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CEB CIO Leadership Council
28-July-2016
Products Over Projects
IT Operating Model for Digital Webinar SeriesJanuary 2017
28-July-2016
A Framework for Member Conversations
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3© 2015 –2017 CEB. All rights reserved. CIO170432PR
28-July-2016
ROADMAP
Introduction to Product
Management
Creating Product Lines
Managing Product Lines
Coordinating Product Lines
4© 2015 –2017 CEB. All rights reserved. CIO170432PR
28-July-2016
DIGITIZATION CHANGES THE MEANING OF IT
Cost Center (SG&A) Digital Transformation Driver (COGS)
All IT Projects Are Business Projects All Business Projects Are IT Projects
Sole Provider of Technology Partner with Business Led-IT
Business Strategy Drives IT Strategy Business Strategy = IT Strategy
Source: CEB analysis.
5© 2015 –2017 CEB. All rights reserved. CIO170432PR
28-July-2016
WHAT TODAY'S IT OPERATING MODEL MUST DELIVER
Source: CEB analysis.
Flexible ways of working
Faster clock speed
Greater business domain knowledge
Improved customer experience
No reduction in reliability and cost efficiency
1
2
3
4
5
6© 2015 –2017 CEB. All rights reserved. CIO170432PR
28-July-2016
Project # 165211
Catalog # CIO165211PR
Year Range 2016
NEW IT OPERATING MODEL FOR DIGITALKey Features of the IT Operating Model for Digital
PM
O
Adaptive Business Engagement 2
Strategy Over Governance, Management Over Operations
7
Data Strategy Over Ownership
Adaptive Skills and Mindset
Agile, DevOps, Continuous Delivery
3
Operations and Support
Infrastructure Engineering
Cloud-Based Scalable Infrastructure6
Products Over Projects 14 Customer-
Centric Design
Applications Building Blocks5
Enterp
rise Architecture
Inform
ation R
isk
8
9Applications Development
Source: CEB analysis.
See p. 32 of this presentation for definitions of each of the features
7© 2015 –2017 CEB. All rights reserved. CIO170432PR
28-July-2016
PROJECTS VERSUS PRODUCTS
Project Product Line
Lifespan ■ Point-in-time ■ Ongoing
Scope ■ Deploys a specific application or infrastructure technology (e.g., ERP or network) and related business change
■ Supports a product (e.g., a customer-facing platform) or a capability (e.g., customer support)
Managed by ■ Project/program manager ■ Product line manager/service manager
Funding Approach
■ By project, based on individual business cases.
■ By product line/capability, based on their strategic importance
Metrics ■ Project inputs (e.g., schedule, budget, scope)
■ Product outcomes (e.g., quality, cost, volume, value delivered)
Source: CEB analysis.
8© 2015 –2017 CEB. All rights reserved. CIO170432PR
28-July-2016
EXAMPLE OF A PRODUCT LINEHypothetical Example of a Product Line
IT Product Line (Owned by a Product
Line Manager)
Product Pricing
Source: CEB analysis.Source: CEB analysis.
Sample Functionality
Shared Apps and BI Infrastructure(Owned by a
Central Apps and Infrastructure Team) Hosting, Storage, and Network
Manage Product
Promotions
Manage Discounts
Review Product
Performance
Create Dashboards
How Product Lines Help With Digitization
1. Reduced Complexity for Business Leadership: Business leaders know who in IT is responsible for supporting a given business capability and understand how IT can help with digitization and what it costs.
2. Fast, Flexible, Knowledgeable Responses from IT: Product line managers respond quickly to digitization opportunities because they have the necessary business relationships, domain knowledge, and control over the technologies and IT resources involved.
3. Preserves Central IT Efficiency: IT remains centralized and can achieve scale and efficiency.
Review Customer Behavior
Pricing Application ERP BI
9© 2015 –2017 CEB. All rights reserved. CIO170432PR
28-July-2016
Source: CEB analysis.
Business Unit 2
Product Lines Online Banking
Sales Customer Support
...
