Modular Operating Model for Strategy Agility

One of life’s real pleasures, is riding a motorcycle. The sense of freedom when it is just you, machine and the open road is something only sharing enthusiast would truly understand. Inspired, I recently completed a hobby project building the Lego Set 42063. The building blocks of this Technic model constructs the BMW R1200GS Adventure motorcycle, arguably the best allrounder, adapted to handle all road conditions. The same building blocks can also be used to build a futuristic flying scooter, or shall I call it a speedster in true Star Wars style… While building the model I was marvelled by the ingeniousness of the design and how the different components come together in a final product – fit for purpose today but easily adapted to be fit for future.

Lego-Technic-modular

This made me think about business agility – how can this modular approach be used within business. We know that SOA (Service Oriented Architecture) takes a modular approach in building adaptable software application and in the talk on “Structure Technology for Success – using SOA” I explained a modular approached to design a Service Orientated Organisation (SOO), to directly contribute to the business success.

Recently I’ve also written about how to construct a business Operating Models that delivers. Such an operating model aligns the business operations with the needs of it’s customers, while it provides the agility to continuously adapt to changes in this fast changing technological ecosystem we live in. An Operating Model that delivers, fit for purpose today but easy adaptable to be fit for the future, in other words – a Modular Operating Model.

As the environment for a company changes rapidly, static operating models lack the agility to respond. Successful companies are customer centric and embrace continuous innovation to enhance the ability of the organisation to re-design it’s operations. This requires an Operating Model that incorporates the agility to be responsive to changes in business strategy and customer needs. A modular operating model enables agility in business operations with a design that can respond to change by defining standard building blocks and how to dynamically combine them. Modular blocks (with the specific operational complexity contained) simplifies managing complexity. This reduces the time to produce a new operational outcome, irrespective of this being a new services, product or just an efficiency improvement within an existing value chain.  An example of applying modular thinking to a operational delivery methodology is covered in the blog post: “How to Innovate to stay Relevant”. In combining the core principles and benefits of three different delivery methodologies, Design Thinking, Lean Startup and Agile Scrum as modular building blocks, a delivery methodology are constructed that ensures rapid delivery of innovation into customer centric revenue channels while optimising the chances of success through continuous alignment with customer and market demand.

A modular operating model imbeds operational agility through the ability to use, re-use, plug and play different capabilities, processes and resources (building blocks) tech-TOMto easily produce new business outcomes without having to deal with the complexities which are already defined within the individual building blocks – just like a Lego set using the same set of standardised and pre-defined blocks to build completely different things. The focus is on re-using the blocks and not on the design of the blocks itself. Off course a lot of thinking has gone into the design of the different building blocks, but through re-using the same block designs, the model design time is focussed on a new/different outcome and not on a component of an outcome.

Designing modular capabilities, processes and resources that are used to design operating models have benefits not just in efficiencies and savings through economies of scale, but also in the reduction of time to market. These benefits are easier to accomplish in larger multi-divisional organisation with multiple operating models or organisations with complex operating models bringing together multiple organisations and different locations, where the re-use of modular operating model blocks bring demonstrable efficiencies.

 

WIP…

An Operating Model that Delivers

Every organisation that I have worked with around the world, whether it is in London, Johannesburg, Sydney, Singapore, Dallas, Kuala Lumpir, Las-Vegas, Nairobi or New York, there was always reference to a Target Operating Model (TOM) when business leaders spoke about business strategy and performance. Yes, the TOM – the ever eluding state of euphoria when all business operations work together in harmony to deliver the business vision… Sometime in the never reaching future.

Most business transformation programmes are focussed to deliver a target operating model – transforming the business by introducing a new way of working that better aligns the business offering with it’s customer’s changing expectation. Millions in business change budgets have been invested in TOM design projects and 1000s of people have worked in these TOM projects of which some have delivered against the promise.

With the TOM as the defined deliverable, the targeted operational state and the outcome of the business transformation programme, it is very important that the designed TOM are actually fit for purpose. The TOM also has to lend itself to be easily adjustable in order to contribute to the agility of an organisation. The way the business is operating must be able to adapt to an ever changing technology driven world. The quick evolving digital world is probably the main catalyst for transformation in organisations today – read “The Digital Transformation Necessity” for further insights…

Operating Model (OM)

The Operating Model uses key inputs from the Business Model and Strategy.

The Business Model focuses on the business’ customers, the associated product and service offerings – how the organisation creates value for it’s cliental – and the commercial proposition. Within the business model the business’s revenue streams and how those are contributing to the business value chain to generate profits, are decried. In other words, the Business Model envisages the What within the organisation.

Within the Business Strategy the plan to achieve specific goals are defined, as well as the metrics required to measure how successfully these are achieved. The business goals are achieved through the daily actions as defined within the Operating Model.

Typically an Operating Model takes the What from the Business Model in conjunction with the business strategy, and defines the Why, What, How, Who and With. It is the way in which the business model and strategy is executed by conducting the day to day business operations. Execution is key as no business can be successful by just having a business strategy, the execution of the operating model delivering the business strategy is the operative ingredient of success.

