Courtesy of Software AG's Dr. Ulrich Kalex, below is a transcript of his speaking session on 'Strategy execution for the agile enterprise – be a digital business faster' to Build a Thriving Enterprise that took place at Enterprise Architecture Live Virtual Conference.
Strategy execution for the agile enterprise – be a digital business faster
IT executives have the mandate to ensure digital transformation happens – fast. They know agility is core to digital business success and are implementing Agile approaches such as SAFe, Scrum, Kanban and DevOps to enable IT to deliver products in ever shorter release cycles.
However, IT executives in large organizations are finding it difficult to keep agile development in line with the overall direction,plans and strategy of the organization. There needs to be a bi-lateral exchange between strategists and Lean product managers or there will be a cleft between how digital strategy is defined and what development teams work on. If not addressed, the cleft grows larger leading to poor Agile execution and uninformed decisions on strategy.
Speed-to-market is hampered, digital transformation loses intensity and sustainability, customer desires aren’t fulfilled and the company’s competitive edge is lost. Strategic portfolio management (SPM) integrates strategy management with Lean portfolio management and the feature portfolio on a collaborative platform so that all involved stakeholders see one source of truth and perform their planning and operational activities in the context of the (changing) business strategy.
Find out in this session how SPM can ensure your company’s success in rapidly becoming a competitive player in digital business.
Directly from Berlin, Germany, I would like to welcome doctor urge calix. Doctor. is the senior vice-president of product line management and R&D for software AG. He's responsible for the strategy, roadmap, and execution of development of the Alphabet product. Under doctor Calyx leadership, Alphabet has contribute significantly to defining, shaping the market for enterprise architecture, and the strategic IT planning and portfolio management.
Since alphabet's introduction to the Market as a standard software platform, it has been recognized as a leader in Analysts' reports, such as a Gartner Magic Quadrant and Forrester Wave.
Doctor Calyx is a real honor and pleasure to have you here with us today, and we're very much looking forward to your presentation and insights to be shared with our global audience.
Thanks for the warm welcome, Jose, and thank you all for joining us in this session today, And, it's a true pleasure for me to share some thoughts with you around the relevance, for enterprise architecture, to take agile to an enterprise level, and to facilitate strategy execution.
So, we all know how important digital transformation, S ah.
And ah um, of course, one aspect that is very important in this context is companies that are excelling in digital transformation, take a bigger piece of the pie.
Um, we also can see that at the time of the economic squeeze, resulting from corvid 19, companies have made an adjustment to their budgets and investments across the board.
The one area that really seemed to stand out is that the investments into digital transformation haven't really gone down.
Now, it isn't enough to just make investments.
What we can see from the figures that are on the slide here, is that you need to make the investments the right way.
Only a meager 16% of executives see their organizations.
Succeeding vit their digital transformation efforts, 72% of strategists see that, those digital transformations on yielding the results that everyone had hoped for.
And when we look at what the findings are, we can see that the organizations lak sharing of understanding, lack, that common song sheet that is required for transformational initiatives, such as the digital ones to be successful.
And this isn't really something that we can push out.
It is something that needs to be done now.
And one of the reasons is shown here on the slide, which is, over the course of the last 40 or so years, we have seen a very steep decline in lifespan of companies. And it's been exemplified with the S&P 500 index, but we could use other measures much the same way.
So it is very obvious that disruption is resulting in a reduction off viability of companies that exist in the market.
Disruptions like venal takes all.
So we know this all too very well from the software industry, but we now see this also in other industries where digital is being used to try to disrupt traditional business models.
We also see that brand building he is more and more associated with those digital products and services dead customers are flocking to.
And that gif, even new entrants, this nimbleness, all faith first mover, and that will build loyal customer base very, very quickly.
Customer service, customer care.
customer experience is at the heart of everything we're doing. Wait.
The digital products and services.
It's at the center of the digital paradigm itself, and, digital is an accelerator in differentiation, And what, 10, 15 years ago, nobody would have seen as relevant aspects in the interaction, and collaborations with customers has now taken a center seat.
Now, what are the challenges that we find ourselves did in executing our digital strategy?
Those challenges are by and large challenges in collaboration, in information sharing.
