Successful organizations today are agile. And in fact, as we argued previously, it’s necessary for your survival. But agility needs a catalyst – and that powerful catalyst is software, which plays a major role in how enterprises can increase their agility by responding to and setting new market conditions.
But first, let’s get into definitions: what is agile?
The concept of agile implies nimbleness, speed and rapid thinking. As software becomes a more relevant component of the enterprise strategy, organizations have embraced the precepts of agile development—a way of creating software quicker and in response to feedback and changes from customers in real-time or near real-time.
We’ve identified four specific characteristics of agile, software-enabled organizations.
1. They treat their products like software
Software products are launched to the market under the assumption that they are imperfect and they will change and improve over time. But until recently, the paradigm of releasing less-than-perfect products to the market, with the notion of improving them later, was hard to conceive for any product other than software.
In the car industry, for example, once a new car was launched to the market, it was destined to keep the same capabilities and features as when it came out of the dealership for the rest of its life.
Tesla is changing this paradigm. Virtually every aspect of Tesla’s Model S functionality, from climate control to the suspension, is governed by software. As stated on Tesla’s website:
“Model S regularly receives over-the-air software updates that add new features and functionality.”
Tesla has conceived its cars with a software product mindset. Each car is released to the market with the assumption that it will be constantly upgraded.
2. They use software as a critical component of their business strategy and product offerings
Agile companies use software, in conjunction with their physical products, to enhance these products and operations. And no company represents this more powerfully than General Electric, which has embraced software wholeheartedly.
Marco Annunziata, Chief Economist at GE, said, “We’re no longer selling customers just a jet engine, a locomotive, or a wind turbine; we’re bringing data and actionable solutions along with the hardware to reduce costs and improve performance.”
3. They use software as a thin layer between themselves and their customers, employees and partners
In March 2015, Tom Goodwin famously wrote: “Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content…and Airbnb, the world’s largest accommodation provider, owns no real estate. Something interesting is happening.”
What’s happening is the proliferation of the software interface as the cornerstone for growth. Companies like Uber or Airbnb sell tangible products and services, and while software is not their product, it is the vehicle they use for accelerated growth. They use software as the ultimate interface between buyers and sellers; or as Goodwin explains: “These companies are indescribably thin layers that sit on top of vast supply systems (where the costs are) and interface with a huge number of people (where the money is).”
Think of a bank’s digital interface with its clients. Its app or website is a single point of entry to everything the bank has to offer, or at least that is the expectation of the customer. Through digital interfaces the customer will find the right products, open accounts, request lines of credit, pay services or transfer money.
4. They use big data and analytics to improve their performance
As of 2012, about 2.5 exabytes of data are created everyday, a number that is doubling about every 40 months. And until recently, this data was just piling up with nowhere to go – until companies started adding analytics to provide rich market and operational insights to improve their performance.
In 2001 airline data company PASSUR Aerospace started helping airlines increase the accuracy of their airport ETAs using publicly available data such as weather, flight schedules, combined with proprietary data feeds from a network of passive radar stations to help it gather information about every plane in the local sky.
With these capabilities they provided more accurate ETAs to a major U.S. airline who had found that around 10% of its flights into its major hub had at least a 10-minute gap, and that 30% had at least a 5-minute gap. Using PASSUR’s services they virtually eliminated the gaps between estimated time of arrival and actual arrivals, a benefit PASSUR believes is worth millions of dollars a year for airlines.
How to Become a Software-Minded Organization
Transforming your company from the way you’ve traditionally operated (sometimes for the last 40-50 years) to becoming an agile enterprise is indeed a challenge, but we believe it is essential for your survival as a viable business concern.
Many organizations try to take this on themselves, but it’s a long, hard road often fraught with quicksand and booby traps. Softtek helps companies achieve this kind of transformation quicker and avoid wasted cycles spent on trial and error. Learn more about our business IT Transformation Consulting expertise, Softtek’s newly-announced partnership with GE, or check out my complete e-book, Embracing Enterprise Agility, for more examples of success cases.
