Driving Customer Loyalty Strategy Through Data Analytics

With the ease of online shopping, the pop-up ads sharing news of sales and low prices, and the help (or harm) of online reviews, many companies are feeling pressure from their competitors. The challenge of gaining return customers is at the forefront of the battle for survival and many organizations are turning to loyalty programs as a way of incentivizing their products and services. There are a number of different loyalty programs out there, however, the most commonly used ones measure the amount of customer engagements (number of visits, money spent, products purchased, services used, etc.) and allow customers to accumulate points for being a loyal customer. As an Information Architect, I spend my days helping clients to understand analytics and insights resulting from these programs. Let’s take a closer look at some examples and their affects.

Customer Loyalty Reward Types

Not all customers are profitable; similarly, not all rewards lead to loyalty. When measuring the success of loyalty programs, it is important to take a hard look at various rewards and measure which ones lead to the best level of engagement.

Some loyalty programs have simple rewards. For example, Kroger, the grocery chain, provides instant rewards to customers in the form of a discount for being a Kroger Plus customer. There is no process of accumulating points and redeeming them.

On the more complex end of the loyalty spectrum are the organizations that utilize programs in which customers accumulate points that they are then able to redeem for different types of rewards. You may be familiar with some of these programs. One example is the program in place for American Express customers. These users accumulate points simply by using their American Express credit card. The points they earn can be used for travel expenses (flight, hotel, etc.), gift cards, merchandise, or the customer can choose to receive cash back. Similarly, airlines such as Delta and Southwest, give you a host of redemption options to choose from just for choosing their airline. Another example of this type of loyalty rewards program is Dunkin Donuts offer of free beverages for the customers that buy their products most often.

Evaluating Rewards Using Data Analytics Techniques

Assuming your company offers a variety of redemption options, the most accurate way to measure the effectiveness of the different options is by conducting a pre-post analysis using matched pair design, a special case of the randomized block design statistical experimentation technique. More simply, individuals redeeming their rewards are divided into pairs of similar customers. Well, what does that mean? The way you define “similar” is based on your specific definition. Generally speaking, you will match customers using attributes such as age, gender, loyalty class (basic, premium, etc.), tenure, market/location or previous revenue spend. When creating these matched pairs, you will ensure that while the customers are similar on all other attributes, one of them has redeemed the reward you are evaluating while the other has not. This essentially gives you a control group of customers. The next step is to measure the customer’s behavior before and after the redemption activity. The measurement can be revenue, number of visits, number of trips/miles, etc. If you have succeeded in creating these pairs, you should find that the pre behavior of the control and target groups will be similar. You will then be able to observe the behavior post redemption and measure the lift the reward/redemption generates.

Potential Pitfalls

Although this form of evaluation does give you measurable results, there are many factors that you need to be aware of. For example, you could introduce sampling bias if you start by choosing the wrong group of customers. Many large corporations have tens of millions of customers in their loyalty program and only the active ones are maintained in a readily available database. This makes sense for different types of analysis as it improves the speed and performance of queries. However, if you start with this set of active customers, it could introduce sampling bias as you will probably miss customers that moved toward other vendors/loyalty programs after using a certain reward. In this instance, my recommendation would be to use a random sample from all customers, both active and inactive.

Other factors to keep in mind are the enrollment date of customers and the period for the analysis. You want to avoid customers that have only been members for a partial time period. The recommendation here is to choose customers that became enrolled before the date of the analysis and ensure that specific pairs of customers have similar tenure, as tenure can influence the level of engagement in certain industries.

In most cases customers do not only engage with one type of reward. In order to ensure that the analysis is specific to the reward being evaluated, its important to try to choose customers that exclusively participated in the given reward.

Linking ROI to Various Customer Loyalty Rewards

The result of your analysis will give you the metrics you are looking for relating to the effectiveness of each reward and the amount of lift it is generating. You can conduct a bit more analysis to compute the incremental revenue as well.  For example, if you know the dollars spent per month by a group of customers you can calculate the average revenue in the post-reward period for the control group customers and compare that value to the target group customers to calculate the percentage age increase due to the redemption. If the number of customers is known, you can now compute the total incremental revenue.

