How can Continuous Delivery power innovation in an organisation?
In this article, Steve Smith explains the IT As A Business Differentiator technology strategy, and the role of Continuous Delivery.
When an organisation is in a state of Continuous Delivery, its technology strategy can be described as IT As A Business Differentiator. This means the IT department is accounted for as a profit centre, in which profits are generated from incoming revenues and outgoing costs. A profit centre provides services to customers, and is responsible for its own investment decisions and profitability.
IT As A Business Differentiator promotes IT to be a front office function, with delivery teams integrated into business verticals in order to create differentiating customer products. There is a rolling budget, and a rolling plan. The rolling plan will consist of dynamic product areas with scope, resources, and deadlines constantly refined by feedback.
This is in direct contrast to Nicholas Carr’s 2003 proclamation that IT Doesn’t Matter, to which history has not been kind. Carr failed to predict the rise of Agile Development, Lean Product Development, and in particular Cloud Computing, which has commoditised many lower-order technology functions. These advancements have contributed to the ongoing software revolution termed “Software Is Eating The World” by Marc Andreessen in 2011, which has caused a profound economic and technological shift in society.
Continuous Delivery as the norm
IT As A Business Differentiator is an Internet-inspired, 21st century technology strategy in which IT is an independent business unit. The performance of the IT department is measured in terms of revenue, costs, and profitability. This means IT executives and managers are incentivised to maximise revenue generating activities, as well as controlling cost generating activities.
Continuous Delivery is table stakes for IT As A Business Differentiator, as IT executives and managers are accountable for delays between ideation and customer launch. There will be an ongoing investment in technology and organisational change, to ensure deployment throughput meets market demand. There will be a focus on optimising flow by eliminating handoffs, reducing work in progress, and removing wasteful activities. The reliability strategy will be to Optimise For Resilience, in order to minimise failure response time and blast radius.
IT As A Business Differentiator encourages Lean Product Development. Rolling budgets are used to fund product delivery teams that are responsible for finding product/market fit for a particular business capability. In Products Not Projects, Sriram Narayan describes the ideal product delivery team as an “empowered, outcome-oriented, business-capability aligned, long-lived, cross-functional, ideate-build-run team”. Product delivery teams aim to uncover new revenue streams that can improve the profitability of IT, and the overall financial health of the organisation.
IT As A Business Differentiator and Continuous Delivery were validated by Dr. Nicole Forsgren et al, in the 2018 book Accelerate. Surveys of 23,000 people working at 2,000 organisations worldwide revealed:
- Continuous Delivery results in high performance IT
- High performance IT leads to simultaneous improvements in the stability and throughput of IT delivery, without trade-offs
- High performance IT means an organisation is twice as likely to exceed profitability, market share, and productivity goals
- Continuous Delivery also results in less rework, an improved organisational culture, reduced team burnout, and increased job satisfaction
Leaving IT As A Cost Centre
If an organisation has institutionalised IT As A Cost Centre as its technology strategy, moving to IT As A Business Differentiator would be difficult. It would require an executive-level decision, in one of the following scenarios:
- Competition – rival organisations are increasing their market share
- Cognition – IT is recognised as the engine of future business growth
- Catastrophe – a serious IT failure has an enormously negative financial impact
If the executive leadership of the organisation agree there is an existential crisis, they should publicly commit to IT As A Business Differentiator. That should include an ambitious vision of success that explains the current crisis, describes a state of future economic prosperity, and injects a sense of urgency into the day-to-day work of personnel.
There is no recipe for moving from IT As A Cost Centre to IT As A Business Differentiator. As a complex, adaptive system, an organisation will have a dispositional state of time-dependent possibilities, rather than linear cause and effect. A continuous improvement method such as the Improvement Kata should be used to experiment with different changes. Experiments should include co-locating IT delivery teams with their product stakeholders, removing cost accounting metrics from IT executive incentives, and establishing a Digital IT business unit as its own profit centre.
This leaves the open question of whether an IT department should adopt Continuous Delivery before, during, or after a move from IT As A Cost Centre to IT As A Business Differentiator.
- The Principles Of Product Development Flow by Don Reinertsen
- Measuring Continuous Delivery by the author
- Lean Enterprise by Jez Humble, Joanne Molesky, and Barry O’Reilly
- Utility vs. Strategic Dichotomy by Martin Fowler
- No Projects by the author
Thanks to Thierry de Pauw for his feedback.
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