Product Line Managers
Business Analysts --
Architects
Agile and DevOps Teams
Infrastructure Engineering,
Ops and Support
Business Unit 1
Create a coordination mechanism across product lines to spot opportunities for scaling innovation.
ORGANIZE AROUND PRODUCT LINESProduct Line IT Organization
Empower the product line manager to reallocate funding and resources.
Define product lines that align to the most critical business capabilities.
10© 2015 –2017 CEB. All rights reserved. CIO170432PR
28-July-2016
Sales
FUND PRODUCTS NOT PROJECTSFunding Process for IT Product Lines
Funding Prioritized by Enterprise Capability
■ Determine the relative importance of product lines annually and allocate funding proportionally.
■ Guide senior business partners through a structured tradeoff exercise.
Source: CEB analysis.
Product Lines Online Banking
Product Line Managers
■ Product line managers have discretion to allocate funds to enhancements, technology refreshes, innovation, etc.
■ Product line managers can reallocate funding dynamically across the year as priorities change.
IT Budget
...Customer Support
11© 2015 –2017 CEB. All rights reserved. CIO170432PR
28-July-2016
ROADMAP
Introduction to Product
Management
Creating Product Lines
Managing Product Lines
Coordinating Product Lines
12© 2015 –2017 CEB. All rights reserved. CIO170432PR
28-July-2016
DEFINE PRODUCT LINES WITH BUSINESS CAPABILITIESOverview of MetLife’s Capabilities-to-Product Line Mapping Process
Understand Business Strategy
Build a detailed understanding of business strategy and the key capabilities partners would need to execute their strategy.
Optimize Product Portfolio
Evaluate each product based on the process and application maturity associated with the capabilities composing the product line, in response to business strategy.
Identify Business Capabilities
Identify business capabilities that are sufficiently granular to each reflect a key activity in the organization’s business model.
Group Capabilities
Create groups that contain business capabilities that serve a similar function or similar audience.
Define Services
Define IT product lines around grouped capabilities, aligning product line definition to the business activities enabled by the capabilities.
Link Systems to Capabilities
Map supporting IT infrastructure and applications to each capability.
Aggregate Cost and Performance
Create a rough aggregation of total system costs, dividing costs across business capabilities that depend on each system. 1
Source: Metlife; CEB analysis.
Note: This process is continuous and not limited to the service definition process. In the original version of this case product lines were referred to as end-to-end IT services.
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28-July-2016
CAPABILITIES AS BUILDING BLOCKS FOR PRODUCT LINES
Administer Invoicing
(Outcome: Process Billing)
Claim Resolution (Outcome:
Manage Claim)
Initial Claim Notification(Outcome:
Manage Claim)
Maintain Billing History
(Outcome: Process Billing)
Maintain Billing History
(Outcome: Process Billing)
Provide Claims Support
(Outcome: Manage Claim)
Claim Resolution (Outcome:
Manage Claim)
Initial Claim Notification(Outcome:
Manage Claim)
Provide Claims Support
(Outcome: Manage Claim)
Business Capabilities Claims Management Product LineImplementing
Billing Management Product Line
Administer Invoicing
(Outcome: Process Billing)
Capabilities composing a product line must be at the same level.
Capabilities composing a product line must align to already defined business activities.
Capabilities must have business outcome metrics that reflect the performance of all the capabilities that constitute the product line.
Source: Metlife; CEB analysis.
Note: In the original version of this case product lines were referred to as end-to-end IT services.
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28-July-2016
CLASSIFY PRODUCT LINES BY USER NEEDSOrganizing Product Line Classification
IT Governance and Operation Services (e.g., EA Program Compliance)
Technical Services(e.g., Global Network)
Internal IT Services
Competitive Advantage Product Lines
(e.g., Pricing Mgmt.)
Commodity Product Lines(e.g., Payroll Management)
End-User Product Lines(e.g., Social Collaboration)
Business Capability Aligned Product Lines a“Retail”
“Wholesale”
End-User Aligned Product Lines
Shared Service Assets (e.g., applications, hardware, information, people, processes)
Not offered as product lines, but support the delivery of product lines
Offered internally within IT, often to product managers of business-facing product lines
Offered directly to business partners and end users; managed by product managers
1
2
3
Source: Cisco; CEB analysis.