There are many online resources that explain how to compute lift or incremental revenue, but it’s important to understand your unique situation and business problem, discuss the approach with the stakeholders to whom the results will be presented, and take the approach that best fits your situation.

Conducting an analysis will reveal the types of rewards that will likely be most profitable and what makes sense for your company and for your customers. Once you have made that determination, you may want to begin to do more broad market research into the different reward types to see if you can identify any trends. You may also choose to create a customer profile to determine the most profitable types of rewards and to understand the types of customers that take advantage of these rewards. Your findings will help to inform your customer acquisition strategy.

You Know Who Will Respond…Now What?

As with any analytics project, understanding what the numbers are telling you is not always easy. It is entirely feasible to come up with varying results based on underlying assumptions. Once you have put all of the work into understanding who is participating in your organization’s loyalty program and how that is affecting their decisions as a customer, be sure to find a partner to help you fully realize the potential of the program you have in place and to keep your customers coming back for more.

AmirCharaniaInformation Architect

Amir Charania is an Information Architect at Daugherty Business Solutions - Atlanta. With 15+years experience in the information technology industry including technology consulting, product management and business intelligence architecture/development, Amir has been an integral part of delivering end-to-end large-scale solutions to a number of Fortune 500 companies. He has gained extensive experience in every aspect of data analytics, customer loyalty programs, machine learning and data warehouse solutions crafting. Amir earned bachelor’s degrees in computer science and engineering from the University of Mumbai before moving to Atlanta to complete the MBA program at the Georgia Tech College of Management. He currently lives in the Northlake area of Atlanta with his wife and two children.

The Urgent and Important Work of DevOps

“What is important is seldom urgent and what is urgent is seldom important.” – Dwight Eisenhower

There are things in our lives that are urgent and important, urgent and unimportant, not urgent and important, and not urgent and not important. The idea is, you first want to get your urgent and important things out of the way, then put a lot of energy into important but not-so-urgent priorities. DevOps adoption, as it’s currently being practiced, tends to focus on not-urgent or not-important problems – and sometimes both.

Some Background:

When the term “DevOps” was first introduced in 2009, the largest barrier to adoption was awareness. Managers and leaders didn’t know what DevOps was, much less why they needed it. As an industry, we tackled this problem with two main strategies: we appealed to the unicorns (i.e., Amazon is doing production deployment every 11 seconds), and we built grassroots proof of concepts. At the time, this was both urgent and important. Urgent because our competition was reading the same articles about the industry leaders, and important because the first step towards solving a problem is to recognize it and name it.

Seven years later the unicorns have all been spotted, rounded up, studied, analyzed, reported on, photographed and imitated.  So why do we still feel that it’s important to drive awareness? Certainly there is still a good deal of uncertainty about what DevOps really means, and this needs to continue to be refined.  But the awareness is there. IT VPs are beginning to put DevOps initiatives in their budgets.  The elusive “DevOps Engineer” is a hot commodity for enterprise recruiters. Go to any technical conference, and there’s sure to be a session on DevOps for developers. Undoubtedly, many organizations have at least one team that can showcase automated builds, tests and deployments. It has now become urgent and important to begin realizing the gains that have been promised by all the grassroots champions.

It’s Not About the Tools:

Any student of the DevOps movement will tell you that it’s not about the tools – it’s about building the culture. And yet, everyone is organized around building and leveraging those tools. We are seeing teams that are able to check in code and automate processes all the way to deployment into QA, but then things stop. The change advisory board is still there.  IT security is still there. Ops is still on edge about frequent deployments. But let’s not forget what the whole point of all of this is: to deliver business value quickly. It is now unimportant if you go from 1 build a day to 10 builds a day, if you’re still sitting at 1 deployment per quarter.  It’s not urgent to lower your WIP from Dev to QA if you’re letting it all stack up on your staging servers. Clearly the important work is to address the culture, relationships, security, and change control processes that have previously been stuck in a not-urgent/not-important quadrant.

