What Atlassian's Success Teaches us on Agile Business Fundamentals

Is anyone surprised that a SaaS company that provides agile project management tools to software developers, marketers, and enterprises is about to IPO at a $3.3 Billion valuation on revenues of $320M? I'm talking about Atlassian of course and if you've been leading agile practices you know them for their tools like Jira and Confluence that help teams manage agile programs and collaborate across teams. What you might not have know is how strong of a business Atlassian is even when you compare them against large SaaS providers like Salesforce and Workday that target much larger markets.

How Businesses Can Be Successful with Agile Practices

Atlassian's financial benchmarks are truly impressive. Now assuming they run their business with agile practices and their own collaboration tools - one can see the financial benefits of running an agile business and targeting an agile culture -
  • When you build a simple to use tool, it sells itself - "Atlassian has spent between 0.04% and 2% of their revenue on customer acquisition in the last three years. These metrics are simply unheard of." It is one of three enterprise-grade technologies that is sold without salespeople calling you - the other two are from Apple.

  • It doesn't take a lot of R&D $s to target a Minimally Viable Product -  "Atlassian spends frugally in research and development, investing only single-digit percentages of revenue over the last three years, substantially less than the typical SaaS company"

  • Agile is for everyone and there is no excuse to be managing your projects with spreadsheets! - Atlassian has 48,000 customers paying on average $5500/year and with only 864 customers paying more than $50K/year.  

  • Agile tools and practices is not sufficient without agile culture and happy people - They have a 4.2 rating on Glassdoor where 88% would recommend a friend working there and were listed as the best place to work in Australia for two years in a row. "They’ve ingrained the engineering mindset in their culture" and "every time a product question is asked by a customer, Atlassian engineers see it as a challenge to fix" are part of the Atlassian Culture.

Digital Transformation Start with Agile Practices

Of all the things I've read the last couple of weeks, it is this quote that really stands out

"All companies fit into one of two buckets: either becoming a software company or being disrupted by one. Every industry is being fundamentally altered by software" - Cannon-Brooks, co-CEO of Atlassian.

 More enterprises have to learn from the best.

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6 Digital Criteria to Evaluate Superior Technology

In my last post, I proposed six business, cultural, and strategic objectives you can use to evaluate digital transformation enabling technologies. The intention of these objectives is to align executives and stakeholders on opportunities and challenges worthy of investment independent from any evaluation of solutions and technologies. Now there are plenty of methodologies to evaluate technology and I once blogged on 10 attributes of agile platforms, but I propose that technologies aligned with digital transformation efforts need a new set of consideration and criteria.

I divide the criteria into three categories dependent on the primary owner. Stakeholder criteria are usually driven by business teams responsible for selling or developing workflow against the new technology. Business driven criteria aim to evaluate the technology on longer term viability and strategic capabilities. Technology driven criteria are driven by integration capabilities and alignment to existing platforms and strategies.

Evaluation Criteria for Technologies Deployed for Digital Transformation

Below are the key criteria that I focus on for new technologies - 

  • Delivers a User Experience that People Love - Reviews of digital business and technologies starts with an analysis of user experience across multiple sales channels (omni-channel) and device (multi-mode and especially mobile). This is for good reason because if the experience sucks, if it doesn't simplify life for end users, if the value proposition is irrelevant, if the data and experience is not ubiquitous across devices, if the user interface isn't intuitive or if it exhibits other poor usability considerations then the platform will fail to achieve the desired transformation goals.

  • Has Embraced Self Service Capabilities - "Enterprise" applications enable configuration and customization capabilities largely by providing application development and administrative tools to the IT staff. Today's SaaS platforms are better measured by how easy and how much of this configuration can be accomplished easily and correctly (without complications or quality issues) by non-technical business users. Many self-serve applications allow users to customize look/feel, publish forms, configure dashboards and reports, enable simple workflows, or perform common data operations. The more sophisticated platforms are fully self-service and enable citizen developers through simple visual interfaces, low-code tools, or entire desktop applications fully designed for business self-service.

  • Has Achieved Critical Mass of Fanatical Developers and Users - At minimum, users and developers should love the technology and be promoting it on social media. The vendor's conferences should be huge and getting bigger every year. Chances are if the social sentiment of a technology is strong, it's a strong endorsement that it's easy, powerful, versatile, secure, and stable.  Developers and users do not socially endorse platforms too easily or have the budgets to attend conferences regularly, so when you see thousands of daily tweets, tens of thousands attending the conference, subreddits that have frequent and positive feedback then it's a sign that this is an easy to use platform that has made others successful in a wide variety of opportunities.

