Why Agility Fails – is a Digital Platform the answer?

11 September 2019

Why Agility Fails – is a Digital Platform the answer?

Companies are striving to be more agile in a fast-moving digital world. Yet research from McKinsey & Henley Business School finds that resulting complexity due to existing legacy systems reduces agility.

A major reason for this complexity is that it takes time to re-engineer the legacy systems built up over many years or decades in an organisation. To add new digital functionality quickly, the survey found that one approach is to make more point-to-point connections. This encourages a spaghetti-like structure which makes further changes more difficult.[1] Just like excessive financial debt, this technical debt can be a heavy load in an organisation. The complexity also adds risk and given the pervasive impact of digital on customers and products, the top team need to address this as a governance issue. It is a key step towards Digital Leadership.

The McKinsey & Henley survey found that Digital Leaders had significantly fewer interfaces on average. Our assessment is that these organisations are more effective in creating streamlined digital platforms designed for agility. These platforms also align with increased modularity and greater re-use of services. It requires strong architectural capability and business engagement to create the environment for a balanced digital platform.

An Intellectual Property Office case review reinforces the business, design and stakeholder success factors. The new IPO digital platform was a big investment hence the investment had to be tied to strategic benefits. Executives were walked through an on-line demonstration of how the business processes would be redesigned in a digital environment. Architecturally, the digital platform was built using design principles to reduce complexity and increase agility. The CTO has confirmed that this is already delivering substantial financial and customer benefits. Now, the IPO goal is to evolve digital functionality on the platform to ensure that it is fit for purpose for the next decade.

Not every company needs or can afford to do a complete replacement of existing systems. An alternative is to classify business processes and technologies offering a differentiating impact in contrast to those needing to be operationally robust. This leads to a hybrid architecture that has platforms either optimised for customer experience or for transactions requiring scalability and resilience. [2]

Whichever route is taken, a short-term emphasis will not deliver sustained agility and a robust digital platform for the next decade. A strategic decision is needed at the top level with strong guiding principles and execution.

(with acknowledgement and thanks to Dr Oliver Bossert, McKinsey and Mike Fishwick, CTOIPO)

[1] https://www.mckinsey.com/busin…

[2] https://www.mckinsey.com/busin…