Note: In the original version of this case product lines were referred to as end-to-end IT services.a Cisco has an additional Business Capability–Aligned Services subtype called Functional Business Services. Immature or non-
standardized services are organized in this subtype until they are either managed for stability into Commodity Services or become Competitive Advantage Services.
15© 2015 –2017 CEB. All rights reserved. CIO170432PR
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ALIGN APPLICATIONS RESOURCES TO CORE BUSINESS CAPABILITIESApplications Organizational Structure
Chief Sales and Service Officer
Chief Financial Officer
Run: Enterprise Operations
Business-Aligned Support Team
Business-Aligned Support Team
Service Manager Service Manager
Compensation Value Stream
Financials Value Stream
CIO, IT
Technical Applications Support StaffPrimarily contractors; conduct work that does not
require business domain knowledge (e.g., patching)
Source: Autodesk, Inc.; CEB analysis.
Plan: Relationship Management and Planning IT Domain Director
Business AnalystsIT Domain Director Business Analysts
Build: Enterprise Applications Delivery
Project Team Project Team
DevOps EngineersDesign and develop automated services architecture
Project # 164518
Catalog # CIO164518PR
Year Range 2016
16© 2015 –2017 CEB. All rights reserved. CIO170432PR
28-July-2016
REALLOCATE INVESTMENT AS BUSINESS PRIORITIES CHANGEOngoing Funding and Resource Allocation Process at Autodesk IT
January
July
Start of Fiscal Year
Business Value Stream-1 owners
Business Value Stream-2 owners
IT domain director
IT domain director
Funding Allocation Participants
Monthly ■ Business value stream owners meet to adjust funds across business value streams as enterprise priorities change.
■ Business value stream owners reprioritize projects according to their business value streams’ needs.
Source: Autodesk; CEB analysis.
Project # 164518
Catalog # CIO164518PR
Year Range 2016
Between Monthly Meetings ■ For rapidly changing business value streams, the owners discuss and reprioritize work as needed to maintain alignment with the business value streams’ priorities.
■ IT domain directors continuously monitor progress against BVS objectives and capability gaps and propose adjustments to priorities as needed.
Annually ■ Business Value Stream owners meet to allocate funds across the business value streams.
■ Business value stream owners cascade their funds to dedicated plan, build, and run staff.
■ Business value stream owners and IT domain directors prioritize projects and work for their dedicated resources to drive the greatest impact on business value stream objectives.
17© 2015 –2017 CEB. All rights reserved. CIO170432PR
28-July-2016
ROADMAP
Introduction to Product
Management
Creating Product Lines
Managing Product Lines
Coordinating Product Lines
18© 2015 –2017 CEB. All rights reserved. CIO170432PR
28-July-2016
PRODUCT LINES REQUIRE CHANGES TO ROLES AND SKILLS
Performance Challenges Facing Managers of Product Lines
■ Create dedicated product line manager positions.
■ Part-time product line managers lack the time and focus to perform the role effectively.
■ Give product line managers authority for resource allocation.
■ Influence alone will not secure the resources required to launch new product lines or fix delivery problems.
■ Help product line managers build skills in finance, communications, and stakeholder management.
■ Product line managers require skills rarely found in IT.
■ Hire a product line architect and product line performance manager to support product line managers.
■ Product line manager roles have many responsibilities they need executed.
Insufficient TimeAuthority, Not
InfluenceSkills Gaps
Responsibility Overload
Challenges
Solutions
Source: CEB analysis.
19© 2015 –2017 CEB. All rights reserved. CIO170432PR
28-July-2016
THE AUTHORITATIVE PRODUCT LINE MANAGERHow Product Line Definition and Degree of Responsibility Impact the Product Line Manager Role
Nature of Service/Product
Line Definitions
Product Lines
Technology Services
Degree of Responsibility for Resource AllocationLow High
Source: CEB analysis.