    Why do I list this criteria as business and not technical driven? If you ask the vendors, existing customers, or third party analysts to evaluate the size, financial strength, or customer satisfaction of the technology then you're likely to get an incomplete and possibly biased picture of the platform's long term viability. When you can measure a growing ecosystem of passionate supporters, then you can measure this endorsement against competitive options. That's one reason why leading platform providers like Google, Apple, Amazon, Salesforce, Twitter, and Facebook all work really hard to cultivate large and supportive developer communities. 

  • Demonstrates A Strong Commitment to Data Portability and Quality - Technologies can create, process, and deliver data but they often don't do all three in isolation. Digital platforms have to enable growth and that should drive a slew of both data and quality considerations. What usage data is the platform collecting and how is it used to improve user experience? Does it have well used APIs and other tools to get data in and out? Does the platform provide sufficient functional, regression, and data quality testing tools? What tools, reports, and guidelines are provided to insure that business driven configurations do not yield performance issues. What is the performance and cost impact of using the platform with Big Data and increasing volume or velocity of data? What flexibility does the technology have to configure data security and enable auditing? This is a partial list and needs to be tailored to the type of platform and how it will be used.

  • Participates in the Digital Ecosystem - It's one thing to have an API, but is the technology already "out of the box" integrated with other technologies? Can you easily enable single sign on with Azure Active Directory Okta, or competitive platform?  Is it already configured in a data integration or IFTTT platform like Zapier, Informatica Cloud, SnapLogic, or similar? Can your self-service BI platform like Tableau or Qlik automatically connect to it as a data source? What app stores is the technology plugged into? I'm not just talking just about mobile applications on IoS or Android; what about SalesForce, AWS, or Azure marketplaces?
    What's worse - and what drives me irate as a CIO - is the selection or review of new technologies that overlap with platforms and capabilities that already exist in the enterprise without considering reusing existing platforms or calculating the future costs to consolidate technologies.
    The media and industry analysts promote this issue by developing new and sometimes proprietary terminology for technologies that have common capabilities. For example, are you buying a CRM, a Sales Automation platform, a 360 degree customer experience platform, or tools for marketing automation? These tools and platforms have overlapping capabilities that can be competitive strengths or commodity offerings but selecting multiple tools leads to  complexities.

    The best way to avoid this is to develop reference models that document a technological future state that aligns with strategic priorities. Reference models are often useful to document platforms, capabilities, reference data, data flows, and enterprise workflows. Then, when someone wants a "new solution", the organization is in a better place to review existing capabilities or identify primary requirements for any new technology selections.

What do you think?
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Six Critical Strategies For Selecting Breakthrough Digital Transformation Platforms

What criteria are you, your business stakeholders, influential technologists, and executives using to evaluate a new software application or SaaS platform?

Are you concerned about features and functionality? Is it the design of the user interface that grabs your attention? Perhaps you go deeper to understand how much of the platform can be configured or customized to meet specific business requirements? If you're in procurement you'll be looking at financial and legal considerations while IT operations will be looking at service levels, security, and system integration capabilities.

That's all necessary and critical for the evaluation, but I would label them as "table stakes" (for you poker players) or "par for the course" (for the golfers out there) when reviewing a new technology. What this means is, all vendors need to have a competitive offering in all of these criteria and what you might see and need to evaluate is the strategic and implementation tradeoffs made by the vendor depending on their competencies, maturity, and capabilities. In other words, traditional technology evaluation criteria only exposes tactical difference between comparable platforms.

Evaluate Technologies for Digital Transformation

Perhaps traditional criteria is "good enough" for evaluating a new application aimed to fit a specific problem - a tool - however these criteria are completely insufficient if you're going to deploy them as part of a digital transformation. Transformation implies targeting new revenue opportunities, establishing new ways to engage customers, staging organizational transformations that yield order of magnitude efficiencies and evaluating other transformations enabled by mastering this digital lens. The way most stakeholders view a technology and the nature of traditional technology selection criteria is based on how the business operates today and not through criteria that enable a digital future.

To best evaluate technologies for digital transformation efforts, I suggest leaders develop a set of business and cultural strategic objectives and then include a new set of technology criteria to evaluate options. I'll provide my thoughts on evaluating the business objectives in this post, then follow up with technology considerations in my next one.

