As orgnizations orient towards a product centric structure, they realize it’s just not organization structure which needs to change but the entire way of working.
Organizations are increasingly embarking on Digital transformation journey by revamping their technology landscape. The buzz around new-age technologies like cloud, bigdata, blockchain etc. excites many organizations to focus on technology implementation but their organization structures are still oriented in a traditional way which makes it difficult for them to reap the benefit of Digital transformation programs.
It is not surprising that in a recent Harvard Business Review study of almost 1500 IT projects it was found all but one in six projects had a cost overrun of 200% on average and a schedule overrun of almost 70 %. After embarking on a Digital transformation journey, it is extremely difficult to alter your organization structure, which ultimately leads to limited value realization from such programs.
CIOs of global organizations are now realizing the need to fix their organization structure first before staring on any major digital initiative. The new paradigm in organization structure is to organize functions by a set of modular capabilities called “product”. Each “product” is identified as a set of independent logical capabilities that deliver a specific business goal. The objective is to ensure sustained Business-IT partnership, reduced time to market with a Agile/DevOps mindset.
In a Banking organization, products can be Retail, Cards etc while in Retail organizations it can be Logistics, Merchandize and e-commerce, POS etc. Apart from how an organization is organized, there are fundamental differences between how a traditional IT operates versus a product centric IT
To create a product centric IT structure, one needs to start small and some of the key steps in building such a structure are:
- Identify products : For your business, identify key products, operational and customer-facing capabilities, and organize existing run and transform activities in alignment with the products.
- Create product-centric teams : Each product teams are “fully-functional” teams equipped with a Product Manager which represents business, architects and full-stack developers who have skillset to develop, test and maintain code.
- Roll out pilots : Instead of a big bang approach, focus on releasing pilot products, define clear steps and mini-initiatives to achieve the end-goal of transitioning to a product centric model. The aim of these pilots should be to test end-to-end the process, technology and skillset required to operate a product centric team. Having such a structure enables to fully leverage processes such as Agile, DevOps along with latest tools for automation.
- Set-up transversal teams : After rolling out few pilots, it will be important to identify any duplicate process or functionality followed across pilots. These functionalities are a good candidate for transversal teams which cuts across products. Transversal function candidates can be Infrastructure, Helpdesk, Cloud, COEs, Vendor management functions etc
- Define incremental roadmap : Finally, pilots should be scaled up across the whole organization and tranversal functions should be activated.
To achieve a successful transformation to a product centric organization, requires fundamental changes to an orgnizations capability, investment model and more importantly culture. The core of this model is the product manager role around which the model pivots.
As orgnizations orient towards a product centric structure, they realize it’s just not organization structure which needs to change but the entire way of working. Once done right, it helps in aligning the structure, technology and processes to seamlessly work together and helps provide flexibility to rapidly innovate and at the same time improve customercentricity .
However, many times it is observed that as organizations embark on their product-centric journey, they lose the focus on optimizing their current capabilities which will still be valid in a product centric structure. It is important that organizations should continue any intiatives such as standardizing processes across verticals, cloud adoption, automation, vendor consolidation etc. as they ramp up their product centic model.
CIOs across the world always had one aspiration for their IT department – we want to be as agile as “Amazon” or “Spotify”. Probably, the missing link was always the way they were set-up and not just the technology or the processes elements.
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