Product Line Coordinator
■ Delivers product lines against plans set by others
■ Responsible for product line quality and continuity
■ Uses influence to drive decisions and secure resources
Infrastructure Manager
■ Manages assets aligned by infrastructure towers
■ Tactical role focused on incident, problem, event, and configuration management
■ Little involvement in strategy
IT Operations Manager
■ Manages all resources and operations required to deliver an IT asset–focused service
■ Responsible for ensuring technology and systems are continuously available
Product Line Manager
■ Develops product line strategy from demand forecasts and business partner engagement
■ Has direct authority over the planning, portfolio management, and delivery process related to a given product line
■ Sets product line prices and owns product line P&L
■ Provides cost and capability transparency to business partners
See p. 33 of this presentation for product line manger job description
20© 2015 –2017 CEB. All rights reserved. CIO170432PR
28-July-2016
DECIDE WHERE SPEED IS IMPORTANT
Source: Cisco Systems; CEB analysis.
Speed
L
H
Cost Constraints
L
H
Speed
L
H
Cost Constraints
L
H
Competitive Advantage Product Lines(e.g., Pricing Management)
Commodity Product Lines (e.g., Payroll)
Impacts company revenue.
Potential differentiator to competitors.
Value of innovation justifies higher costs and risks.
Supports back-end and non differentiating business outcomes.
Pressure on costs and low tolerance for risk.
Product Lines
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KPI TARGETS FORM DECISION MAKING GUARDRAILS
KPI TargetCompetitive Advantage
Product Line: Pricing Management
Commodity Product Line: Payroll
1. QualityEffectiveness and efficiency of a product line’s delivery.
2. User ExperienceUsability and user satisfaction with a product line.
Consistent target from a selection of best fit metrics.
Consistent target from a selection of best fit metrics.
3. RiskRisk thresholds and risk acceptance for a product line.
4. Capability CostOverall cost targets for a product line.
1% reduction of the overall cost of capability
9% reduction of the cost overall of capability
5. LeverageActual versus expected usage of a product line.
70% of potential user base 99% of potential user base
6. Speed-to-MarketTime to provision, adopt and enhance a product line.
Average time to fulfill product line enhancement is two weeks
Average time to fulfill product line enhancement is six weeks
Consistent Targets
Tailored Targets Based on Need for Speed
Source: Cisco Systems; CEB analysis.
22© 2015 –2017 CEB. All rights reserved. CIO170432PR
28-July-2016
DEVELOP THE CORE COMPETENCIES OF SERVICE MANAGEMENT EFFECTIVENESS
HOW CEB CAN HELP: CEB SERVICE MANAGEMENT BOOTCAMP
A New Development Resource for IT Staff. CEB Service Management Bootcamp combines a deep understanding of the skills that drive effectiveness with best practice tools and templates in an engaging learning environment.
OutcomesParticipants will practice and develop the following skills:
■ Identify critical stakeholders to collect and clarify service requirements and understand competing stakeholder priorities.
■ Communicate with critical IT stakeholders to understand service constraints and opportunities.
■ Articulate cost and value trade-offs for service investment.
■ Communicate a structured overview of an IT service tailored to business and IT colleagues.
Note: This training is a premium offering and is not included in standard membership.
How to Get Started:Contact your account manager, or e-mail
23© 2015 –2017 CEB. All rights reserved. CIO170432PR
28-July-2016
ROADMAP
Introduction to Product
Management
Creating Product Lines
Managing Product Lines
Coordinating Product Lines
24© 2015 –2017 CEB. All rights reserved. CIO170432PR
28-July-2016
SPECIALIZE PORTFOLIO MANAGERS BASED ON PORTFOLIO COMPOSITIONEmerging Specialized Portfolio Manager Roles
Source: CEB analysis.
Bridge Builder
Bridges portfolio execution and business strategy by working
with business partners to define investment strategies and
prioritize work
Benefits Steward
Focuses upstream and downstream of execution to
ensure projects and programs realize anticipated benefits
Methodology Master
Manages the design of processes and cultivation of skill sets required for a portfolio that is increasingly Agile, Scrum,
Kanban, etc.