Business, Cultural, and Strategic Objectives To Evaluate Transformation Enabling Technologies

Presented below are five objectives leaders should meet on, evaluate, and document prior to any review of new technologies in consideration for a business or digital transformation

  1. Develop a Shared Vision on Future Needs - Today's needs should more or less be well understood and are often capture in functionality objectives. But consider where the organization "should" be 3-4 years out and articulate a list of future objectives. Even though the implementation time for new technologies is shorter today then a decade ago, leaders today often leave out this analysis and then realize that the solution selected isn't designed for a new or transformative set of objectives.

  2. Identify Strategic Opportunities and Problems - You would think that leaders are on the same page about what business opportunities and issues they are trying to solve, but my experience is that this is rarely the case. Since transformations will involve evaluating different approaches and often multiple technologies, it's critical that leaders acknowledge a priority list of both opportunities and issues.Some of these need to be future-proofed against the future vision to help prioritize the future versus today's needs.

  3. Review Customer Segmentation and Experience - Many digital transformation efforts target improvements in customer experience as a primary benefit, so this driver is worth reviewing independent of strategic benefits and even vision. Identifying a future customer segmentation and an ideal target of customer experiences can help prioritize opportunities and differentiate solution options.

  4. Dimensionalize Multiple Solution Sets  - Ten years ago, technologies competed on a relatively narrow set of categories and capabilities such as databases, middleware, application development etc. Today's technologies are far more fragmented and so there are often multiple solutions that can be deployed with very different underlying technologies. Non-technologies executives often fail to see where two technologies directly compete on capability and where other technologies can enable entirely new types of solutions. The technology leadership team needs to educate business executives on the various solutions that are applicable and to propose priorities and pilots.

  5. Model Organizational Impact - Many technology evaluations attack organizational considerations by defining roles/responsibilities on operations once the technology is deployed but fail to reconsider restructuring or process realignment as part of the evaluation. In planning for a transformation, the leadership team should consider documenting several organizational models and use the evaluation to map technologies under consideration to people and process.

  6. Communicate Financial, Legal, Risk, and Security Constraints - While transformations can be enabled by new technologies, selecting appropriate technologies is often bounded by a number of real world constraints. Unfortunately, leaders are often unaware of these constraints or have different interpretations of their importance, so documenting these helps complete a shared vision (point #1) with these considerations.
The five objectives above map out a charter for a transformation review. In my next post (part 2), I will propose a new set of criteria to be used in evaluating transformative technologies.

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Winning Transformation by Mastering this Simple Digital Lens

"Digital Transformation is about looking at the business strategy through the lens of technical capabilities and how that changes how you are operating and generating revenues"- Isaac Sacolick

StarCIO Digital Transformation Lens

Enabling Digital Transformation

The diagram above is my digital lens. On the right side you'll see some of the new technologies that enable digital transformation while on the left side you'll see that the greatest impact is with people, collaboration and an organization's innovation capabilities to transform new digital customer experiences.

Organizations that master their digital capabilities are able to transform their business model and participate in a digital ecosystem. As I described in What is Digital Business and Digital Transformation, example of business model innovation include Amazon Prime (subscription integrating physical and digital products) and Uber/AirBNB (zero asset models),

New models and new ways of doing things will open the doors to new competitive threats which is why existing businesses should ask these two questions before kicking off a digital transformation. Businesses also need to understand new regulations and security considerations as part of their digital lens.

The Focal Point of the Digital Lens

The entire Digital Lens is driven by a culture of "Smarter Faster" defined by the talent we cultivate, the practices we mature, the operations we automate, the intelligence we gather, the collaboration we enable, the values we communicate, and the cultural transformations we champion.  Aspects of "Smarter Faster" that I've already touched on include

and more to come...

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What is Digital Business and Digital Transformation?

My first step in looking at an existing business through a digital lens is to ask two questions about how a startup might disrupt it by creating a competing digital business.  A startup does not have sunk investments, legacy thinking, and existing practices that need to transform so if you can "blue sky" what would a startup do you should get some insights on what you need to become through a digital transformation. Digital transformation are the steps an existing "analog" business must perform across multiple domains in order to be a more competitive "digital" business.

What is Digital Business?

Before looking at digital transformation, it's worth considering how some of the experts define digital business.  "Digital business is about the creation of new business designs by blurring the physical and digital world" says Jorge Lopez of Gartner. One thinks about digital supply chain management, context aware mobile experiences, and IoT using Gartner's definition.

