**2. A methodology to build agility in systems and business architecture**

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

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

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"

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

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 cus-

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

management systems, organizations were able to build "business-level" agility.

tomer value creation through advanced digitization.

quickly deliver these services to the market with an agile business architecture.

systems enabled "decision-level" agility.

94 Management of Information Systems

agility.

The growing use of mobile communication, social media, and the Internet is empowering customers to seek information, evaluate competitive products and services, and shift allegiances among competing firms to maximize their value. Firms have been using artifacts such as an "innovation sandbox" to allow employees, partners, and customers to develop innovative product/service ideas, and to use focused organizational resources to assess their commercial viability [3]. Such an entrepreneurial mindset often calls on a firm to "pilot test" ideas with customers before institutionalizing them as a part of the firm's regular business model. However, firms today have to move beyond the "pilot test" approach and use a sustained two-speed approach to support business agility. The two-speed approach calls for use of a "faster speed" to continually look for innovative value propositions to support the current business model or create new business models, or both. The sustained use of a "faster speed" requires agility in both system and business architectures to realign organizational resources for the design and delivery of digital services.

IT and business leaders need and entrepreneurial mindset today to develop the digital quotient [4] or organizational capability to take advantage of advanced digitization opportunities and build a high performing digital enterprise [5]. McKinsey proposes six building blocks for creating a digital enterprise: *strategy and innovation, customer decision journey, process automation, organization, technology, and data analytics*. Data analytics helps generate innovative value propositions to support the customer decision journey. These value propositions lead to digital services, that is, a mix of manual and automated processes using advanced digitization. Organizational structure and effective strategy help deliver these digital services to the market quickly to meet customer needs. While these building blocks identify several elements of system and business architecture, they do not provide a systematic approach to building service level agility using module system and business architectures.

This chapter proposes a structured approach to build agility in the design and delivery of digital services. The 10-step methodology, shown in **Figure 1**, uses five distinct "service-level" components that create and sustain value throughout the design and delivery process.


**Figure 1.** Digital leadership: customer centric, service driven and agility focused.

**5.** Service management (steps 8 and 9): Structure the management team that includes both internal employees and external suppliers/partners to deliver digital services for customer use while mitigating customer risks.

The customer focus is at the center of each of these service components. The service operations will meet evolving customer value propositions, and digital services designed will support customer engagement. The service strategy positions digital services to meet customer strategy, and service management ensures that a team of internal and external partners will deliver digital services to mitigate customer risk. In addition, as discussed earlier, service level agility is supported at each service encounter with modular system (service operations and digital service design) and business architecture (service strategy and management) to address changes in customer expectations or technologies all through the customer engagement in the purchase, design, and delivery process. This methodology is *customer-centric* in value creation, service-driven and evolving as customer expectations and technologies change and agility-focused to support configurability in both the design and delivery of the services.

#### **2.1. Research methodology**

This chapter proposes a structured approach to build agility in the design and delivery of digital services. The 10-step methodology, shown in **Figure 1**, uses five distinct "service-level" components that create and sustain value throughout the design and delivery process.

**1.** Service innovation and delivery (steps 1 and 10): Develop innovative customer value propositions, often co-created with customer engagement, which are reviewed/refined after

**2.** Service operations (steps 2 and 3): Identify customer service encounters that incrementally and collectively influence customer engagement in value creation, and map these encounters to specific processes/work-flows that will operationalize these service encounters. **3.** Digital service design (steps 4 and 5): Leverage advanced technology to automate select processes/work-flows to develop digital services, and build a data warehouse to analyze value created and delivered and gain keen insight into customer decision processes.

**4.** Service strategy (steps 6 and 7): Strategically position digital services to address a cus-

implementation to sustain innovation.

96 Management of Information Systems

tomer's competitive strategy.

**Figure 1.** Digital leadership: customer centric, service driven and agility focused.

The methodology proposed and used in teaching digital leadership is based on a combination of inductive and project-based learning.


As new technologies continue to transform the way organizations (commercial, non-profit, and governmental) service their customers in all the roles they play as consumers, patients, citizens, members, and so on, some of the nuances of various steps used in the methodology will continue to be refined (e.g. how to position a service and how to mitigate risks). The next section discusses two example cases that describe this methodology.