In order to document and describe how an organisation functions, the Operating model usually includes business capabilities and associated processes, the products and/or services being delivered, the roles and responsibilities of people within the business and how these are organised and governed within the business, the metrics defined to manage, monitor and control the performance of the organisation and then the underpinning Technology, Information Systems and Tools the business uses in delivering it’s services and/or products.

Analogy: A good analogy to describe the Operating Model is to compare it to the engine of F1 car. In 2016 the Mercedes Silver Arrow (the fastest car, driven by Lewis Hamilton (arguably the fastest driver), did not win because of engine and reliability problems. Instead the World Championship was won by Nico Rosberg, who had a better performing engine over the whole season. Nico benefited from a better operating model – he had the processes, data, systems and the people (including himself) to win. The mechanical failures that Lewis suffered, mostly not through fault of his own, were a result of failures somewhere within his operating model.

Target Operating Model (TOM)

The Target Operating Model (TOM) is a future state version of the Operating Model. To derive the TOM, the existing Operating Model is compared with the desired future state keeping the key aspects of an operating model in mind: Why, What, How, Where, Who and With. The TOM also cover two additional key aspects: the When & Where defined within the transformation programme to evolve from current to future states.

The difference between the “as is” Operating Model and the “to be” Target Operating Model, indicates the gap that the business must bridge in the execution of its Transformation Model/Strategy – the When and Where. To achieve the Target Operating Model usually require large transformation effort, executed as change & transformation programmes and projects.

ToBe (TOM) – AsIs (OM) = Transformation Model (TM)

Why >> Business Vision & Mission

What >> Business Model (Revenue channels through Products and Services – the Value Chain)

How >> Business Values & Processes & Metrics

Who >> Roles & Responsibilities (RACI)

With >> Tools, Technology and Information

Where & When >> Transformation Model/Strategy

Defining the TOM

A methodology to compile the Target Operating Model (TOM) is summarised by the three steps shown in the diagram below:

TOM Methodology
Inputs to the methodology:

  • Business Model
  • Business Strategy
  • Current Operating Model
  • Formaly documented information, processes, resource models, strategies, statistics, metrics…
  • Information gathered through interviews, meetings, workshops…

Methodology produces TOM Outputs:

  • Business capabilities and associated processes
  • Clearly defined and monetised catalogue of the products and/or services being delivered
  • Organisation structure indicating roles and responsibilities of people within the business and how these are organised and governed
  • Metrics specifically defined to manage, monitor and control the performance of the organisation
  • Underpinning Technology, Information Systems and Tools the business uses in delivering it’s services and/or products

The outputs from this methodology covers each key aspect needed for a TOM that will deliver on the desired business outcomes. Understanding these desired outcomes and the associated goals and milestones to achieve them, is hence a fundamental prerequisite in compiling a TOM.

To Conclude

An achievable Target Operating Model, that delivers, is dependant on the execution of an overall business transformation strategy that aligns the business’ vision, mission and strategy with a future desired state in which the business should function.

Part of the TOM is this Business Transformation Model that outlines the transformation programme plan, which functionally syncs the current with the future operating states. It also outlines the execution phases required to deliver the desired outcomes, in the right place at the right time, while having the agility to continuously adapt to changes.

Only if an organisation has a strategically aligned and agile Target Operating Model in place that can achieve this, is the business in a position to successfully navigate its journey to the benefits and value growth it desires.

renierbotha Ltd has a demonstrable track record of compiling and delivering visionary Target Operating Models.

If you know that your business has to transform to stay relevant – Get in touch!

Originally written by Renier Botha in 2016 when, as Managing Director, he was pivotal in delivering the TOM for Systems Powering Healthcare Ltd.

Top 10 Technology Trends Impacting Infrastructure & Operations for 2018

Does your IT strategy include infrastructure, operations (I&O) practices and data center architectures that are sufficient to meet the demands of the digital business. Digital transformation requires IT agility and velocity that outstrips classical architectures and practices.

David Cappuccio, from Gartner outlines the top 10 trends that will impact IT operations (I&O) in 2018. Each will have an impact on how IT operates, plans, enhances internal skill sets, and supports the business.

 

Guest Blog: Original Article @ Gartner

Outside forces will shape IT’s journey towards a digital infrastructure.

Legacy infrastructure and operations (I&O) practices and traditional data center architectures are not sufficient to meet the demands of the digital business. Digital transformation requires IT agility and velocity that outstrips classical architectures and practices.

In 2018, IT will be increasingly tasked with supporting complex, distributed applications using new technologies that are spread across systems in multiple locations, including on-premises data centers, the public cloud and hosting providers.

David Cappuccio, vice president and distinguished analyst at Gartner, says I&O leaders should focus on 10 key technologies and trends to support digital transformation.

“These are not necessarily the top 10 technologies, or the hottest trends in IT, but rather the 10 trends we feel will have an impact on I&O teams over the next few years,” says Cappuccio. “Some are happening already, some are just beginning, but each will have an impact on how IT operates, plans, enhances internal skill sets, and supports the business.”