In connecting, still, the disconnect between the business strategists and the Agile change agents, they live in totally different, totally segregated, territory's off the enterprise oftentimes.
Lack of sharing of information between those digital leaders and. the planners is another characteristic that we find.
And then thirdly, it is a lack of transparency and insight between the digital product owners.
On the one hand, they have more of a business view to the world and the architects, and here we are right at the heart of enterprise architecture.
So, when we look at how organizations are approaching agile, the find many of them, still in a situation like this, klima.
So there's this strong understanding of entrepreneurship, leaving, cite the need for governance across agile development and product management.
There are stairs.
Adopting the Agile development methodology.
But not realizing how these need to be grounded in the business and IT strategy.
So, the Agile teams, half, perhaps, too much of autonomy in what they are doing, they are not enough connected to business and IT strategy.
There's a lot of knowledge and experience that has been gained in the Agile teams, spidey, Agile product managers, our Scrum Masters, and developers.
Yet, this is knowledge that sits, and resides, and stays within the contains of the team.
There's no mechanism available that would allow this experience and knowledge to be elevated into the conversation of business strategy.
Then, of course, The belief that everything can be done with spreadsheets.
We've always been doing this with spreadsheets.
We know the technology, but the co-ordination of strategy and execution requires more.
The consequences of this narrowness in mindset of this lack in going across the barriers and boundaries of silos is we are all too likely to be displaced by these new and nimble entrance which have this innovative and customer focused Approach, two, the market and the necessities and needs of the market.
Being locked out from those new and dynamic market segments that come with higher margins: with better growth potential, a bit better up and cross sell capabilities.
And last, but certainly not least, the reduction in margins is also making for much less attractive or lucrative investments.
So management ville not be as excited about the prospects that these investments portray to them.
So when we look at what can be done, then the need for tieing strategy and execution takes a very dominant precision.
And this, in this tying of strategy and execution, it is really the establishment of the feedback loop between planning and delivery that is needed here.
And, in this context, the portfolio management topic ant that V it helps providing transparency across the entire strategic product life cycle, is called out for its importance. And this is a quote here from a recent Forrester Research.
So, now, what are the different elements that make up for this successful journey?
two, strategic portfolio management, quoting Agile Enterprise, First Steps four, disciplines that we see as being core business strategy planning. So as to articulating what is important, where do we want to?
Strategic portfolio management to understand which are the digital products and services we should be investing into.
The Lean portfolio management, to manage the IT value chain of delivery.
And then the Agile Financial Management to make sure that the right guardrails are in place for the delivery of these digital products and services.
Come to it.
The concept of scaling Agile, to the enterprise level, which isn't the first time.
So organizations have gotten this, that we already, so you should be able to benefit from beer experience.
And the way to benefit from their experience is to look at Agile scale frameworks.
The topic of road mapping, as the predominant means of communication across the many different, still saturated teams that are part of this journey that are contributing to the digital transformation.
And then, a very strong integration foundation that can make sure that the ecosystem data from the many different, relevant management solutions can come together, and can be leveraged to the better of the digital transformation.
So, let us take a zoom into the Lean portfolio management topic.
The LEl portfolio management topic brings together agile investment funding, agile portfolio operations, and governance.
And it's been done through three strong LACs in the organization.
one is what we call the enterprise teams.
The enterprise teams have responsibility to balance the strategy.
To balance the strategic themes to understand which of strategic themes gives, give us the best movement towards the long term business outcomes that we are aspiring to.
They allow aligning the plan to the overall business strategy.
They understand the impact of change, because much like anything else in life, business strategy isn't static.
It does evolve. It need to reflect movements of competitors, new entrants, new opportunities or whatsoever.
So, how do we work in that impact of change into our overall approach to delivery?
The second lack, the second set of teams, is what we call the portfolio teams.
The portfolio teams are responsible for the funnel.
They are managing the flow of epics into the product delivery, securing the outcomes of strategic themes.
So, they typically gravitate to one strategic theme.
They typically are responsible to manage the resources and budgets, assigned, or allocate it to the strategic team.
And they will ensure that there is a solid cadence of delivery for the digital products and services associated with the strategically.