DevOps Graphic

What You Can Do:

This shift towards focusing on non-technical matters is hard for developers. When we’re staring at our screens thinking, “what can I do to make this better?” we usually come up with technical answers like writing a script to automate a process, or creating a tool to assist with build metric collection. These are great ideas, but a better answer may be to go find an ops guy and take him out to lunch or to sit in on a release management meeting to better understand why getting through production control is so difficult.

Rule of Thumb:

If you’ve already developed some automation, then do not favor more automation over relationship development with operations. I witnessed one mid-sized company focus entirely on agile development practices and build automation without ever addressing the production control variable. Sprint velocity and story acceptance was high.  Builds were automatically deployed to development servers on code check-in, and were push-button deployable to QA servers when QA was ready. All final binaries were automatically packaged up for deployment without any developer involvement. Yet, during a 12-month period not a single line of code was deployed to production. Clearly automation didn’t provide any business value here.

Conversely, I worked with a Fortune 500 company that was struggling with large, complex software releases. Big-bang releases would frequently be rolled back, causing the deployment complexity to continually ratchet up. Some rollbacks were the result of configuration or usage issues, rather than bugs. Failed deployments became a self-fulfilling prophecy. While developers were improving the build pipeline no new build or release automation was put in place to mitigate the deployment issues. Instead, the problem was solved by establishing a better relationship with our operations partners. We figured out that if we had the right players involved, we could collaboratively deploy smaller incremental releases to a limited production audience. This allowed developers to work side-by-side with end users to quickly certify changes and develop fail-forward plans in the event of mistakes. Release frequency went from a monthly ordeal with regular rollbacks, to multiple weekly deployments with nearly zero rollbacks.

It is time for the development managers and directors to start playing a more active role. Managers need to recognize that to fully realize the benefits of DevOps, they can’t simply delegate all the work down to the technical staff. Someone needs to champion the organizational changes that need to occur to get development, operations, QA, change management and security all working to take the same hill. Someone needs to start the grassroots work of building the organizational tools (not technical tools) to get the products through security and release management teams. These are the highly important, and increasingly urgent tasks that are needed to solve the DevOps puzzle.

JimDrewesManager

Jim Drewes joined Daugherty Business Solutions in 2013 as a Senior Consultant. With extensive experience in account management and sales growth, Jim quickly became a key member of the Customer Development Line of Service team. He moved into a managing Application Architect role at Daugherty, specializing in DevOps practices and large enterprise software engineering. Prior to his time with Daugherty, Jim worked in a number of IT management positions. In October 2010, he was named a Top Small Business Executive by the St. Louis Small Business Monthly. Jim graduated from Truman State University with a bachelor’s degree in computer science. He earned his MBA from Webster University, specializing in business and IT management.

When Customers Attack! Engaged To Engraged In The Blink Of An Eye

Looking to make a few updates to your loyalty program? There are a few things you should know… If you’re not careful, there could be a volcano of negative sentiment waiting to erupt in the form of your customers.

Just ask Starbucks who recently announced this past month that it was changing its loyalty program structure from a frequency-based model to a model based on what customers actually spend instead.

For those of us who eat, sleep, drink, and live loyalty, announcements like this are never that much of a surprise. In fact, Starbucks’ recent announcement harkens back to the changes Southwest made to their frequent flyer program circa 2011. What seems to catch some companies off guard though is the customer backlash that ensues.

You’ve seen it, maybe even had a similar experience. It’s when your fiercely loyal customers turn on you and go from engaged to what I’m calling engraged by spouting mad declarations through social media, showing how their ex-favorite company has ripped their loyal heart out and eaten it… Raw.

So what is engraged? My definition: When a loyalty program member cares so deeply about the program and its brand that any unilateral change to the program’s core structure is viewed with outrage and a feeling of downright betrayal.

