Internal technology organizations are often considered cost centers that “deliver” projects; based on the pre-determined requirements from the business functions within that enterprise. The technology delivery process has evolved from the traditional “waterfall” manner to an Agile and DevOps-based approach, that has successfully accelerated delivery. However, a project-based approach; results in every initiative having a finite life. It leads us to the question – is every task we get rolling out, a finite initiative? We strongly disagree. Every application or system is designed and developed with an intended business outcome in mind. Practically, these outcomes do not have a limited shelf life, then why is the initiative to build the application or system finite? Hence, we believe the answer lies in a product-centric approach to technology development and delivery.
Let’s take the instance of a Loyalty Management Platform that a newly established airline is implementing. As a greenfield implementation, the airline chooses to implement a product and then customize it to their specific program needs. Let’s assume that it is executed with a project mode where the IT organization within the airline forms a team that works with the product vendor and implements a customized version of the product. We live in a volatile, complex, and ambiguous world in which change is the only constant. Once the airline launches, they realize that changes need to be implemented to the platform based on real-life customer feedback. They need to be implemented as quickly as possible without disrupting the operations. But due to practical considerations of the project-based delivery approach, for instance, perhaps the project team might be dismantled, and new funding needs to be requested for these changes, the situation gets complicated.
There is an alternative to mitigating this situation from happening. Let’s assume that rather than using a project approach, the airline plans the customized implementation of the loyalty platform as a product. With a product-centric approach, the airline assembles a team that consists of staff from the loyalty business team, the technology team to form a product team under the leadership of a techno-functional product owner. The team continues to prioritize features after the initial implementation is completed, and when the airline needs changes, they are added to the feature list and given the highest priority to be part of the subsequent product release.
In a product model, resources are planned around products instead of specific projects. In the product mode, each product team manages a defined product or set of products. The team develops a product roadmap that precisely shows how the products can meet customer expectations. Every aspect of the roadmap is set with measurable business outcomes.
What are the benefits of the product-oriented approach?
- Ability to respond to market changes quickly: Product based enterprises rely on customer feedback to prioritize processes. This results in better business outcomes and increased agility because success is measured based on the value being delivered to customers instead of milestones reached during the process.
- High business impact: There have been instances in which IT Projects have been delivered with clockwork efficiency but have become obsolete and hence have a low business impact. With outcomes achieved, the impact will be certainly realized better for organizations with the product-based approach.
- Faster value realization and ability to re-invest value realized: Product models encourage collaboration, between technology and business and even with customers, and hence, can meet customer expectations and business outcomes. Since the product is developed by prioritizing the business and end-users needs, adoption is higher. This leads to faster value realization and the actual ROI can be re-invested in a future iteration of the product development.
The transition from project to product model
Shifting to a product model will often involve aligning complex changes across a range of operational areas. There are various aspects to be considered while moving from project to product.
Budgeting
The essential approach has to be “Fund a product and not a project”. In budgeting and funding a project, enterprises earmark fixed funds intending to deliver the project on time and on budget. In a product approach, the first and most essential step in the shift will be for the teams to build a product map. The product roadmap should incorporate clear expectations for product development over the next few months along with the business outcomes that will be delivered. The funding should be provided for a duration and aligned to the delivery of business outcomes as this offers the opportunity for course correction.
Success measurement
The product-oriented approach steers organizations to focus on measuring business outcomes and customer-centric KPIs such as operational efficiency, customer loyalty, and market penetration. They also try to measure and evaluate the comprehensive performance of individual products at different stages in their lifecycle.
They move from a cost center mindset for technology organizations to treat them as business units that can generate income. Most importantly, they align metrics across technology, finance, and business functions for consistency in reporting value delivered.
Perhaps, one of the most significant aspects of success for this model is to have a collective success measurement criterion between business and technology teams and to have a “one-team” mindset.
Risk management
Some risks are unpredictable and the most advanced risk management techniques cannot help identify them. Risk management is one of the most challenging aspects of project-oriented organizations. Product centricity gives the ability to react to external factors and re-prioritize tasks hence helping to mitigate risk.
Cultural shift
“Product” mindset: The shift to product-centricity is about more than just embracing new strategies of planning, organizing, and delivering. There are more cultural dimensions to the “project-to-product” transition that play a significant role. Culturally, product-centric organizations go beyond customer-centricity. A product-centric mindset prioritizes value creation over the process.
The collaborative approach of business and technology teams: The transition from delivering specific lists of requirements and features, to becoming product teams that understand the customer journey, their needs, and the measurable outcomes to be achieved involves a collaborative effort of the business and technology teams. Cross-functional teams can then ideate iteratively towards the best solutions that deliver the desired business outcomes.
Conclusion
As made evident by the onset of the COVID-19 pandemic, the travel industry needs to respond to disruptions effectively and even innovate in times of adversity. Such quick, effective responses to disruptions and emergencies come from factors such as continuous efforts in innovation, and collaboration in cross-functional teams. We believe that a product-centric IT model establishes a model that will help travel enterprises to react quickly to external changes while also providing a mechanism for attributing business outcomes to IT spend.