And then thirdly, we have the product teams.
The product teams operate on the features, on the backlog.
They are focused on one specific product or service, or maybe, in certain situations, a small number.
Their responsibility is to make sure delivery happens, to make sure the outcomes are rolling into place.
They take techniques and methodologies, like the Kanban Board to provide for a continuous delivery pipeline.
And, of course, all this need to be orchestrated, and the orchestration of this is what typically it's been referred to as scaling Agile, to enterprise.
Because, Agile, historically, is kind of a self discipline of those product teams that I just mentioned on the previous slide.
So, how do you scale this to an enterprise rate hundred?
Thousands, contributors, if 10000 contributors, maybe even only a thousand contributors, This is a very significant undertaking, and methodologies, such as Save, have come into existence to help organizations take away the headaches related to the introduction off, such an agile enterprise paradigm.
And at the core, we have that cycle, the terns Enterprise Strategy into deliveries in two metrics that can measure attainment of Enterprise Strategy, which is being translated into strategic themes, and Lean Portfolio budgets.
But it's also there, **** leal that is driving the translation process into the delivery organization.
That is determining what should Babu, up in the backlog, virtue of epics, are the ones that are most valuable to the organization, because they give the best support to our strategic theme or themes.
And how do these translate into features that we can channel into the various product backlogs?
They're all contributing to the overall attainment of our strategic theme.
A central seat for this, the point of gravity for this, is enterprise architecture.
So, enterprise architecture has a critical role to play for the Agile product management and product architecture, because persuing Agile, from the vantage point of Enterprise Architecture, enables for an agile architecture, which means it isn't all set in stone.
The architecture gives us the freedom to evolve into the future.
The architecture is used to delineate the digital products and services.
And this is critical in situations where you are not just building new products and services, because that you're not just building new products and services all the time, but really when you come to understanding that you need to extend, and hence append, your digital product and services, which are the ones that you should be making this addition wait.
Architecture will help you finding the decisions to these questions.
The integrated portfolio management is the way to tame your existing ikea's state to move to an optimized and agile IT.
The business capabilities are the elements and aspects.
Did you have it available that can help you drive business decision making, trends late strategy into something more operational?
Identify the verb these products and services should be created, how they should be created, who the consumers of these digital products and services will be.
Whether these be internal or external consumers, provide and maintain the linkage to do strategy.
Builds that delineation from the strategy all the way into execution so that anytime you do anything in your organization, you have it full lineage back to strategy.
So, as to understanding whether or not what you're doing is relevant to the strategy.
Need to stay if the strategy was to be adjusted.
Because of external forces, because of new entrants, because of competitor moves, and yes, talking about competitors.
It is also the business capability, a facilitator to understand how are you stand out compared to your competitor better.
You stand out compared to your competitor which are the business capabilities that you're really differentiating vis-a-vis your competitors.
So understanding virtue, you direct your strategy to, yes, there will be cases where you are deciding, OK, there is a business capability. I should be differentiating that even though today, you are not.
But more often than not, you would want to strengthen the business capabilities that you're already differentiating with, because it will give you third are headway compared to your competitors rather than paying you down in a catch up mode.
So, how do we connect strategy to execution?
I want to come up with a couple of examples here.
And these examples revolve around connecting enterprise architecture and strategic portfolio management.
On the one hand, which is culmination off hour strategy site, that's the application life cycle management, which is the representative or the execution side of the house.
And, of course, one prime example for application life cycle management, solutions would be jira.
I'm sure many of you are users of Jira.
So, I'll be And we use jira, two, Manage the Scrum teams to manage the Agile delivery against our existing state of products and services.
Now, if you're a firm user of Jira or any other application life cycle management solution for that matter, then you know that, Vit, in those L M tools, you are siloed to one specific product or project.
What you are lacking is the understanding that a feature that you're working on in the context of that one product actually has a relationship to some other feature in some other backlog for some other product.
And this isn't just one tool Nutter.
It is actually one too many, or actually many, too many.
So key things side of these dependencies is near impossible in the context of your application life cycle management solutions.
And hence, you are prone to vase thing precious resources and capacity in maintaining course for one of these products.