Seems fitting, right?

Hyperbole aside, for most companies, the decision to alter the foundational structure of a rewards strategy is a long time in the making. However, you can minimize the damage done by your “engraged” customers. The key lies in your mindset, advanced planning, and strategic over-communication well in advance.

Below are a few pieces of advice you should consider if you’re planning changes to an existing loyalty program or strategy you have in market today.

Don’t Panic – Your Strategy is Sound

If you’ve done your due diligence in coming to the difficult decision to alter the fabric of a loyalty strategy, you’ve probably worked through a number of scenarios and put in the “hard yards” to get to that decision. You can take comfort in that fact and remember that the ensuing backlash will lessen with each passing day. After all, Southwest certainly lived to fly another day after their program changes. I suspect Starbucks will too.

The Right Customers Will Adapt

A change in a program structure like the aforementioned can also serve as an opportunity for you to indirectly ask for a “hand raise” from your customers. Customers will choose with their actions whether they’re still in, or whether they choose to no longer do business with you. For a lot of companies, that’s scary. Some companies are reticent when it comes to recognizing the belief that all customers are NOT created equal. Those companies should remember though that the best loyalty programs – especially rewards-based ones – should be designed with a best customer in mind, not every customer. And sometimes, the definition of “best” can change and doesn’t always equal “most frequent.”

Fail to Plan, Plan to Fail

As a consultant, I often tell clients that the best time to craft your program’s exit strategy is before you even launch it. The same principle can be applied to situations where major changes are being made to the rules of a program structure. Realistically, the announcement of changes should be made at least a full 6 months AFTER the decision to make the change is made.

Why? That’s how long it takes to develop the right communications plan, analyze the legal (if any) and financial risks, and prepare and train your frontline employees to handle question and inquiries. If the plan is simply to issue a press release and make the change, then you should revisit it. It’s critical to be methodical and to take your time, or risk one of the worst case scenarios you’ve thought about come to pass.

Put the Customer Center Stage in Your Planning    

All planning you do around communications, timing, and risk should be done with your mind squarely focused on the customer backlash. Looking at worst case scenarios and planning for them will help to minimize the impact such an announcement can have financially on your company’s bottom line. In essence, you need to be ready for whatever comes your way. Part of this planning is determining the size of the bone you can throw disgruntled customers when the inevitable complaints arise. That size should be determined by customer value and your frontline employees should be empowered to address complaint situations.

Communicate Early and Often

If you drop an atomic bomb on your customers’ loyalty, you can expect them to go nuclear. Ideally, customers should be notified that changes are coming at least 6 months before the effective date with subsequent communication streams aimed at promoting any new program benefits and helping customers realize the impact the changes will have on them. Your messaging should be as devoid of “spin” as possible, but still should accentuate the more positive reasons for the change (tied back to the customer) and should definitely highlight any new features or benefits that are also getting introduced.

For instance, Southwest highlighted how the new program structure would save the customer from having to endure expiring credits. The new points program had no expiration so long as a customer remained active. They also highlighted ways to earn even more based on new fare types and promotions.

Provide the Engraged with a Platform to Complain

When angered customers are left to their own devices, that’s when perceptions of a brand can tank. In one fell swoop, customers can show that not only did your company devalue the program they once loved, but now you’re being unresponsive to their complaints. The way to circumvent this perception is to provide them some recourse or platform to lodge their complaints. Take caution however – the expectation will be that a response will be provided. If you let them complain in a one-sided dialogue, then risk the perception of your brand getting even worse.

Generally, customers are hearty, adaptive, and most of all, not stupid. Loyalty programs have been around long enough for them to know that sometimes changes need to be made. If you take the time to remain positive about your decision, plan carefully, and most of all communicate strategically, you can minimize the impact sweeping changes may have and at the same time reaffirm your commitment and loyalty to your best customers.

