Information Technology (IT) management is about leveraging technology investments to address business/mission needs. IT management is responsible for ensuring that budgets spent on IT solutions result in the implementation and ongoing support of effective and economical systems and processes. Effectiveness is the degree to which such investments help the organization achieve business goals and objectives. Economy translates into the total cost of ownership (TCO) incurred from adopting a solution as well as efficiencies gained through its use. Effectiveness and economy are actually signifiers for the many elements that make up business value. Ultimately, the success or failure of any IT implementation is judged by the value it delivers.
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IT’s (Poor) Record at Delivering Value
Unfortunately, IT management’s track record for delivering value is lack luster. According to the 2015 Standish Group CHAOS Report:
- Only 29% of IT projects are successful. Successful projects are delivered within estimated time (OnTime), within budget (OnBudget), and satisfactorily (Satisfactory). The Standish Group defined satisfaction as the level of customer and user satisfaction achieved, regardless of how much of the original project scope was delivered.
- 52% of IT projects are challenged. Challenged projects are delivered but miss the mark on at least one of the three criteria above.
- 19% of IT project fail. Failed projects fail to deliver any capability.
Along with the three measures listed above, the Standish Group also measures how valuable the implementation is deemed to be (Valuable) and how clearly defined the business objectives were for the project (OnGoal):
- 59% of IT projects are considered valuable
- 62% of IT projects align to clearly-defined business objectives
So, based on the polling, of the 81% of projects that deliver some level of capability, 59% are considered valuable. This translates into less than half of all IT projects delivering value.
Scrum’s Product Management Mindset
A major difference between Scrum and traditional IT project management is Scrum’s product development/management mindset. Agile in general and Scrum in particular have deep roots in product management and Lean. Two fundamental principles of both Agile and Scrum exemplify their alignment with modern product management:
- Focus on delivering value and evaluate progress based on actual value delivered rather than tracking progress on planned activities
- Team Self-Organization – Development teams manage their work, determine technical approaches, estimate their work, report their progress, and help define the product
A good way to illustrate the differences between product management vs. project management mindsets is to compare the core functions performed by product managers and project managers. While their work often overlaps, their primary responsibilities compare as follows:
It is important to note that the scope of what constitutes product management is much bigger than Scrum. Scrum is a way of developing products, including software, that dovetails nicely with the philosophy and practice of modern product development and product management..
The Product Management Approach to Value
The predominant trend across software development companies is a shift away from traditional project management to Agile. Companies are making the shift to:
- Accelerate time-to-market performance
- Address rising expectations of demanding customers
- Compete in fast-changing markets
Fundamentally, this is a shift away from predictive project planning to adaptive product management.
Product Management for Organizational IT
However, IT management and portfolio management are firmly in the sphere of organizational IT. Development of organizational IT solutions is different from for that of product solutions for the following reasons:
- Most organizational IT initiatives are system integration efforts
- System integration efforts are driven by sponsor organizations
- Sponsor organizations decide which capabilities to develop or acquire, how much budget to allocate, and when new IT capabilities are due. Unlike products, these decisions are not shaped primarily by market demand
- Most IT solutions are highly customized implementations tailored to the needs of the sponsor organization, rather than designed to compete in a generalized market
- IT solutions integrated into enterprise environments are typically much more constrained technically and organizationally than green-field product development efforts
Thus, system integration efforts are, by nature, service engagements, not product development efforts .
So if product and system integration efforts are so different, does product management apply to organizational IT? Whether an organization is a business, a government entity, or a non-profit, product management activities occur to some extent as part of deciding what IT capabilities to develop or acquire. The term “product” can refer to any technical product/solution, business process, or a combination of the two.
Defining Value
Equating the value of a technology solution or service to its cost is a mistake. The world is littered with all kinds of expensive solutions that yield little to no value for their owners or users. How we define value is at the heart of how we link IT investments to organizational needs because the value of any particular solution is inextricably tied to the value provided by the organization.
A solution is valuable when it benefits those who acquire it and use it (customers) and those who create it (producers). Benefits to customers boil down to what they care about or makes them happy. Benefits to profit-driven producers map to outcomes necessary for sustaining and growing the business: revenue, profit, cost savings, increased market share, customer loyalty, etc. Benefits for non-profit producers (e.g., government agencies, charities) align with mission execution and accomplishment: protecting lives, promoting health, caring for the needy, etc.
