Product-based IT: A bold shift to business value

The shift toward product-centric IT has accelerated of late, as more IT leaders find project-based delivery models untenable for achieving their digital transformation aspirations.

In traditional project management, business units build software, churning through task lists and tracking budgets against carefully calibrated timelines. The overall organizational strategy and roadmap is typically not considered in project-based IT delivery models, and waterfall is the preferred development method within these fiefdoms, which jealously hoard KPIs and other metrics that help gauge business value, according to analyst firm Gartner.

Product-led models, on the other hand, are fueled by cross-functional, co-located teams comprising developers, product managers and business analysts who work together to craft business capabilities. Such teams employ agile and DevOps methodologies to provide continuous, iterative delivery of a specific product feature in a business process, such as search or order fulfillment. They measure value streams — the set of interactions required to produce meaningful outcomes — with KPIs accessible to all.

Whereas project management structures result in slower delivery timelines and questionable outcomes, product-centric IT models yield quicker business results, improved customer experiences and reduced organizational friction, boosting trust as the business aligns toward the same goals, Gartner says.

This ongoing shift toward product-based IT underscores how traditional companies are following in the footsteps of Facebook, Uber and other digital-native companies whose products are designed to delight consumers.

Product model accelerates digital home remodeling

Power Home Remodeling is one such organization teaming up software developers, Scrum masters, site reliability engineers and business staff to build digital products that better serve the needs of the company’s employees and customers.

As have most companies, the $900 million firm has had to accelerate the timeline of several products in the wake of COVID-19 and resulting social-distancing restrictions, says Jenny Gray, Power Home’s senior director of application development.

First up this spring is Home Tour, which will enable remodeling consultants to provide clients a visual walk-through of products they believe will work well in specific residences. Remodeling consultants will use iPads to snap pictures and make recommendations, capturing critical property information for Power Home.

Want to see how a double-hung window with a four-pane grid might look? Or to know what relacing or repairing a leaky window loaded with rot might cost? Home Tour fits the bill. In time, this tool will incorporate augmented reality, overlaying critical information atop images of homes to help improve decision-making for remodelers and their clients.

“It will be great to step back from a home and look at how it would look like with different siding, or what a new front door will look like,” says Gray, by way of example.

More important than the single product is Gray’s rapid development and iteration process, which leans into agile and DevOps methodologies to enable her teams to push between 15 and 50 features into production every day.

To ensure its business and tech teams achieve cohesion, Power Home teaches remodelers and customer service staff to code in Rails, which Gray says help stakeholders grow and learn together.

Product management for songwriters’ rights

The American Society of Composers, Authors and Publishers has undergone a similar shift to product-led IT as it works to ensure its 800,000 songwriter and publisher members are properly compensated for their 11.5 million works. The nonprofit organization’s application developers and product owners meet quarterly with business stakeholders to hash out digital product and feature roadmaps for the year, says CTO Tristan Boutros.

ASCAP, which is harnessing cloud infrastructure and analytics to more precisely allocate royalties for its artist members, builds software incrementally in two-week sprints using software from Atlassian to track the status and performance of application builds as they wend their way through DevOps pipelines, Boutros says. Daily standups are part of the culture, with consistent KPIs and other metrics helping ASCAP to align value streams to business outcomes.

“We treat our IT systems as living products,” Boutros says. “There is one team, one backlog and one customer mindset.”

Product-led IT still requires governance

But here’s the dirty little secret: The shift from project to product management is harder than it seems. Moreover, most organizations aren’t good at it.

Only 27% of organizations say they have pivoted to product teams for software development, according to a survey of 266 digital and IT professionals conducted by Forrester Research in 2020.

By 2023, 40% of large enterprises will manage internal business capabilities as products to drive continuous innovation and competitive advantage, Gartner predicts. More than the 27% today, but still not where most companies would like to be.

Indeed, organizations are finding the shift to product-led IT isn’t as simple as flipping a switch; it requires a new governance model.

Gartner recommends that organizations swap one-size-fits-all governance with an adaptive approach to governance that contextualizes decision rights and balances product needs with enterprise goals. Enterprises should also shuffle the operating model orientation from cost to value and adjust its components, ostensibly to boost agility.

“As business operating models become more product-centric, CIOs must modify IT governance and the I&T operating model to support this shift and enable their enterprise to respond to market demands with speed and agility,” wrote Gartner analyst Remi Gulzar in a 2019 research note.