JRSlubowskiDirector - Digital Engagement & Analytics

JR Slubowski is an integrated marketing strategy, customer engagement and loyalty professional with over 15 years of experience. As a Director in Daugherty’s Digital Engagement and Business Analytics Center of Excellence, he’s helping clients create, implement and evaluate their customer engagement initiatives. JR has his Master’s from Northwestern University in Integrated Marketing Communications and has taught marketing courses as an adjunct professor at Maryville University in St. Louis, where he is based. When JR’s not flexing his business smarts for Daugherty’s clients, he enjoys playing competitive tennis (most days), cooking elaborate meals, and drinking really good wine.

Staying Relevant in IT: How We Foster a Collaborative Learning Environment at Daugherty

While there are many things that I love about my job at Daugherty St. Louis, there’s nothing quite like helping a developer grow in their craft. If we’re honest with ourselves, one of the toughest parts of our job is staying relevant. Technology is moving so fast, and it takes a community of caring individuals to help inspire, motivate and teach to stay on top of our game.

That’s one of things that I’m so proud of here in the Software Architecture and Engineering Line of Service. We all motivate each other, teaching and learning from everyone, to keep driving technology forward and solving some of our client’s toughest business problems.

With that, one of our goals as an organization is Alignment. We try to understand where the technology is going, what our clients are implementing, and ensuring that we train every one of our consultants to stay relevant. One of the more entertaining ways we do this is through our Annual Summit.

It’s a full day event where our teammates can come together for learning, great discussion, fun, and camaraderie. Nearly 70% of our team packed our two largest conference rooms on a Saturday for 10 distinct classes. Who says learning can’t be fun? With our passionate group of individuals, the Annual Summit is one of my favorite days of the year.

Classes this year included Responsive Web Design, Intro to Microservices, Cloud Development, and Internationalization as well as thought leadership topics like Dev Ops, Bi-Modal IT, Agile in the Real World, and Solution Architecture. Daugherty employees were able to select between classes that were newly developed for the Summit or that they were not able to participate in during our normal round of Lunch-n-Learns and evening classes.

It wasn’t all lecture and discussion… Half way through the day, the teams broke into smaller groups to participate in a team-building event. They built a deck of “cards” that was quite impressive. In fact, we were all amazed at the ingenuity of our employees.

It wasn’t all work, either. After a full day, we hit the lanes for some bowling. When you work with clients all across the St. Louis region, our team gets fairly spread out. Events like our Annual Summit, regular hackathons, and Daugherty social events remind us just how important it is to continue fostering an environment of collaboration, respect and learning opportunities for our people.

I would encourage anyone who is a developer or a manager, make sure that you never lose sight of the importance of teamwork and team building. What can you glean from those around you? Take a break, check out some training, have a discussion with your teammates, and never stop learning. (Which goes for managers, too.) We’re never too old to learn something new.

So, what’s your environment like? How can you foster more collaboration and learning among your peers? Share your thoughts with me in the comments, and of course, I’d love for you to consider joining Team Daugherty if your environment isn’t quite what you’d like.

Photo Credit: Dave Oleksa via Twitter

SteveAmbrosiusSenior Enterprise Architect

Steve Ambrosius is a Principle Consultant at Daugherty Business Solutions and co-leader of the Software Architecture and Engineering line of service for the St. Louis Branch. Steve is passionate about how Enterprise Architecture can help corporations execute their business and IT strategy. When not evangelizing the benefits of IT and business alignment, he plays bass guitar for the original band Lida Una and catches as many St. Louis Blues games as time allows.

Organizational Project Management (OPM) Trends Upward

“Without strategy, execution is aimless. Without execution, strategy is useless” – Morris Chang, CEO of Taiwan Semiconductor Manufacturing Co.

When you think about a project, it makes sense that all projects should be enablers to reach organizational goals. If not, why would a company work on that project? More and more, companies are making an effort to ensure this occurs, but it’s not exactly as easy as it sounds, especially within large corporations.