These categories of value are not isolated. A business that focuses on providing excellent value for its customers, gains a following, and experiences increased revenue and profit. A charity that fails to raise money or mismanages its budget is soon in no position to provide aid to anyone. Organizations that focus on pleasing customers at the expense of the wellbeing of their employees eventually suffer morale problems and employee turnover that cripple their effectiveness.
Organizations can experience negative value. Negative value occurs when:
- Organizational or technical problems diminish the value provided or achieved
- Actualized outcomes do not align with expected/preferred outcomes
Examples of negative value accrual:
- A website that stores customer credit card information is hacked
- A charity spends significantly more on operating expenses and salaries than on providing services to people in need
Organizational Vision
The value an organization attains or provides by acquiring or developing IT solutions must align with that organization’s vision. The organizational vision serves as the organization’s North Star as it navigates decisions towards an envisioned future state. The vision answers, clearly and concisely:
- What is the organization’s reason for existence? What contribution or impact does it intend to make and to what end (purpose)?
- What is the organization working towards becoming? What will set it apart from competitors or alternatives in its market or mission space?
The organizational vision should inspire and motivate people. A vision that fails to connect with people emotionally will fail to muster the enthusiasm and perseverance needed to overcome difficulties and achieve challenging goals.
Business Strategy
The organizational vision informs business/mission strategy. The strategy is a roadmap of actionable objectives that culminate into achievable goals. Goals are the desired long-term business results or outcomes that incorporate the vision. Achieving them lets us know we reached the destination described in the organizational vision. Objectives are measurable milestone achievements necessary to attain organizational goals. The work and resources needed to achieve the objectives inform strategic and tactical plans implemented across the organization. Objectives are decomposed and flow down from the strategic level to the tactical level. Objectives at different levels of the organization spur the development of plans to achieve them.
IT solution implementations may be strategic initiatives, tactical-level initiatives, or both. Regardless of the organizational level they directly support, the value provided by IT solutions must support business strategy and, by extension, the organizational vision.
Defining IT Solutions
Similar to the organizations they support, well-planned IT solution implementations (products) follow from a well-defined product vision and product strategy. An organization may develop products for external and internal users.
Product Vision
The product vision communicates the desired end state for the product in business or mission terms. The product vision clearly and concisely answers:
- Who is/are the target audience/customer(s) for the product?
- What is the product’s most important benefit or value proposition?
- How does the product differ from existing alternatives?
- What sets the product apart? What is the product’s competitive advantage?
The product vision may link to business strategy as a goal, an objective, or as an activity defined as part of a strategic or tactical plan. For example, a company selling products and services online, as its primary delivery channel, may set a goal to be the first to offer a new online service. Since it is an online company, it is conceivable that the new online service offering may rise to the level of a goal that directly supports the company’s vision. In other cases, an IT implementation may be an objective towards a strategic goal or an activity necessary for accomplishing a strategic or tactical objective.
Product Strategy
The product strategy is the roadmap towards realizing the product vision. Considerations addressed by a product strategy include:
- What will the product be? What characteristics must the product incorporate to address customer and producer needs?
- What product features would best deliver value to customers/users? How will the product differentiate itself from competitors or alternatives?
- How is quality defined for the product? What characteristics and/or behavior must the product embody/demonstrate to be a quality product?
- How will the product be branded or introduced to users? Which product characteristics would support the organization’s brand image, reputation, or culture?
- How will a commercial product be positioned in the market? How will organizational IT solutions be acquired (contract types, source selection, budgets, etc.)?
Product Value
Returning to the topic of value, we now focus on the value the product provides. As stated earlier, value provided by IT solutions must align with the organization’s vision and business strategy. Also important to consider is the alignment of product strategy with the work performed by Agile development teams.
How do we characterize product value and, once alignment with product strategy is achieved, how do we maintain it? I will address these topics in part two of this blog series.
Conclusion
Building the right thing is every bit as important as building things right. Often, organizations hyper-focus on defining and building or acquiring technical capabilities while losing sight of whether the resulting solutions solve the right problems and address the right needs. The current pace of organizational and technological change requires that organizations adopt an IT management approach that incorporates the product management mindset championed by Scrum. Doing so helps ensure that IT investments further organizational vision and goals by creating real, measurable value for both the organization and its customers.
