Medco’s Agile Enterprise

Kenny Klepper, president and COO of Medco, gave the second keynote at the Forrester BP&AD Forum today on their business transformation. I saw him speak at PegaWorld earlier this year (and Pega even published the video), so this was a good update on what they’re doing – check out those reference for background on Medco and more information.

They’ve created an enabling architecture – frameworks, service bus, data fabric, data management and data warehouse – that enables their agile enterprise, and he believes that this level of supporting technology just couldn’t have been created a few years ago. We’ve reached a tipping point, where the technology has empowered the business for self-service, leading back to the themes from the opening keynote earlier: they’ve moved hundreds of people out of their IT groups and into centers of excellence, turning them into mentors and innovators rather than just back-room techies. What’s key is that they didn’t create some new group for the fancy new technology, but changed the roles of their existing people to allow them to take on the challenge. This resulted in business process centers of excellence, business innovation and agility centers, core IT centers of excellence, and operations centers, all working in concert. They don’t see this as a technology play, however, it’s financial: he sees these four centers as key to their return on invested capital, and an earnings-generating activity.

They use embedded “imagineers” with no technology constraints and rapid prototyping tools to rethink their business processes, not just apply some incremental process improvement techniques. This links up the market view of the business innovation and agility centers with the internal view of their operations centers, then pushes the innovations back through the business process and core IT centers of excellence. The result: they’re seeing business changes in days, not weeks or months.

This new agile enterprise structure has changed how they deploy and manage capital: they allocate capital both for growth and productivity, rewarding agile methods in order to incent movement away from legacy projects and into the new infrastructure. Interesting idea: choke off the funds going to the old legacy development, and people will start to focus on moving off the platform.

This has obviously been a huge success for them, both financially and in the enthusiasm of the people in their organization: the video clips that he showed were mostly of the business people who are impacted positively by this, one of whom claimed that you would have to “pry [the system] out of my cold dead hands”. We should all have such passionate stakeholders.

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