Within our own clients, companies are looking to reduce the chasm between strategic planning and results, and the solution for this is good execution. This only happens when you can translate organizational strategy into a portfolio’s components (i.e., programs, projects, operations, initiatives, etc.) and align them to overall strategy. Below are a few great resources for helping you with this whether you’re a large organization or just getting started in your career as a project manager.

Research Available:

In the last five years, PMI (Project Management Institute) conducted surveys in government, for-profit and non-profit organizations to identify their approach on how their organizations are aligning their portfolios with the organizational strategy and what they have done to improve execution. The results of the survey have been published in different issues of Pulse of the Profession.

Guides:

There’s also a new guide that the PMI developed: Implementing Organizational Project Management: A Practice Guide. This guide helps executives and project management practitioners to envision the alignment and execution that can create the required synergy to produce the products and benefits to achieve strategic goals. It’s everything you need to meet or exceed the stakeholder’s expectations.

What are the real applications of this?

One great example in the public sector on how project portfolios were aligned with strategy to enable success is the City of Frisco, Texas, which has been named “The Best Place to Raise an Athlete.” To keep achieving that vision, it has run several projects partnering with the U.S.’s major sports leagues and teams to create a thriving sports-related market. The City of Frisco secured the right capabilities – not available in the public sector – and implemented them in the right place at the right time throughout partnerships with external sources that share Frisco’s vision. Today, the stadiums and arenas used by professional teams are surrounded by sports academies that help young kids to develop tomorrow’s athlete.

In the private sector, organizations like 7-Eleven do not limit their employees and executives to staying in the same position forever. As an example, their CIO held several leadership positions from logistics and merchandising to operations. His strategic and business acumen helped him to select and prioritize the alignment of IT projects with business needs to gain full support from stakeholders and to execute and prioritize business initiatives through innovative technology solutions.

Key Takeaway:

Organizations can take advantage of those combined skills in business and strategic management, and versatile resources are driving their success. As business evolves, there is a great opportunity to elevate your value as a strategic partner and be more successful as an organization.

PMI identifies these versatile resources as the PMI Talent Triangle. It’s the ideal skill set combining technical, leadership, and strategic and business management expertise. This is what we’re seeing within our own clients at Daugherty and how we’re helping many of them be more successful.

Does your organization have an approach to align and execute portfolio components to consistently and predictably deliver corporate strategy that produces better results? If you’re a project manager, do you have the additional skills to stay competitive in the ever-increasing complex market? With the right capabilities and planning, this can make a significant difference in your success.

ConradoMorlanProject Manager

An experienced global portfolio, program and project manager with more than 20 years of experience. His specialties include aligning projects with organizational strategy for multinational companies and leading virtual and co-located multicultural and multigenerational teams in the Americas and Europe. When Conrado is not blogging for DBS or PMI’s Voices on Project Management,  you can find Conrado hitting the asphalt in major US marathons, supporting US Men and Women’s national soccer teams, or at a race track watching an F1 Grand Prix around the world.

Yes – You Can Embrace Bi-Modal IT and Be Better for It

As the Digital Business Revolution rages on, we’re continuing to see businesses struggle to keep up. This blurring of the digital and physical world doesn’t show any signs of stopping, either. With the continued creation of new business designs, how does one balance the tried and true method with the exciting opportunities of innovation?

The problem that we see quite often is a misalignment between the dollars spent and the value returned. Gartner’s Pace Layered Application model shows us that IT is spending the preponderance of their budget on systems of record, even though it is the systems of Innovation and Differentiation that provide the most value and alignment to the business strategy.

This is where Bi-Modal IT comes into play, which is a term Gartner uses to describe the dual set of capabilities, activities and deliverables. It’s one of the tactics used to try and right size this conflict by dividing IT into two distinct paradigms.

bi-model-it

Take a look at the graphic above and think about this – New business models are arising daily, and it takes a different thought process and structure to keep up with the speed of change (Mode 2 on the right). For example at Daugherty, there is still a need to operate in Mode 1 (on the left), providing the rock solid reliable delivery necessary to ensure our customer’s customers are getting the value they expect. Our 30 year history is built on providing valuable, predictable, end-to-end project delivery. But, that does not conflict with our embracement of Mode 2 for systems of innovation.

