“Organizations that manage IT delivery as projects instead of products are using managerial principles from two ages ago and cannot expect those approaches to be adequate for succeeding in this one. Visionary organizations are creating and managing their Value Stream Networks and product portfolios…“
Mik Kersten, CTO and author
Dear all,
Sorry to keep you waiting for new installments of WR. We did move house just before Xmas, and the after-effects still require me to moonlight more as a handyman, electrician, smart-home technician, etc., and write less than I had hoped.
But back to business. Last week started with an interesting conversation with the CIO of one of our clients about which benefits of a product-oriented IT organization might be significant to a CFO.
A few arguments came to my mind:
Product-oriented IT is impact-focused. It is usually organized around value streams aiming to improve some business KPI, ideally linked to a customer benefit.
Once established, product teams typically stay the same. Unlike projects, they constitute a predictable cost factor, requiring less controlling and re-budgeting effort than the typical host of overlapping IT projects.
In combination, these two factors also allow for gauging IT cost-benefit ratios more effectively.
True product orientation also improves business agility. Unlike project organizations which are output-driven, a product organization’s impact focus will almost automatically drive adjustments if the business environment changes.
Arguably, a product-oriented IT setup will, in addition, improve effectiveness. With product teams managing application development for impact, „business“ and IT must agree on priorities to optimize available resources and funds.
Unlike project-based organizations, product organizations also deliver value continuously, decreasing time to impact and, consequently, business benefits by avoiding the stop-and-go of project-based delivery.
This effect is enhanced by the fact that true value stream-based product orientation reduces dependencies. Reduced dependencies, in turn, increase the likelihood of in-time delivery as every avoided dependency doubles the chances of delivering without delay.
Recent research into the positive effects of employee tenure suggests that product-oriented IT may also be more innovative. Product teams are focused on one value stream and therefore develop a deeper understanding of the business- and users‘ requirements relating to it.
In addition, stable product teams do away with the inherent inefficiencies of a project model. Relieved from context-switching or even multi-tasking, developer productivity and error rates typically improve substantially.
In short, a truly product-based IT setup increases business agility, improves the effective use of IT resources, and reduces budgeting and controlling overhead.
Here are three additional perspectives on product-based IT:
Gartner Survey Finds 85 Percent of Organizations Favor a Product-Centric Application Delivery Model –
Results from a Gartner Survey
Product-based IT: A bold shift to business value
CIO Magazine ponders the differences between project- and product-based approaches
Shifting To A Product Mindset Can Make Your Digital Product Thrive
Appnovation’s Steve Perez shares his ideas for developing a product mindset
Enjoy the rest of your weekend!
All the best,
Godehard