What is the most adequate operating model for software products and platforms?
A lot of companies today are choosing to aggregate their digital divisions with their traditional IT by bringing them into a single technology operating model.
Combining digital operations -- in which cross-functional teams apply new technologies and ways of working, such as agile, to improve user experiences -- and traditional IT delivery (in which technical specialists develop and maintain core business systems according to traditional methods) makes a lot of senses except for the fact that moving to an integrated technology operating model does require significant cultural change: further, to achieve the technical agility of a digital native, it is often enough to form integrated, cross-functional technology teams, which define forward-thinking technology organizations.
Part 2: Creating a governance model
Each team in an integrated technology organization should have its own leader. Companies might also think about getting a head of products, a head of platforms, and a head of infrastructure services. In addition, integrated technology organizations need a central team to balance the priorities and resource requirements of product and platform teams and to coordinate any overlapping or related activities, particularly when it comes to prioritizing changes to platforms. Here are some actions that such a central team could take to govern integrated technology organizations well:
Define value-focused performance metrics. Defining a few performance metrics for each team, in partnership with business leaders, will help tell whether teams are on track. Such metrics should measure both value creation (“Is the team contributing to the business?”) and the delivery of work (“Is the team meeting its commitments?”). For example, the team managing the search product previously described might be assigned a target for increasing the proportion of online searches that convert to sales, in support of a broader strategic goal to lift e-commerce sales.
Create processes for tracking and reporting. Because they should have consistent workflows for collecting performance updates from product and platform teams (with particular interest in whether business-value and other targets are being met and whether any interdependencies are causing delays) and synthesizing those into reports that can inform a leadership team’s strategic decisions.
Gradually adopt an agile funding model. It is common for technology organizations to allocate funds for products and platforms on an annual—or even less frequent—basis. By contrast, an agile funding model ties new releases of funding to the achievement of development or performance objectives. This approach keeps teams focused on delivering value and prevents companies from backing struggling initiatives merely because funds were already allocated to them. With respect to the search product mentioned before, the team might receive initial funding to create and test a new function but only receive full funding to develop and launch the function if user tests show that the new function increases the likelihood of sales conversions.
Establishing a system to prioritize and deliver technology work
Even though technology teams and roles might be well defined, coordinating their many activities can be difficult. Leaders should therefore create a system for maintaining order in how product and platform teams respond to the business’s demand for technology services.
One feature of this system should be processes by which a technology organization aligns product and platform road maps with the business’s priorities. The head of each business function should have a single contact within the tech organization, likely a product manager or user-journey lead, who is responsible for understanding the function’s priorities and translating them into a set of desired technology features, recorded on product backlogs. Product managers then work with their platform-team counterparts on updating the platforms’ development road maps to incorporate the features that products require. (Functional leaders should also assign their personnel to product teams when necessary to speed development.)
Product and Platform teams via a digital delivery handle and prioritize technology requests from business functions:
Business Functions (1) Product leaders (and cross functional product teams (2) Centralized operations management office (3) platform leaders (and tech-led platform teams (4) Product Leaders (and cross functional product teams (2)
The operations management office also helps manage the dependencies among teams, particularly product teams’ dependencies on platform teams, while clearly understanding that product teams can depend on platform teams but that platform teams never depend on product teams. This is in order to prevent any one product team from restricting the work of a platform team because that can interfere with what other product teams want to do. The one-way nature of dependencies between products and platforms might require product teams to postpone the release of certain features while platforms are being updated and to fast-track other features in the meantime.
The operations management office helps manage dependencies by reviewing each team’s road map to identify the impacts of any planned changes. It also holds regular meetings with product and platform leaders to go over the value and feasibility of the features they want to add, identify new dependencies, and negotiate teams’ competing interests (such as product teams’ needs to borrow the same personnel from platform teams and product teams’ simultaneous requests for additional platform features). Some digital-delivery offices establish a common release cadence so that they can more easily coordinate assignments of resources. Other practices, such as feature flagging, can prevent dependencies from delaying releases.
Last, integrated technology organizations should look for and seize opportunities to modernize IT products and platforms as they are working on requests from the business for new features and solutions. For platform teams, especially, modernizing core systems in the course of their normal work ensures that the platforms remain capable of meeting increasingly sophisticated technical requirements from product teams. Platform teams should also reserve capacity to ensure that any changes are exposed in as-a-service offerings for all product teams to use (through an API endpoint, for example). This approach not only ensures that changes to platforms support multiple products without adding duplication or complexity but also allows product teams to build new capabilities without always engaging platform teams.
Let me know what you think!
DM me @philippemora on IG and Twitter
My name's phil mora and I blog about the things I love: fitness, hacking work, tech and anything holistic.
Head of Digital Product
thinker, doer, designer, coder, leader