For our clients, we have helped several of them move to a more agile, product-based way of thinking, where rapid deployment and feedback can provide a competitive advantage and deeper customer loyalty. This starts with a deeper alignment between the business and IT. When this happens, you can truly measure success and see the desired business outcomes that stem from this type of partnership.

The truth is that innovation is going to happen, and it will happen with or without IT’s knowledge and guidance. As we can all likely agree, IT should be the one providing the guidance and understanding of where and when to use cloud, PaaS, and SaaS, and providing the landscape and the ability to rapidly prototype and stand up proofs. However, the business has tools at hand to act as citizen innovators that are far more powerful than the old Shadow IT of the past.

While change can feel risky, an IT that embraces Mode 2 will be better positioned to ensure feasibility and sustainability of systems when prototypes and pilots turn into production systems. And yes, you can accomplish this without leaving behind the delivery excellence of Mode 1. With a Bi-Modal IT structure, it allows the business to be a partner with IT, not competitors.

Here are some things to keep in mind for embracing the culture of innovation, or Mode 2:

  • Failure is an option, and failing forward is a valid plan
  • Value driven decision support and alignment out weighs other factors
  • Consistent teams will have a sense of ownership and accountability
  • Focus on brand, experience, sentiment, and loyalty
  • Business driven, in many cases, exposes new tools and techniques
  • Be risk tolerant
  • Be Mobile, anywhere at any time
  • Low, organizational governance
  • Continuous learning
SteveAmbrosiusSenior Enterprise Architect

Steve Ambrosius is a Principle Consultant at Daugherty Business Solutions and co-leader of the Software Architecture and Engineering line of service for the St. Louis Branch. Steve is passionate about how Enterprise Architecture can help corporations execute their business and IT strategy. When not evangelizing the benefits of IT and business alignment, he plays bass guitar for the original band Lida Una and catches as many St. Louis Blues games as time allows.

Agile in the Real World – Is It Right for Your Organization?

At Daugherty, we probably hear about Agile Development more than any other topic. Common detailed questions such as: How do I get started? Should I use scrum? Can my PM be the scrum master? Then, there’s also the other big picture questions about the nature of migrating from a waterfall or an iterative approach to full agile.

Daugherty believes that there is no one answer that fits perfectly into every environment. The truth that everyone must understand is:

  • Agile is not a magic bullet that is going to solve all of your IT dysfunctions
  • Agile is not a set of ceremonies and artifacts, but is a cultural discipline that demands a change in thinking as well as process

Let me start off this conversation with the question we should be getting asked. Why Agile?

Agile Construction provides key benefits that will align IT closer to the business outcomes it provides, reduce rework, and provide tangible value quicker to the business. No matter how you design your Agile program, it must have:

  • Rapid Feedback from all parties that leads to less rework, highest value construction, and better definition of the deliverables
  • Embedded Q/A and continuous testing (we are going to be ruthlessly refactoring; we need to make sure we aren’t breaking the things that used to work)
  • Tight, well-defined relationship between the business and IT, dedicated product owner(s) that is willing to guide the teams through all decision and feedback stages
  • Empowered teams that are allowed to self-select, self-drive, and self-commit to the work being done (along with empowerment comes responsibility and accountability)
  • Faster release cycles, getting the high value, completed items in the users hand as quickly as is feasible
  • Prioritized risk evaluation, making sure that architectural or technical risk is addressed before functionality is fully developed

An Agile program can leverage Scrum, XP, Adaptive Software Development, or any of the other Agile frameworks, as long as first and foremost you keep the above disciplines in place.

So to address the bigger question… Should you go Agile?

