Re-Purpose the Central IT Organization
The resources, knowledge, leadership, and expertise that have traditionally resided in centralized IT organizations will continue to play a critical role in the successful operation of a digital business. Achieving this value does not rely on fully decentralizing the traditional IT organization or its capabilities and resources. Instead, the important question becomes what resources and capabilities to retain in a large-scale central organization, and which to embed with Product and Business teams. To best guide these decisions, the value proposition for a large-scale centralized technology organization must be re-evaluated and re-purposed with a clear mission that serves the goals of the Digital Operating Model.
The most important consideration to highlight here is that the central IT organization is no longer the core of the Digital Operating Model, which is now made up of Digital Product lines. Its new purpose is as an enabling foundation for Digital Products and the value they create. In practice, realizing the value potential of a large-scale, centralized technology organization within the digital business lies in successfully executing across four priorities:
Digital Enabling Product Portfolio
As an example of the potential for this enabling foundation, consider development capabilities that are likely to be embedded within Product teams across the business. The central IT organization may provide foundational, enabling Digital Products such as low-code solutions, integrated development environments, Application Programming Interface (API) libraries, and other tools and platforms. IT established governance can include secure coding standards and development best practices. Above all, IT curates a centralized pool of delivery resources that can expand and contract flexibly, supporting volatile delivery demand for Product teams across the business, while maintaining efficiently-sized organizations.
Large scale, Agile delivery taking place across multiple Product and Delivery teams without a common set of standards can introduce unnecessary risk, lead to duplication of capabilities, funding inefficiencies, or otherwise erode value across products and portfolios. At the same time, any governance should take into account the need for flexibility in delivery and operations across teams. Also consider that governance will need to continuously evolve based on the needs of the business as well as changes in technology, delivery, and operations methodologies.
A central technology organization responsible for large-scale digital delivery as well as owning the Digital Enabling Product Portfolio (including infrastructure, network, large-scale platforms, etc.) is the ideal organization to set and drive overarching digital governance. This includes driving business-wide standards, processes, and best practices.
The central technology organization will often represent one of the largest owners and managers of Digital Products, each with their own Product Managers and Product teams leveraging the same overarching value-management strategy and with the same accountabilities and responsibilities as other Product teams. Value Management Through Product-Centricity described five implicit product and portfolio types including Digital Enabling products that enabled the technology supply chains leveraged by other Digital Products, and internal end customers that deliver productivity and collaboration capabilities across the business. A central technology organization is best suited for both the management and delivery of these portfolios.
At a high-level, the criteria for aligning product management within a large-scale technology organization are large-scale delivery/consumption and industry commodity. For example, consider the need for collaboration capabilities across the entire business that is the same for businesses of any size and across any industry vertical. Management of these products rarely warrants business-internal innovation, and is typically focused more on quality, availability, and customer experience while managing costs by leveraging common vendors and best practices for operations. Note that using these criteria, there may be cases where Digital Products and Digital Product lines that enable internal business operations (Internal-Business Enabling Digital Product types) may reach a scale and consistency in operations that it makes sense to shift management out of the Line of Business and into the central technology organization.
While Digital Products and Product teams within the Lines of Business often receive most of the visibility for innovation, it can and should remain a major priority for the central technology organization. The impact of innovation within the Digital Enabling Portfolio and technology supply chains cannot be understated. A relatively minor innovation in this area – a gain in efficiency, speed of delivery, cost reduction – can have value-creation ripple effects across dozens or even hundreds of Digital Products across the business. Also consider that, with their technology domain focus, digital delivery resources within the central technology organization are just as likely to identify innovation opportunities in any Digital Product or portfolio they may support that may not have been identified by Product teams or embedded delivery resources. Considering the opportunities across so many areas it is vital for the leadership of the central technology organization to recognize continuous innovation in their domain as a major value potential for the business and to encourage, recognize, and reward these contributions.
Another priority for the central technology organization is to enable a right-sized pool of delivery resources that can facilitate outcomes driven by Digital Product teams across the business. This delivery encompasses common technology domains of expertise including software development, data science and business intelligence, and engineering of infrastructure, all of which a large-scale, central technology organization is well positioned to support. The real challenge for these organizations lies in the now highly unpredictable levels of demand and risk inherent in digital delivery. Digital delivery demand across a digital enterprise can spike or fall off dramatically with no warning and last for unanticipated periods of time. Simple demand prioritization can lead to delays resulting in lost opportunities and even lost revenue, all while leaving other Product teams in perpetuity waiting for support and putting undue pressure on Delivery teams that can sacrifice quality or introduce risk. At the same time, over-sizing Delivery teams can leave resources “on the bench” for far longer than anticipated and lead to significant loss of value throughout multiple Digital Product portfolios. To minimize value erosion and delivery risk across the business, digital delivery must be both Agile and highly-elastic, and even then capable of relying on dynamic work assignment and decentralized work prioritization.
The key to supporting these requirements is to move past strictly hierarchical, formally-structured teams with small numbers of fully dedicated direct reports and to, instead, approach digital resourcing as coordinated Centers of Excellence (CoEs) as shown in Traditional Organization versus Center of Excellence. In a CoE, resources are loosely organized and may not be formally aligned to the same reporting structure organizationally. Resources may also be committed to the CoE full-time or in increments, allowing for multi-discipline resources to respond to delivery demand across multiple CoEs. Organizational Models discusses organizational models that can be leveraged by CoEs for further elasticity. Another important step is to leverage new models for classification and engagement of the resources (internal and external, permanent, and part-time, even “gig workers”), also described in Organizational Models, and to transform the approach and structure of agreements with partners and MSPs. Successfully updating these mechanisms will require the central technology organization to work closely with Finance, Procurement, HR, and any digital resource and Digital Value Management teams – all with a clear understanding of the Digital Operating Model.
Management of a CoE focuses on broad resource coordination, guidance and support for qualification of the delivery capabilities of individual resources, and continuous demand assessment. It is also important to remember that the capabilities, solutions, and outcomes delivered by CoEs are considered products themselves. This means that CoE management also incorporates Product Management, and shares all of the same accountabilities for managing value and risk associated with the “products” delivered by the CoE. This is a critical element of driving product awareness and product thinking with teams and resources that are primarily delivery focused.
In order to support the broadest range of Product teams, all delivery resources, including partners and MSPs, must be capable of working within a range of old, new, and evolving delivery methodologies. Delivery resources lacking tools or failing to understand and engage via the same methodology as Product teams can introduce delays and risk to the product lifecycle.