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Agile Means Profitable

Blog: Capgemini CTO Blog

A Capgemini ad asks the question: “What good is an ERP solution if it doesn’t increase profitability?” The answer is: “Not very good, and also not very agile.”

The Capgemini SAP implementation framework — Captivate — leverages agile and lean principles. A good example is our Design by Acception® (DbA) approach. This approach says that the best way to improve a process is to focus on the relatively few areas of inefficiency (or “waste,” in lean jargon) and fix those areas rather than try to reinvent the whole wheel. In agile SAP we do that by working one “acception” or sprint at a time, each time modifying a piece of “out of the box” standard code to satisfy a specific customer requirement that the standard code doesn’t fully address.

But ultimately our customers are in business to make a profit, not cut costs. And making operations more efficient is just one way to boost profits. The other way is to increase the amount of money coming into the business in the first place. As agile consultants we can’t just focus on optimizing value streams. Agile also provides the opportunity to increase the number of value streams and also the volume of money flowing through them.

Agile’s take-it-one-step-at-a-time approach is actually ideal for boosting revenues since not all parts of a business have an equal impact on revenues. In fact, usually it’s just a few and those few typically have a disproportionate impact. So what are those “acceptional” areas agile teams should look at to boost revenue? I would suggest three:

More Business

There are typically three ways to bring in significant new business: adding new lines of business, entering new markets with the businesses you already have, and also increasing the value propositions within those businesses. All three methods generally become more achievable as a company becomes more digitized. Something as simple as allowing marketing staff to redesign, on their own, product order forms — without asking for IT’s help — or to publish the same order form in different languages could make it easier to enter new markets or introduce new products. Simple code “fixes” like this might not even occur to a customer if the customer doesn’t know that such changes are possible. Nor are they likely to surface in a waterfall project if they were not baked into the original design spec. But they might make an ideal subject for an agile white boarding session or a sprint.

More Delight

ERP systems are at the heart of what people experience when they interact with a company — how they order products and services, how they receive those products and services, how well customer support is provided, how vendors get paid — and much more. Just because something performs functionally as required, even if very efficiently, does not necessarily mean it’s a great experience. Again, agile is ideally suited to address issues around usability and customer experience. That’s because agile consultants don’t just — as typically happens in waterfall — implement code to spec and then move on to the next item in the backlog without first meeting with users and stakeholders to see how they like the deliverable. In fact, part of the requirements of a sprint is to produce a deliverable that is working and demonstrable. That gives users and stakeholders an opportunity to gauge the experience beyond just whether the function works. And since users and stakeholders can gauge the experience, the consulting team should encourage them to do so.

More Innovation

When you hear the words, “This is a game changer,” it usually means someone has come up with a new and better way to solve an important problem, maybe even a problem most people didn’t know they had until the solution was put in front of them. Office copiers and iPhones are examples of that. True innovation is the secret sauce that nurtures the highest margins and the biggest profits.

This is another area where agile beats waterfall. Innovation is not something that occurs on a predictable schedule. It doesn’t always occur at the start of a project or before a project starts. Creative sparks can ignite at any time over the course of a project. And they are more likely to ignite when people get to see — and respond to — the finished product as it evolves over time. People don’t know what they don’t know — maybe not until they start seeing what the finished product will look like in action. Agile development gives them that chance. It is then that they are more likely to ask the kind of “what if” questions that can prompt innovative ideas or expose roadblocks that require further innovation.

None of these three areas — more business, more delight, or more innovation — is necessarily about cutting out waste or streamlining a value stream. If demand for your product or service is high enough you can afford to be inefficient and still make a lot of money. Agile development offers many opportunities to identify and exploit these profitable pockets of opportunity. So let’s not overlook them.



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