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Agility—What Is It? In a recent UtiliPoint International benchmark of IT organizations in the North American power marketing industry, an interesting adjective began to emerge. IT Directors and CIOs alike began to use the term “agile” to describe how their staffs were working to solve business issues. Several directors mentioned that their staffs were working “shoulder-to-shoulder” with wholesale traders, power marketing managers and retail organizations in order to satisfy their ever-changing business requirements in a near “real-time” mode. In the July 2004 issue of Electric Light and Power, editor Ted Pollock writes, "It's hard to adjust to change, for we are all the willing victims of inertia. We feel comfortable with the status quo because we're used to it. If something new (technologies, government regulations, reorganizations, etc.) comes along that threatens to rock the boat, we view it with suspicion and, sometimes, hostility. Yet change is a condition of life, the only thing that has brought progress. And, the truth of the matter is, the rate of change itself is accelerating." Jim Kensok, CIO for Avista Utilities, a provider of electric and natural gas service, speaks of agility: "We continue our steady growth and enjoy the flexibility to use technology that keeps us efficient and agile, and helps us provide the quality service our customers have grown to expect." The 2003 joint press release about an agreement with EDS goes on to say, "The 'On Demand' delivery model, focused on agility, is structured to adapt to the sometimes rapid changes in Avista's business environment. This agreement provides Avista with the ability to quickly deploy resources 'on demand' to emerging projects and to adjust priorities to meet its current and future business needs." Other Industries Have Adopted Agility Agility is the mantra in the manufacturing sector today. That industry got the wakeup call in the nineties when Japan's Lean manufacturing initiatives raised the bar with higher quality and lower costs simultaneously. While scrambling to follow behind the Japanese, U.S. manufacturers also realized that agility would be the next competitive battleground. To get a jump on understanding how to be more agile, hundreds of organizations and thousands of managers worked in collaborative groups at what was originally called the Agility Forum, creating new knowledge about the impact and sources of change, and eventually, what to do about it. These new understandings created new business strategies and priorities and a demand for new business processes, business practices, and enabling technologies. The result is today's interest in outsourcing, virtual enterprise, web services, service oriented architectures, real-time enterprise, transparent enterprise, on-demand services, commercial off-the-shelf (COTS) applications ... to scratch the surface. Every organization in every business sector has some areas where it already deals with change somewhat effectively. Examples in the energy and utility sector include: real-time monitoring and control, outsourcing business processes that benefit from economies of scale and/or process improvement, and risk management practices. Fundamentally, agility is a reality issue. Things have always been changing, and organizations have always had to cope with change, but the pace and breadth of change have exceeded the response methods that once worked. Coping with too much change places organizational viability under threat, and postpones innovation programs. Reality Hurts Sometimes Reality is not always a friend to companies, and the energy and utility sector is not immune. New regulation and compliance rules impatiently mandate faster response with higher frequency and further reaching implications. The pace of new and useful technology has exceeded effective decision making and implementation resources. Systems that support asset management, engineering, customer care, and service operations have grown in complexity and integration difficulties. Information technology projects regularly overrun costs, exceed deadlines, and fail to meet performance expectations. Security threat and vulnerability are increasing in both frequency and damage potential, exceeding responsible risk limits and effective response capabilities. Merger and acquisition benefit expectations are outpaced by cultural and technological integration complexities. Customer and regulator expectations, molded by experiences with Internet business models, advances in product and service quality, and innovative personalized services in other sectors, are more demanding and more informed. What is driving agility into the energy and utility sector are the same general issues that faced the manufacturing sector. The details, priorities, and migration strategies are surely different, but the basic needs and values are universal. Maintaining viable business health in the face of increasing unpredictable change is the reactive aspect. Innovative leadership in strategy, business process, product, and service is the proactive aspect. An illuminating survey taken in 1995 of top executives at 212 manufacturers found and ranked 45 strategic issues associated with agility (see essay #17). Most of their issues appear timeless, and many would likely find close resonance in the energy and utility sector if a similar survey were taken today. The energy and utility sector would undoubtedly include additional issues specific to regulatory influences, asset management, enterprise information technology, and the new compliance and security environments. The energy and utility sector can leverage both the understandings developed by the manufacturing sector and the enabling technologies that have come as a result. But that doesn't mean that everything right for manufactures is right for energy and utility companies, just as everything right for one manufacturer is not right for others. Agility deals with reality, and reality is defined very specifically and individually for each industrial sector and for each organization within those sectors. Reality establishes limits, both constraining and enabling. Reality issues for the energy and utility sector include the regional business environment, governing regulatory bodies, the organizational culture and behaviors of employees and management, current skill sets and human resources, in-place assets, financial resources, customer base, existing services and products, location-based disaster potential, exposure as a security target, physical asset distribution, supply sources and prices, partners and alliances, risk policies, and in-place legacy information systems. Some of these are, in theory, under internal control, and some are external and beyond control. Being agile doesn't mean being in control. It means having a controlled response ability to deal effectively with things that are beyond control—whether internal or external, whether opportunity or necessity. Response ability is obtained through culture and structure. The structural aspect employs what we call an RRS response architecture: Reconfigurable systems of Reusable modules in a Scalable framework. The cultural aspect employs Change Proficiency as an organizational competency: knowing how to manage a response quickly (time), affordably (cost), predictably (quality), and with sufficient range of variability (scope). Structure and Response Ability Examples:
Culture and Response Ability Examples:
Response ability alone does not make an organization agile. It is necessary, but it is only a capability. In order for that capability to be employed effectively there are two more necessary elements: timely knowledge management and decisive value propositioning. These, too, will be explored here in this continuing series. For example, agility is a word we often associate with cats. When we say a cat is agile we observe that it is both physically adept at movement and also mentally adept at choosing useful movement appropriate for the situation. Agile carries with it the elements of timeliness and grace and purpose and benefit as well as nimbleness. A cat that simply has the ability to move quickly, but moves inappropriately and to no gain might be called reactionary, spastic, or confused, but never agile. Picture a cat on a hot tin roof. Conversely, a cat that knows what should be done but finds itself unable to move might be called afraid, catatonic, or paralyzed, but never agile. Like the cat that's got itself up a tree. Agility fundamentally means confronting reality, in the business environment, in human behavior, and in technological infrastructure. This new fundamental view was not factored into earlier techno-centric understandings of agility. As the energy and utility sector migrates to agile business processes and practices, this perspective, building on the knowledge developed by the manufacturing sector, can avoid false starts and short-cut the process. ------------- References and sources for more information -----------------------
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©2004 RKDove
- Attributed Copies Permitted - Essay #064 -
First Published as Utility Agility - What Is It, IssueAlert® |
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