**1. Introduction**

Business transformation in an evolving digital environment calls on firms to operate at two different speeds [1]. Firms must continue to operate at the traditional speed to meet their established business market needs, while using a faster speed to explore new opportunities enabled by advanced digitization. When operating at a faster speed, firms must use entrepreneurial thinking to generate innovative ideas that create value for customers, design digital or IT-enabled services quickly using advanced technologies, and build organizational capability to deliver such services to meet customer expectations. Faster design and delivery of these digital services requires agility within the IT system and business architectures under the co-leadership of IT and business executives. This is in essence the definition of *digital leadership*—a process that

© 2016 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. © 2018 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

is essential to developing and sustaining a culture of innovation by bringing ideas to fruition quickly using an agile IT and business architecture. This chapter proposes a 10-step structured methodology that is customer-centric, service-driven, and agility-focused. It helps translate innovative customer value propositions into digital services that are modular to address evolving customer expectations, while ensuring that the firm has the organizational capacity to quickly deliver these services to the market with an agile business architecture.

Information technology and business leaders working together to build an agile system and business architecture is not a new phenomenon. Agility through modular software design was a critical feature of system architecture when the business focus was on seeking operational process efficiencies through digitization in the late 1970s and 1980s. The design, development, and subsequent maintenance of modular software systems has enabled "system-level" agility.

With the introduction of personal computers in the 1980s, the focus of agility became critical in the development of systems that support business decision-making. Managers were able to evaluate alternative scenarios with varying assumptions to address decision uncertainty using modularization of data, decision models (algorithmic and heuristic), and configurable user interfaces. The design of such user-driven and IT-enabled modular decision support systems enabled "decision-level" agility.

When markets demanded operational efficiencies and effectiveness to address external stakeholder expectations (e.g. faster responses to customer order fulfillment and better off supply chain management) in the 1990s, agility to share data and integrate processes across departmental boundaries became critical. The modular design of processes across the enterprise, using best practices and enterprise software, provided organizations with "process-level" agility.

With Internet and web-based technologies extending business processes into customer and supplier operations in the early twenty-first century, organizations needed agility to build better relationships with customers (e.g. tracking orders and addressing design flaws or service complaints) and suppliers (e.g. gaining access to inventories and addressing supply chain disruptions). By separating business policies or decision rules sensitive to environmental changes from the rest of business operations using customer relationship and supply chain management systems, organizations were able to build "business-level" agility.

In summary, organizations over the last four decades have used modularity in software, decisions, processes, and policies/business rules to build agility to address changing market conditions. Today, customers are demanding value creation at each of their interfaces with the organization (i.e. service encounters), face-to-face or virtual, as they make decisions related to the purchase of a product or service. Organizations therefore need modularity at the service encounter level so that they can adapt the business to changing customer expectations. In other words, organizations need the capacity to build "service-level" agility to address customer value creation through advanced digitization.

The agility built at the software, decision, process, and policy levels to meet customer needs is defined with an internal focus, that is, how best to structure an organization to deliver the final product or service. Service-level agility, however, requires an external and a much more granular focus, especially in a virtual environment where customers engage in their decision-making process. Each of their service encounters—as they search, review, and evaluate products before they decide to purchase, and as they address all their service needs post purchase—become critical to gain customer loyalty. Such service-level agility calls on an organization to build its capability to adapt quickly and even reconfigure its customer value proposition as customer expectations change. Any change in their expectations can cause customers to shift allegiance and move to a competitor. This makes successful completion of each service encounter (i.e. a micro-service or business) a critical organizational capability, with all such micro-services or businesses leading to the customer ultimately purchasing a product. One characteristic of this capability is the ability to mix and match organizational resources, internal and partner, to keep customers successfully engaged [2]. This chapter discusses how service-level agility can be proactively supported using a modular system and business architectures with a 10-step structured methodology.