Strategic

Trend 1: Geo Planning
Outside factors including the European Union’s General Data Protection Regulation (GDPR), geo specific workloads and global and regional network access are driving IT to spend more time on geo planning as part of their longer term strategies. The long term objective is not to own a global infrastructure, but to build the infrastructure needed to support the business via partners, as well as leveraging an organization’s partner’s infrastructure to help support initiatives such as multiple network connections and infrastructure design and support.

Trend 2: The Intelligent Edge
Many digital business projects create data that can be processed more efficiently when the computing power is close to the thing or person generating it. Edge computing solutions address this need for localized computing power. For example, in the context of the Internet of Things (IoT), the sources of data generation are usually things with sensors or embedded devices. The intelligent edge serves as the decentralized extension of the campus networks, cellular networks, data center networks or the cloud. Organizations that have embarked on a digital business journey have realized that a more decentralized approach is required to address digital business infrastructure requirements.

Trend 3: Intent-based Networking (IBNS)
Gartner predicts that by 2020, more than 1,000 large enterprises will use intent-based networking systems in production, up from less than 50 today. Intent-based networking (IBNS) is not a product, or a market. Instead, it is a piece of networking software that helps to plan, design and implement/operate networks that can improve network availability and agility, which becomes increasingly important as organizations transition towards digital business.

With IBNS, rather than explicitly defining to the network what needs to be done, the software translates the business intent to determine the “correctness” of the network configuration before deployment. The system then continuously compares the actual and desired state of the running network.

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Tactical

Trend 4: APIs – Integration Economy
A digital business is supported by technology platforms in five areas: information systems; customer experience; data and analytics; IoT; and ecosystems. The ecosystems technology platform supports the creation of, and connection to, external ecosystems, marketplaces and communities. Application performance interface (API) management enables the digital platform to function.

Organizations should design APIs from the “outside in,” based on ecosystem requirements, not “inside out,” based on existing applications or technology infrastructure. “Ensure that your organization takes an ‘API first’ approach, designing APIs based on the requirements of your organization’s ecosystem,” says Cappuccio. “APIs designed in this way can be mapped to internal technology infrastructure. This approach is more effective than simply generating APIs based on existing infrastructure and data models.”

Trend 5: Reputation and Digital Experience
There are two interlinked trends impacting business today that have nothing to do with IT infrastructure, but everything to do with infrastructure design. Digital experience management (DEM) is the impact of presenting the right digital experience to customers. The experience could be mobile or web-based, and should be always available, continually improving and perform quickly and consistently. If any of these tenants are lacking, customer satisfaction is in peril. If customer satisfaction is in peril, especially in today’s social media savvy world, corporate reputation could quickly be damaged.

Trend 6: Beyond Traditional IT – New Realities
Business units are demanding agility, in opening new markets, taking on emerging competitors, bringing in new suppliers, and creating innovative ways of interacting with customers. Over 30% of current IT spend is not part of the IT budget, but overall responsibility for supporting these new initiatives, once they are tested and stabilized, will reside with traditional IT. Managing those new providers, managing workflows and managing new types of assets in this hybrid environment, regardless of where they are located, will become crucial to IT’s success.

Operational

Trend 7: DCaaS as a Strategy
In a perfect world, at least from the perspective of many business leaders, IT and the data center would be essentially a very agile provider of service outcomes, rather than the owner of the infrastructure. To do this organizations are creating a data center as a service (DCaaS) model, where the role of IT and the data center is to deliver the right service, at the right pace, from the right provider, at the right price.

“Making key short-term decisions can lead to a long-term strategy that incorporates the best of ‘as a service’ and the cloud without compromising IT’s overall goals to both protect and enable the business,” says Cappuccio. “In this manner, IT can enable the use of cloud services across the business, but with a focus on picking the right service, at the right time, from the right provider, and in such a way that underlying IT service and support does not get compromised.”

Trend 8: Cautious Cloud Adoption
For many enterprises the journey to the cloud is a slow, controlled process. Colocation and hosting providers have established private or shared clouds on their premises to provide customers some basic cloud services, enabling controlled migrations, staff skills training and a “safe” cloud environment as a stepping stone to increased cloud adoption in the future. As customers get comfortable with these services and costs, increased migrations to external providers are enabled via interconnect services. Using this partner ecosystem to enable an agile infrastructure is a rapidly emerging trend.

Trend 9: Capacity Optimization – Everywhere
Organizations need to focus on optimizing capacity and guard against stranded capacity – things that are paid for, but not really being used. This issue can be found both in existing on premise data centers and in the cloud. A change in culture is needed to fix this problem. Organizations must learn to focus not just on uptime and availability, but also on capacity, utilization and density. Doing so can extend the life of an existing data center and reduce operating expenditures from cloud providers.

Trend 10: Extended Infrastructure Management
The data center as the sole source of IT infrastructure has given way to a hybrid of on-premises, colocation, hosting, and public and private cloud solutions. These elements are being combined with a focus on providing business-enabling services and outcomes, rather than a focus on physical infrastructure. Enterprises must apply a future-looking, enterprise-wide “steady hand” to IT strategy and planning, and apply appropriate guardrails, or face the possibility of losing relevance, governance and enterprise agility.