Let’s look at what it takes to truly make agile work. First and foremost, you need a committed business and IT alignment, where value, funding, and outcomes are all in sync. If you do not have this, your first step should be to invest in a Business Alignment workshop, otherwise you may have Agile construction, but you will never have an Agile Enterprise.

Second, you have to understand your current staff. You wouldn’t ask a Java shop to start coding in .NET without training, continuous education, and a coaching plan. Nor should you expect your business and IT resources to be able to pick up the rigor and discipline of Agile without the same level of training and support. In addition, the way you allocate resources, to product instead of by project, may mean an organizational change is warranted, which again can be culturally difficult to accomplish.

And lastly, follow the money. Is your organization willing to make decisions without full knowledge of cost and delivery date (many would argue that we never had this and that we were just kidding ourselves in Waterfall)? Daugherty believes that some upfront work is necessary, that a level of scoping and overarching requirements should be rapidly gathered and allow for the final feedback driven scope to emerge. Emergent architecture and emergent standards should be avoided where possible. Agile works best when Architecture and Security are provided as up front guidance, followed by just-enough governance, to business and construction teams.

We, ourselves, run an agile shop in our Dev Centers and have several scrum masters and certified SAFe experts across our team. We’re helping clients through agile workshops and coaching, Rapid Process Mapping techniques (the quickest, most accurate method of getting 80% requirements), bringing Agile programs to scale, and even Bi-Modal IT and Application Pace Layering. Let us know when you’re ready to talk agile. Team Daugherty is ready to help you.

SteveAmbrosiusSenior Enterprise Architect

Steve Ambrosius is a Principle Consultant at Daugherty Business Solutions and co-leader of the Software Architecture and Engineering line of service for the St. Louis Branch. Steve is passionate about how Enterprise Architecture can help corporations execute their business and IT strategy. When not evangelizing the benefits of IT and business alignment, he plays bass guitar for the original band Lida Una and catches as many St. Louis Blues games as time allows.

Service First Design in the Real World: Lessons from SA&E Summit

On August 23, Daugherty Business Solutions in St. Louis held its annual Software Architecture and Engineering internal summit.  I had the pleasure of teaching an SOA / Service First Design class, which focused on the fact that SOA is a design paradigm and not a suite of tools.  We spent time discussing the meaningful utility, feasibility and sustainability in putting your service design at the forefront of your architectural vision.  It was a great, interactive class on moving from application centric design to service first design.

But, how do you begin?

Starting something as daunting as SOA can be very difficult, since the changes are as much cultural as they are technical.  To move your organization toward Service First Design, you need to have three key ingredients:

1. Alignment between Business and IT

To break the application focus paradigm, both entities must begin to speak about, plan for, and measure business capabilities (See Gartner Business Capability Modeling for further reading).

2. Centralized Governance

You’ll need a centralized governance model that can evolve to provide oversight of the SOA governance components of service first design

3. Appetite and Ability

Companies will need an appetite and the ability to develop and adhere to business outcome driven roadmaps.

The idea of implementing SOA, and the Enterprise Architecture necessary to ensure these ingredients are fully developed, scares many organizations.  That’s because too often they are presented as “tool solutions” and large “Ivory Tower” activities that are not easily digestible.  One of Daugherty’s strengths is its ability to take the complex IT disruptions facing organizations and present them with an “in the Real World” perspective.

Yes, service first design is a large leap for organizations, but it doesn’t have to seem impossible.  To ensure your business capabilities have aligned technical solutions that can continue to evolve as long as your business does, you must begin to embrace that “Everything Is a Service.”  Service First Design is one way to help you make that transition.

SteveAmbrosiusSenior Enterprise Architect

Steve Ambrosius is a Principle Consultant at Daugherty Business Solutions and co-leader of the Software Architecture and Engineering line of service for the St. Louis Branch. Steve is passionate about how Enterprise Architecture can help corporations execute their business and IT strategy. When not evangelizing the benefits of IT and business alignment, he plays bass guitar for the original band Lida Una and catches as many St. Louis Blues games as time allows.