"You must think of your company as part of a dynamic ecosystem of value that connects digital resources inside and outside the company to create value for customers" says Nigel Fenwick of Forrester. While this definition also conjures images of supply chain, Nigel's more critical point is that digital business must, "deliver a greater share of value to customers" in order to be competitive. In other words, customer experience and the value customers perceive through your channel must win a disproportionate market share versus direct and indirect alternatives.

Digital Business Disruption

This might be too abstract for some, so let's look at some example attributes of digital businesses
  • Digital businesses drives recurring revenue, often through subscription. Think Amazon Prime vs. buying goods/services through an ecommerce channel.
  • The most successful digital businesses are asset-light. Think Uber and AirBNB that market and sell services owned by individuals.
  • Algorithm driven experiences can "deliver a greater share of value". Think Waze with traffic routes based on traffic patterns and social clues delivered via your phone versus the Garmin GPS that we all had in our cars just a few years ago.
  • Digital disruptions can radically alter cost structures and price points. Think Etsy, Amazon Handmade, Craigslist, Zillow, LinkedIn, Monster, Autotrader, Cars.com and many other sites that decimated the newspaper classified ad business
  • Digital business leverage new digital tools to raise the competitive table stakes. They enhance multi-channel customer experiences, engage workers to capture ideas, and automate production steps to improve quality.
  • IoT Sensors integrated with cloud data capture platforms like Amazon IoT help connect the physical to digital worlds. Not only is this a new source of competitive real time data, it is also a channel to provide additional context and intelligence to customer experiences. MIT calls this "Digital Ubiquity".

These examples hopefully illustrate the need to transform businesses and analog products and services to digitally driven experiences. If you consider just these examples - and there are many others - traditional businesses will face mounting pressure when competitors leverage digital competitors to a strategic advantage. What's more is that it is likely that multiple competitors will emerge applying these digital capabilities in different innovative ways and when that happens it creates new industry dynamics.

Digital Transformation is an Evolution

So my conclusion is that Digital Transformation is a necessity to stay competitive. It's not a one time transformation but a continuous evolution with milestones leading to an unknown ending. It needs ongoing funding, new talent, time to think and learn, experimentation, new ways to work collaboratively, and a culture of questioning, measurement and prioritization.

So now that I've answered the What and Why, my next posts will go into the How.   

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Culture Change is Critical in Digital Transformation

How important is managing culture change in a digital transformation? By the size of the "packed room" at Gartner's session on "How to create a culture that is ready for anything", at least CIO have recognized how critical it is to either own or be a part of an organization's cultural changes.

Here are some highlights from this and other sessions related to cultural changes:

  • Culture change is about educating people on how to "live differently" and to be cross-fit to handle any number of new, disruptive, or even volatile situations.
  • An "Ironman culture" addresses how we make decisions, engage coworkers, customers and suppliers, how we measure outcomes and how we work.
  • Culture changes cannot be done in one "big bang" and must be done incrementally. Establishing agile practices, cleaning up meetings, and developing other rituals are all tools to enact culture change.
  • Today's culture requires more people becoming "hands on". The business isn't going to transform by developing presentations or spreadsheets.
  • What are the value pillars of your culture change? Is it driven by business analytics and becoming a data driven organization? Is it done through community activities (Zappos downtown project)?  

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Gartner Focuses on Algorithms as the Foundation to Digital Business

Gartner filled their opening keynote with lots of advice for the Digital CIO.

As I've been saying on this blog for some time (see posts on agile thinking, cultural practices, and program management) digital transformation is not a bunch of business driven projects that have a beginning and an end. Transformation requires significant culture changes in how enterprises work internally, how they partner, how they fund investments, who they view as competitive threats, and how they evaluate strategic opportunities.

Are algorithms the intellectual property of significance in Digital Business? Gartner SVP Peter Sondergaard sold this to the thousands participating in their keynote with an expanded view of what defines an algorithm. Yes, it can be a machine learning algorithm, but it also might be the secret ingredients in your product (Heinz Ketchup) or proprietary steps in your workflows. Gartner suggests that the Chief Data Officer role should grow beyond "data" by taking inventory of the key algorithm assets in the enterprise.

CIO's Role in Digital Transformation

The keynote ended with some key advice from Gartner VP Mary Mesaglio on success in digital transformation. The CIO has to end "cloud fear" and "legacy fatalism", make innovation a core competency, and take steps to become the CEO's "trusted ally" in digital transformation.

My next few posts will summarize some of my key learnings from the conference and highlight some of my social activity. Tweets below are from the opening keynote.

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