Because you don't understand how Vince have changed Indian, Ireland, resulting in re prioritization off plans, this is for strategic portfolio management and in particular ISO that comes into play.
ISO bid and strategic portfolio management have the oversight to understand that a demand, an epic, a strategic theme.
They are all connected to not just the single feature request in a single backlog, but really to multiple feature requests across multiple backlogs.
And with the integration from strategic portfolio management into L M, you are making sure that changes that are coming from the strategy that are coming from the business environment, can find an effective way into the day-to-day activities of the many teams that are executing your backlogs.
And the reverse direction makes sure that the strategy stays informed about any progress, or lack thereof in the execution of your backlogs pass on attaining a strategy.
So you are in a position to have early warnings that would tell you that VR.
Unlike we're likely to miss this delivery because we are having problems with a couple of feature requests in that one specific backlog.
And the way this is done is that, and in jira, you basically are defining your backlogs along the architecture dimensions of your enterprise, enterprise architecture.
So it could be a product, it could be an application, it could be a microservice, it could be a critical integration platform, it could be.
It technology implementation that you are making, but the grander scheme of things is then seen in the enterprise architecture as part of the strategic portfolio.
And here's a second example, This second example actually takes it one step further.
You're not staying at the level of application life cycle management via extending into what some call, E, D, L, M.
That is the Application Delivery, life cycle Management. So this is where the world of continuous integration and continuous delivery has been linked into the application life cycle Management topic.
In VR, connecting strategic portfolio management all the way into DevOps.
Are we on not only thinking about backlog management? But we'll also talk about build and release management?
We are talking about bringing products into operations.
And we are talking about gaining an understanding of operational realities, forty's products to bring that information back into the portfolio conversation.
So, here's an example in a bit. We are talking about an agile release train called E hotel.
E Hotel has, of course, many different aspects in Alphabet, like, OK, what is my as this architecture? What is my target architecture? What are the resources that I have assigned to this? What are the financial resources that I have assigned to this?
one of the topics we will be dealing with is, What are the issues that we have found? Now, this is a system that is already all operational.
So, issues would also be the feedback from users.
And that feedback from users will now be juxtaposed to the strategy that we are pursuing and the contribution to business outcomes that this E hotel product is to provide.
And then on the Azure DevOps site, we are seeing how this is reflected in the Backlog, four, the C D C I team, that is managing E hotel, and it will manifests itself as what Adeel, Microsoft, Azure DevOps, calls, drug items. And some of these work items would be assigned. Some of these work items would be committed.
They would have priorities, it would have the resource effort estimates.
And, while the priority would come from this strategy into adeel, the estimates for efforts would flow back from ... into life a bit.
So, S two, understanding, OK, do we still have Capacity two, asked for another of these issues to be addressed with the current scrum cycle, or should we be moving it into the next grant cycle?
So, here you can see the issues on the Alphabet site, and the work items they translate into on the audio side.
So, let me summarize.
What digital transformation really requires is bringing together constituencies of business and IT leaders.
They need to come, two, a collaboration on the strategic portfolio management topic.
And we see three important areas for these collaborations.
one is the area of innovation.
Innovation is a two-way process.
At the end, what matters is the innovation in the business. Are we able to see new business models? Are we able to establish new operating models?
Can we lead it new, innovative, maybe even patentable business model product or service.
And on the other hand, we have the topic of technology innovation and technology innovation, of course. Often people start with the business innovation, and look for a good technology innovation.
At the age of tech, digital transformation, it is often also the other way around VR, finding, and technology innovation.
And then we are understanding that this technology in innovation has the potential of enabling a specific business innovation.
So we are seeking out new opportunities, wait, potentially existing, or new customers.
That would be enabled.
Fight is technology innovation.
The second of topics is the topic of agility.
Agility means that V, as an organization, are able, potentially better act than any of our competitors bringing color variation into the agile teams, across the silos of the agile teams.
I think all organizations now have proven that they can bring Agile into develop development teams.
The next race is on two, bring Agile, intuitive collaboration across teams.
Finding, optimization, potential and unleashing this potential of maximizing asset value is one of the tasks.
Is to be addressed with this cross team collaboration with this Agile Enterprise, accelerating The delivery of digital products and services by anticipating gird.