Change Agent
Creates and supports the tools, processes, skills, and behaviors
required to manage change created by projects across a
portfolio
∆
Air Traffic Controller
Works with other portfolio managers to coordinate
resources and other interdependencies within
and across portfolios
25© 2015 –2017 CEB. All rights reserved. CIO170432PR
28-July-2016
Number of Milestones/Deliverables Dependent on Project
Num
ber
of
Mile
sto
nes/
Del
iver
able
s
on
Whi
ch P
roje
ct D
epen
ds
0
1
2
3
4
5
6
7
1816141210862 4
“Receiver” Projects
Neither “Receiver” nor “Driver” Projects
“Receiver” and “Driver” Projects
“Driver” Projects
Source: CareFirst Bluecross Blueshield; CEB analysis.
PROVIDE A PORTFOLIO VIEW OF INTERDEPENDENCIESCareFirst Interdependency Dashboard
Project # xxxxxx
Catalog # PMOEC71811544
Year Range xxxx–xxxx
Action: Reduce project scope or re-sequence deliverables to minimize interdependencies.
Action: Monitor weekly for potential delays.
Action: Allocate more resources to expedite delivery. Many other projects depend on it.
Action: Project should undergo a SWOT analysis.
26© 2015 –2017 CEB. All rights reserved. CIO170432PR
28-July-2016
IT OPERATING MODEL FOR DIGITAL WEBINAR SERIESNext Webinar: Adaptive Business Engagement
IT Operating Model for Digital Webinar Series
CEB Enterprise ArchitectureCEB CIOCEB Applications
CEB IT Midsized CEB Infrastructure
CEB Information Risk CEB PMO
27© 2015 –2017 CEB. All rights reserved. CIO170432PR
28-July-2016
Additional Resources and Upcoming Events
28© 2015 –2017 CEB. All rights reserved. CIO170432PR
28-July-2016
Project # 164926
Catalog # CIO164926PR
CEB CIO LEADERSHIP COUNCIL WEBINAR SERIESWebinars for February–April 2017
AprilFebruary March
Principles for High-Speed Change: IT’s Role in Making Change Self Propelled6 April 2017 12:00 p.m. ET
IT Operating Model for Digital Webinar Series: Customer-Centric Design20 April 2017 12:00 p.m. ET
IT Operating Model for Digital Webinar Series: Adaptive Business Engagement23 February 2017 12:00 p.m. ET
Tactics to Improve Gender Balance in IT8 February 2017 11:00am ET
Principios de Liderazgo para la Transformación Digital9 February 2017 10:00am ET
Registration information and audio for past webinars is available on the member website in the events section.
Increasing IT Scorecard Effectiveness for Digitization 9 March 2017 12:00 p.m. ET
IT Operating Model for Digital Webinar Series: Agile, DevOps, Continuous Delivery23 March 2017 12:00 p.m. ET
29© 2015 –2017 CEB. All rights reserved. CIO170432PR
28-July-2016
ADDITIONAL SUPPORT FROM CEB IT PRACTICE
CEB Applications CEB CIO CEB Enterprise Architecture
Understand the key features of the new IT operating model for digital by reviewing The New IT Operating Model for Digital.
Learn how leading organizations set priorities and budgets around product lines using Products Over Projects.
Learn how to align IT funding and resources to the most critical business activities requiring IT support. Autodesk’s Changing the Applications Delivery and Support Model
Understand the key features of the new IT operating model for digital by reviewing The New IT Operating Model for Digital.
Learn how leading organizations set priorities and budgets around product lines using Products Over Projects
Define an end-to-end IT service/product line using CEB Ignition™ Guide to Defining End-to-End IT Services.
Learn how leading organizations design product lines and construct governance processes that support those product lines. The New Model for IT Service Delivery
Understand the key features of the new IT operating model for digital by reviewing The New IT Operating Model for Digital.
Understand how Cisco’s EA group redesigned the IT services model to make it easy for business partners to understand and consume. Redesigning the IT Services Model
30© 2015 –2017 CEB. All rights reserved. CIO170432PR
28-July-2016
ADDITIONAL SUPPORT FROM CEB IT PRACTICE (CONTINUED)
CEB Information Risk CEB Infrastructure CEB PMO
Understand the key features of the new IT operating model for digital by reviewing The New IT Operating Model for Digital.
