What is blocking your progress towards increased Business Agility? | Human Capital | Deloitte Netherlands


What is blocking your progress towards increased business agility?

Business agility transformations cannot accelerate fully without tackling ‘burdens from the past’ that reside in ‘technical and organizational debt’

We see an undisputed urgency for organizations to adopt business agility, yet many are succeeding very slowly. The Deloitte 2020 Global Technology Leadership Study reveals that much work remains in extending agility beyond software development and into the business: Not even half (42 percent) of tech vanguards and only 14 percent of baseline organizations are embracing Agile across the enterprise.

Two often overlooked blockers towards enterprise wide Agility are technical and organizational debt. As with financial debt, these are costly burdens that impact organizational performance. Financial debt is made explicitly visible on the balance sheet. Technical and organizational debt, although at least as important, are not shown and therefor escape the much needed attention. In this first blog post we look at the nature of technical and organization debt and how it is restraining organizations in their ambitions to deliver better customer value by business agility. Our next blog describes the consequences of ignoring tech and org debt, and the third post will look at impactful ways to start tackling debt.

When asked about a year ago, pre-COVID-19, how successful organizations have been in achieving benefits through working agile at large scale, a vast majority of respondents (84%) said their organizations were below a high level of competency with agile practices, according to the 14th Annual State of Agile Report. Similar findings from the 2020 Business Agility Institute Report indicate organizational complexity is one of the major impediments to business agility adoption.

Regardless of the lower levels of confidence, there seems a highly consistent view on the benefits of business agility. 70% of the respondents to the Digital AI survey listed as the number one benefit ‘the ability to manage changing priorities’. Other benefits listed in the top 5 are: increased revenue, market share and brand recognition, faster turnaround times, higher quality offerings, improved relationships with customers, greater transparency, and higher employee engagement.

Despite the fact that since COVID-19 there is an even stronger and commonly shared sense of urgency around the need for accelerating business agility, for many organizations something seems to make acceleration cumbersome. The 14th Annual State of Agile Report highlights that more than 50% of the responding companies is already practicing Agile methods for over 3 years. This helps to achieve initial business agility benefits in the area of project visibility, business IT alignment, increased delivery speed and even team morale. However, only 5% of organizations say their agile practices are actually enabling greater organizational adaptability as the key benefit. In our experience this low percentage can be explained by looking into organizational and technical debt. One or the other or in combination, these have a substantial impact on the progress that organizations make and the effort required to increase their business agility.

Insight 1: Even though we see the market strongly aligned around the key benefits of business agility, even more so since COVID-19, the pace of adopting it at larger scale in organizations is low, and requires enormous effort and persistence. The ultimate benefit of business agility to manage changing priorities and enabling greater organizational adaptability is rarely achieved because of the blocking effect of organizational and technical debt.

To actually achieve organizational adaptability at larger scale, bigger and slower moving aspects need to be set in motion. Two of the major aspects we see often being ignored, or consciously de-scoped from agile and digital transformation initiatives, are removing outdated technology and redesign of organizational structures. For technology we are referring to systems, but also software code that have never properly been replaced or removed. This is also known as ‘technical debt’. When this debt increases, the IT landscape becomes too complex and rigid. When these often monolithic IT systems were designed and implemented the need for frequent changes due to customer needs was less relevant. Main design principles at that time focused on stability instead of agility, e.g. support two major releases in a year and ensure business continuity while upgrading. Compare this to modern systems and development processes that allow for near instant changes to be implemented without losing stability. In most cases technology debt cannot be repaired easily but require replacement or, at least, significant re-engineering of the complex IT landscape.

‘Organizational debt’ on the other hand indicates outdated and/or inefficient organizational structures. It refers to roles, processes, rules and organizational layers that no longer serve an organization . This burden grows over time if roles or process steps or management layers are added ‘every time something goes wrong’. This results in rigid, complex bureaucratic structures, with duplications of roles, inefficient processes (gradually too many steps added), and frustration over complex reporting lines and lack of transparency in decision right and formal authority. When left unattended technology and organizational debt hinder speed (time to market), security, quality and even impact employee engagement in multiple ways. Technical and organizational debt acts like a ‘hand break’ on the acceleration of business agility.
Organizational and technical debt are caused by inefficiencies left unaddressed, that have grown over time at all levels in an organization. From lacking clarity on strategic accountability for systems and the overall IT landscape, to insufficient developer discipline to write 'clean code' that reduces rework and burden on maintenance of systems once software functionality is used by end-users. The same applies to organizational debt that piles up when roles are added fairly ad hoc, or spans of control are applied too wide (too many direct reports) or too narrow (too few direct reports), outside the overarching sizing guidelines for optimal spans of control and organizational layers. That is how inconsistency, and inefficiency creep in, and if not looked after with a more holistic view regularly, systems, organizational structures and processes become incredibly complex and highly rigid (inflexible).

As these examples illustrate technical debt and organizational debt appear as consequences of choices made and behaviour at every level in an organization; from the strategic level where decisions are made on the business cases for changes in the IT landscape, to the operational level where developers are writing code that varies from ‘clean’ (little maintenance) to code that is hard to read, complex and costly to fix/maintain.

This is our first blog on how technical and organizational debt are blocking the Business Agility journey. Want to learn more on this topic and specifically on the symptoms and implications? Read our next blog. In the final blog we will share some practical insights to start tackling your organizational and technical debt.

Insight 2: Organizational debt and technical debt have led to IT landscapes and organizational structures that are complex, inflexible and inefficient, making collaboration complex, and making it difficult to keep up with the pace of change in the marketplace. These 'burdens from the past’ result in blockers for change, impacting the time to market and the bottom line.


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