The hurdles of deployment might be, is another one.
Because we are taking lessons from other teams to speed up our own delivery.
Delegating authority is one of the base principles in the Agile budgeting conversation.
So how can I avoid a situation that we can do budgeting only once a year, or maybe at once, a year plus quarterly adjustments?
How can we give more autonomy to the people that actually have their ears on the market?
This also means cascading objectives and outcomes.
And then the third one is really revolving around the business outcomes.
So, the digital business model means giving IT a contribution.
two, providing these outcomes, and generating the value to strategic portfolio management need to reach across the entire organization to facilitate that conversation, to align the digital business initiatives across a very large, very engaged, very enthusiastic, motivated, and diverse set of stakeholders.
And it's the responsibility to monitor progress and derive corrective action from the monitoring process that sits vit.
Strategic portfolio management.
Leadership, and communicating, constantly, communicating the expected business outcomes, and any changes they took.
We have real-time flow of information, and we have, in near real time progression off course correction through our stead, very extended and very variable set of stakeholders.
And I think for this, I have completed my, the session for today. And, I think, Jose, any questions we should be attending to?
Fantastic doctor or to thank you for, for sharing your presentation. Great insights. I'm gonna ask you to stop sharing the presentation at this time, so that the audience can see us on the big screen. Terrific, and for everybody who is watching right now, Please submit your questions. I keep an eye on the, on the, on the monitor here, and ask your questions come in. I'm gonna identify main themes, and, and really, those questions to doctor ... doctor, our first question, and the one of the things that the audience has been probing on is the challenge of some of the arguments is that this Agile teams become almost rogue sometimes. And they start working on their little projects, because they see a need that needs to be addressed.
And then, there is a disconnection with strategy, because either this strategy is actually unclear.
There are too many strategies.
Or, there is not a clear linkage between strategies.
There are AB believe to be developed by the board level and do not translate well into the operations of the business. I am sure you have seen all of this. I'm curious on if you have any advice or suggestions for organizations that are trying to do it, right, or, or, or how are they rolling strategies, high level strategies operational strategies, which is where most of this Agile teams are working?
Great set of questions sent. Indeed, much like you insinuated something that we are observing.
In many organizations, so, I recall it figure, that about 15% of organizations, only about 15% of organizations, actually, have a habit of articulating that strategy.
So, data is where one of the problems already stops.
So, having in the manage ment very high up in the management responsibility to articulate strategy, and to consistently communicate that strategy is critical.
But then you need to take the strategy from these 30,000 foot of elevation, and you need to ground it.
It may need to mean something to Joe and Mary, in the day-to-day doing of theirs, and the way to do this is what we call Strategy operationalization and strategy operationalization is you could consider the sub sub topic of enterprise architecture, even though, very rarely enterprise architects, have the mandate of doing this.
So there is a separate strategy, execution organization.
And little parenthesis here, Strategy execution is one of the sub topics of strategic portfolio management.
Today, AS a strategy execution office it would typically sit in the context, the rhythm of the COO of an organization that has the mandate of overseeing this strategy operationalization process.
Also receiving the feedback, because, as you are operationalizing, you're basically refining your strategy understanding.
And you articulate that, this strategy for this specific sector of the company.
All the organization, means the following means, this is the business outcome we should, be striving for and that need to then bubble back into the top strategy.
Yeah, because there is a cascading of goals and objectives, but also of business outcomes, the business outcome that was articulated on the board level isn't exactly the same business outcome. That is what Joe and Mary vil worry about.
Absolutely, absolutely, the previous speaker talked, talked about the role of enterprise architects evolving and the from what he termed as noise in the beginning were. Very technical. People are trying to create value, doing good things, but it's a bit noisy Because nobody, the leadership team pays attention than it has if. You know, and then, it keeps evolving to maybe more of a push system. And then eventually a pull system, where there's value perceived in the Enterprise Architect function.
And then ultimately, as a Collaborative influencer, that's the highest level that, that, the previous Presenter talked about tonight. And I see a connection to what you're saying here. Do you feel that with the changes, of course, you know if the pandemic and remote work? And, perhaps there's a spotlight now on tech knowledge from, from, from the current settings that we're living in?
