Product line management is fundamental to the new IT operating model

Digital transformation requires CIOs to rethink the way IT operates. At the center of the new IT operating model is product line management, explains CEB's Matt McWha.

Editor's note: Andrew Horne, IT practice leader at CEB, co-authored this tip on product line management.

Big data, the internet of things, machine learning, social and mobile technologies -- companies are using these capabilities to transform their products, channels and operations. While digitization presents many new sources of value, it also requires IT to rethink the way it operates. Companies can only take advantage of digitization if CIOs make fundamental changes to the IT operating model

To understand how and why IT needs to change, let's take a step back and look at what's going on in the broader organization:

  • IT strategy is no longer derived from business strategy, it is business strategy. Digital opportunities and risks are now critical inputs, so IT leaders must work hand in glove with the rest of the leadership team to set the course for growth.
  • Business projects are increasingly technology projects: 73% of all corporate priorities now depend on technology, according to 2016 polling by CEB. This introduces greater volatility into technology planning, so companies are increasingly relying on "test and learn" and "minimum viable product" approaches.
  • Functions outside IT are spending more money on technology. Whereas IT used to be the sole provider of technology, it now often takes the role of a consultant, coach or broker, enabling other business leaders to procure and manage their own technologies.
  • IT is increasingly seen as a driver of company revenue and innovation, but this comes with a huge premium on speed, and recent research has shown that 64% of business leaders believe their organizations aren't yet quick enough.
    Matt McWha, IT practice leader, CEBMatt McWha

Faced with these trends, many CIOs are looking for an IT operating model that's built for speed and flexibility, and that recognizes the blurring boundaries between IT and other parts of the business. At the center of this new model is the concept of product line management.

Product line management involves the allocation of IT funding, staff, and governance authority to a handful of product lines -- sometimes referred to as "end-to-end IT services" or "value streams." These product lines ideally align to the organization's most important business capabilities, which are the core activities business partners need to accomplish their objectives (e.g., customer support or employee onboarding).

Product line management vs. project-centric

Product line management differs from the typical project-centric approach to funding and delivering work in a handful of ways. Product lines represent ongoing streams of work that are funded top-down based on their strategic importance. They are supported by dedicated delivery and management resources, and are measured based on product outcomes (e.g., cost, volume, value delivery).

The shift in the IT operating model toward product lines over projects promises several potential benefits:

  • better alignment of initial IT funding and resource allocation to the organization's most significant sources of value;
  • greater flexibility to test and learn when business needs change, as IT product line managers can use their knowledge of the product line strategy to shift money and resources by presenting key business stakeholders with trade-offs between speed, cost and capability;
  • reduction in cost and effort required for decisions and activities (like business case creation) that previously happened at the project level and now are elevated to the product line level or eliminated; and
  • creation of dedicated, product line-based delivery teams that can serve as the foundation for continuous delivery via Agile and DevOps.

Moving to product line management has the potential to dramatically reshape IT staff roles. Strategy, governance, and management activities traditionally carried out by functions such as the project management office (PMO), the enterprise architecture group, information risk and the Office of the CIO are changing.

Business projects are increasingly technology projects, as 73% of all corporate priorities now depend on technology.

Some activities, such as prioritization and resource reallocation, will be carried out more frequently by product line managers than by a PMO. Others, like ensuring adherence to architectural standards and principles or managing information risk, will be automated or delegated to product line-based solution architects, developers and business staff.

Jump-start your new IT operating model

Given the magnitude of this change, it won't happen overnight, but IT leaders can jump-start their move to the new IT operating model in three ways:

  1. Work with business partners to define a targeted set of product lines that align to the organization's most critical business capabilities. To identify these capabilities, IT leaders can use enterprise and business-unit strategic plans, senior executives' performance goals and business partner interviews.
  2. Determine the relative importance of product lines and allocate funding proportionally. IT leaders should guide senior business partners through a structured tradeoff exercise that weighs the importance of the product lines. They should then use those weightings to guide initial capital allocation.
  3. Identify and empower a manager for each product line. Product line managers work with all relevant business stakeholders to create a strategic capability and investment roadmap for each product line. They oversee the product line's full lifecycle, continually shifting funding and resources when the product line's strategy and investment roadmap change.

Digitization efforts are bigger and broader than ever, and they require IT to fundamentally rethink its operating model. The shift to products over projects is just one feature of the new IT operating model, and we'll explore the others in future columns over the course of the year.

About the author:

Matt McWha is an IT practice leader at CEB, a best practice insight and technology company. He has worked with senior IT leaders to enhance their understanding of governance, project, and portfolio management challenges in a dynamic work environment.

Since joining CEB in 1999, Andrew Horne has authored studies on topics including IT strategy development, performance and value measurement, business intelligence and big data, IT staff and leadership development and IT innovation. He wrote about the new IT operating model in December.

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