Return on equity – 4% higher
Return on assets – 8% higher
Return on investments – 14% higher

These figures are not limited to any one area within the enterprise and are not "IT-specific." They also do not measure returns on any single project, rather, they measure enterprise-wide returns, and reflect the EBITDA of the entire enterprise. The financial effects are enterprise-wide, since the key management capabilities are interconnected, and because both the business and technology professionals in a B-AE actively share ownership of decision-making and execution.

MIT Center for Information Systems Research Agility research[edit]

In the book, "Leveraging the New Infrastructure",^[3] the idea of treating IT as a portfolio of investments, just as corporate finance handles their investment portfolios, is documented as a way to assess IT business value. Agility is a major contributor to these financial benefits.

Agile companies show higher profit growth.^[4][edit]

Performance	Agile	Staid	Measurement
New products	8.8	3.2	Percent of 2004 sales from new products introduced in previous three years. Average = 5.6%
Modified products	35	13	Average percent of 2004 sales from modified products introduced in previous three years. Average = 22.5%
Growth	+7	−10	Average annual percentage growth 2002–2004 (relative to industry average). Average growth = 6.8% per annum
Profit growth	+37	−13	Average annual percent change in ROE 2002–2004 (relative to industry average). Average = 0.5%

Between agile and staid companies there is a 50% profit difference.

Agile Companies exhibit superior Business Value relative to their industry groups.^[5][edit]

Agile companies are IT Savvy. An IT Savvy firm uses a digital platform to integrate a set of electronic business processes and the technologies, applications, and data supporting these processes. Managers in these companies elevate their firm's performance by a consistent use of IT. They use disciplined core processes and then apply the resulting data to both operational and strategic decision-making tasks.^[6]

Business Value – firms with above average IT spending & IT Savvy had net margins 20% above their industry's median
Profitability via sharing – firms with above average percentage of shared applications & it savvy have return on assets 30% above their industry's median
Time to market – firms with above average IT infrastructure spending & IT savvy grew 3 percentage points higher than their industry's average
IT-enabled business investments – top-performing companies (IT savvy) can get up to 40% more value

Agility-focused businesses have reduced IT costs[edit]

Weill and Broadbent's results show;^[7]

MIT has proven that IT departments that have a cost focus spend more and get less than those of an agility focus.^{[citation needed]}

The business-agile enterprise approach[edit]

A business-agile enterprise is an ongoing journey to a state of greater industry competitiveness. A B-AE strives to achieve larger degrees of agility to match their industry's competitive requirements rather than using a reorganization to improve competitiveness.

Technique[edit]

The B-AE is a top–down, business approach that summarizes in one place the joint business & IT elements necessary to compete.

It starts with the Business-Agile Proficiencies (B-AP). The B-APs measure agility (and therefore financial performance) across the Business-Agile Enterprise Framework (B-AEF).
The B-APs are driven down into the business-agile enterprise framework where the practical everyday requirements needed to conduct business are referenced, executed & measured.
The B-AEF requires two investments;
1. IT investments – e.g., service-oriented architecture infrastructure so stable and ubiquitous as to become a utility
2. Business technology investments – e.g., reuse policies and new roles such as the business service champion and the business service analyst
The B-AE Product Categorization Template is a work product of the B-AE Framework. It contains 190 "slots" that describe the execution environment of each of the 5 dimensions (information, organization, process, technology, reuse) within each of the capabilities (e.g., strategic & tactical governance, portfolio & program management, etc...). The filled-in template;
1. Identifies software, hardware, products & services that execute the particular capability
2. Identifies business & technology gaps
3. Shows business & technology redundancies
4. Highlights where acquisitions fit

Business-Agile Proficiencies[edit]

The B-APs are a set of ten (10) practices and competencies that define agility from a practical standpoint.

Business & IT Convergence (Asset Sharing & Mega-Alignment)
Competencies that drive Superior Value from IT (IT Savvy) ^[8]
IT portfolio asset class management (enterprise architecture)
Governance (direction, control & distributed authority for decision making)
Senior management leadership (management involvement)
Business control of information (intellectual capital & information visibility)
Business process understanding (component business modeling)
Business case (business value documentation throughout lifecycle)
Key business performance indicators (consistent & continuous benefits valuation)
External relationships (external assets, skills & competencies to act on opportunities)