And do you feel that the that developing this business skills, if you will, in connection with strategy, is that core capability and competence that enterprise architects must develop?
Oh, absolutely. They must develop that status. There's no doubt about this.
But I want to also shed a bit of light on that other aspect that you mentioned, which is the covert situation.
And they're working from home situation and the new importance of technology.
This can, at best, be a very significant accelerator off, move towards agile enterprise, and move towards strategic portfolio management.
Because, the situation that we have a lack of personal communication, we need to be more articulate about the things that are relevant, that are happening, that should happen.
And, that basically is supporting the strategic portfolio management topic.
And the technology is there.
Very much so, Very much. So, there's a, there's a, clearly, an increase in interest, on, on technology, and digital technologies, from, from all angles, The current setting. So, on that, I want to get a little more technical with you, here and probe and a bit more on the technical side of your presentation.
You know, you talked about Connecting E tools with operative tools like Jira and the the question is what kind of integration technologies you would recommend for making those types of connections?
So, on the connection to the L M Solutions. VDC really the need for real time. Which means we are talking about rest API Connections. Most of these solutions, in particular, the ones that I mentioned, Jira and ..., they have a very suitable set of APIs available that you can tap into.
Uh, and that allows you to take decisions in the strategic portfolio management and make them available in the ILM space immediately.
So, Dad, the Scrum teams, stay development teams, the, the testing teams, et cetera.
They all ...
on what is current from the perspective of strategic portfolios, and much the same way.
On the way back as an then, it has been identified that we have, perhaps use more capacity than we had anticipated, or we are making a change to an estimate that can immediately and in real time, flow back and then trigger a review in the strategic portfolio management context.
So APIs is the technology of choice here.
Outstanding. And the NaN I want to capture before we run out of time. Doctor Ritchie, a question from, although for Vinegars, who has had a couple of questions related to ownership of applications. Just a quick 32nd insight, how his question is.
What approach do you take to convince technical owners to accept ownership over applications? I mean, he implies on his question that lack of ownership of technical owners of their own applications, of any suggestions on that, on, how do you, how do you make that ownership stronger?
I think what we have seen and other organizations being successful is giving that ownership and being outspoken about the accountability and the responsibility, but also the degrees of freedom that come with this ownership.
The moment people see that they are no longer policed but they really have eight limited but a decision authority to live up to the challenge.
Doctor urge Calix, thank you so much for sharing your insight, terrific presentation. And it's been a real pleasure to have you with us today.
Thank you very much, and thanks to the audience for staying with us today.
Goodbye. Thank you.
Ladies and gentlemen, that's doctor ..., Calyx software AG, terrific presentation on how to translate strategy into execution and your digital transformation journey. This is not a trivial matter. and he got in just such depth of how great enduring organizations are doing that are finding not only that you have to work fast and and be agile, but you also must have a clear directional guidance on what you're trying to, what you're trying to achieve. And, and that link between Strategy and Agile execution, he's got a masterful job of showing that from a strategic standpoint, but also something from the technical standpoint, how that's being done from a digital transformation, sweet standpoint.
Very, very good. I am glad everybody's here with us, and I'm very excited about our next guest, who is going to discuss the top artificial intelligence trends and approach for enterprise adoption. at the top of the hour. we're going to have Rho ..., who is the Senior Director of Artificial Intelligence at Intelligence at sap. Be joining us. So, I look forward to seeing you back at the top of the hour rule, and the and of course, for those of you who asked questions, and we didn't have a chance to address all of those. Or if you want to make a comment about what's going on on the Enterprise architecture alive. Lookup. My name shows that there is on LinkedIn. And you're gonna see a post about what's going on here, and make your comment there.
Share your perspectives, or your insights, and perhaps your questions. So, look forward to seeing everybody back at the top of the hour.
Dr. Ulrich Kalex,
SVP Product Management / R&D,
Dr. Ulrich Kalex is responsible for the product strategy, roadmap and development execution for Software AG’s Alfabet product line. Under his aegis, Software AG has contributed significantly to defining and shaping the EA, Strategic IT Planning and Portfolio Management markets.
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