Learn how leading organizations set priorities and budgets around product lines using Products Over Projects.
Understand the key features of the new IT operating model for digital by reviewing The New IT Operating Model for Digital.
Learn how leading organizations set priorities and budgets around product lines using Products Over Projects
Prepare infrastructure for product lines using Preparing Infrastructure for End-to-End IT Services.
Understand the key features of the new IT operating model for digital by reviewing The New IT Operating Model for Digital.
Learn how leading organizations set priorities and budgets around product lines using Products Over Projects
31© 2015 –2017 CEB. All rights reserved. CIO170432PR
28-July-2016
ADDITIONAL SUPPORT FROM CEB IT PRACTICE (CONTINUED)
CEB IT-Midsized
Understand the key features of the new IT operating model for digital by reviewing The New IT Operating Model for Digital.
Learn more about product aligned IT using A Primer on Implementing End-to-End IT Services
Build a complete catalog of IT product lines that cover most of the business using End-to-End IT Services Library.
32© 2015 –2017 CEB. All rights reserved. CIO170432PR
28-July-2016
Project # 165211
Catalog # CIO165211PR
Year Range 2016
NEW IT OPERATING MODEL FOR DIGITALKey Features of the IT Operating Model for Digital
Adaptive Business Engagement 2
Strategy Over Governance, Management Over Operations
7
Operations and Support
Infrastructure Engineering
Cloud-Based Scalable Infrastructure6
Products Over Projects 1
Applications Building Blocks5
Applications Development
PM
OAgile, DevOps, Continuous Delivery
3
4 Customer-Centric Design
Enterp
rise Architecture
Inform
ation R
iskData Strategy Over Ownership
Adaptive Skills and Mindset
8
9
1 Products Over Projects: Priorities and budgets set for business capabilities and products, not projects.
2 Adaptive Business Engagement: Business engagement approach flexes based on business context.
3 Agile, DevOps, Continuous Delivery: Integrated delivery, engineering, and support boost responsiveness and output.
4 Customer-Centric Design: Customer journey mapping used to guide design.
6 Cloud-Based Scalable Infrastructure: IT automation and cloud platforms cut time to scale.
7 Strategy Over Governance, Management Over Operations: Central groups refocus on facilitating strategy, innovation, change, and enterprise data.
8 Data Strategy Over Ownership: Coherent strategy and guidelines around data allow for rapid exploitation by distributed teams.
9 Adaptive Skills and Mindset: Staff become technically versatile, collaborative, and open to innovation.
5 Applications Building Blocks: APIs, platforms, data, and reusable services reduce effort and accelerate delivery.
Source: CEB analysis.
33© 2015 –2017 CEB. All rights reserved. CIO170432PR
28-July-2016
PRODUCT LINE MANAGER JOB DESCRIPTIONSeniority Key Responsibilities
Middle Management
■ Collaborates with IT–business relationship managers to develop the product line strategy
■ Develops annual IT product line delivery plan and negotiates delivery expectations with business partners
■ Provides information to business partners about product line improvement opportunities and collaborates with them to drive down business costs and effectively support business capabilities
■ Guides the product line review process to drive continuous improvement efforts for product lines
Sourcing Difficulty Possible Backgrounds and Hiring Sources
■ Likely to have experience in IT service delivery, direct business engagement, technology sales and marketing, and developing financial plans
■ Likely to be sourced from account manager/business relationship manager, solutions manager, architects or infrastructure manager roles
■ Lack of IT financial management and IT service pricing skills rated by many members as the most likely failure points for new product line managers
Key Skills
■ Strategy Development
■ Business Opportunity Development
■ Financial Management
■ Reporting and Analysis
■ Service-Level Management
■ Service Engineering and Architecture
■ Technology Roadmapping
■ Communications and Change Leadership
■ Business Relationship Management
■ Vendor Management
Source: Intel; CEB analysis.