Successfully Transitioning to Product IT Operating Model: Four Key Elements to Organizing Teams

Successfully Transitioning to Product IT Operating Model: Four Key Elements to Organizing Teams

In the world of IT, agile is the new currency. With growing agility in development of new business models as part of digital transformations in enterprises, Agile as an approach to develop software faster and better is now getting constrained by the a) Organisational constructs of siloed plan/build/run organizations and b) legacy, monolithic and shared systems. With 97% of IT organizations using agile development methods today, conversations at the CXO level are not just about technology outcomes but about the business value and building an engineering culture – similar to that of leading tech companies like Netflix and Spotify.i

Large enterprises, with traditional IT organizations that are now in the journey of business-driven digital transformation are witnessing changes across four dimensions:

  1. Shift to a Product IT Operating Model

    (design of the IT operating model).

  2. Restructuring of teams to align business and technology capabilities to business outcomes.
  3. Modernization of application and infrastructure portfolio to embrace decoupled systems and cloud native microservices.
  4. Scaling up of agile DevOps practices across BizDevOps and DevSecOps.

All are topics of intense debate and research that can amplify insights around agility and experimentation for enterprises looking to make the shift. One of the most public transformations in progress is that of BMWii. The other case study is that of ING, the Dutch banking groupiii. However, there is no single right approach to driving digital transformation given the different contexts enterprises operate in, but the premise is accepted and business cases have been successfully built.

The element of team organization in the context of a large and global enterprise IT function (with all of its complexity around multi-vendor outsourcing, global spread of business and monolithic legacy systems like mainframes or SAP) is core to the change. The key hypothesis of a productized team is that they are organized structured according to capabilities based on business relevance and within the boundaries of enterprise architecture. For instance, in the retail industry, Buy Online Pickup in Store (BOPIS) is a business relevant capability.

Basically, product teams own the ideation, planning, building, testing and running of IT value streams (increasingly called squads) – a term popularized by the Spotify model. However, enterprise IT teams struggle with the twin challenges a) of defining a product. b) scaling problem, for example a business capability could have multiple squads/Pods/teams spread across vendors and geographies.