Innovative CIOs make shift to managing IT as a product

Aping Silicon Valley technology startups, enterprises are revamping their organizations from project-based IT service delivery to product-oriented technology supported by agile development and iterative release cycles.

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It's not enough to deliver software to the business faster, with almost every enterprise adopting agile development models. To compete in the digital era, CIOs are pairing agile with a product management model that more closely aligns technology with specific business lines.

CIOs have spent years shedding the perception of "order taker” as they worked to become trusted providers of stable IT services. IT services were delivered in projects with formal initiation and delivery dates.

But for various reasons — including the desire to be viewed as an equal partner to the business in driving change — CIOs want to be viewed as more than a service delivery arm for technology, says Khalid Kark, managing director of Deloitte's CIO practice.

"More than 80 percent of CIOs I spoke to in last three months have started or are starting that operating model shift because their current model isn't serving business needs," Kark says.

For some CIOs, such as Walmart Stores’ CIO Clay Johnson that means revamping IT around product management. Where Walmart IT managers previously owned a piece of an IT service, Johnson introduced a new digital playbook in which "product owners" are responsible for integrated technology solutions.

Walmart’s culture change underscores how traditional companies are following in the footsteps of companies such as Facebook, Uber and others whose products are designed for the consumer masses. And this model is catching on across a variety of industries.

Managing IT as a product catches on

When Ken Piddington joined energy distribution company Global Partners as CIO in 2009 he encountered a traditional back-office IT organization prescribing technology services for employees. "We were very reactive, but as we grew and offered new products we needed to restructure IT to mirror the business," Piddington says.

So Piddington created specialized technology groups to align IT capabilities with its wholesale, distribution and gas station business lines. To keep pace with business requirements, Piddington cast aside waterfall for agile delivery. Customer satisfaction rose as IT's output and pace increased.

"It's about: How do I move fast, continually adopting capabilities for our organization, much like if we had a product in the market we're evolving based on customer feedback and needs?" Piddington says.

Piddington brought these practices with him to MRE in 2014, instituting a culture around crisper, agile software delivery tied to data operations. Piddington soon discovered a hidden gem: IT had built a software tool that uses machine learning algorithms to assess the health of laptops, server farms and other critical machines MRE consultants use to generate revenue. MRE’s help desk technicians used this information to fix machines before they went down.

Recognizing the potential to create a new revenue stream, Piddington commercialized the tool, seeding an early version with some services clients to see if it would work in environments supporting thousands of machines. Under Piddington's leadership, MRE fine-tuned the app to support network endpoint devices and virtual machines and boosted the algorithm’s accuracy from 85 percent to 98 percent, before taking it to market in early 2017. Several customers are using it, he says.

The cultural shift wasn't easy because MRE's IT group was accustomed to running as an internal-facing technology group, not as a software provider serving external customers. But Piddington says the change was necessary at a time when more CIOs are seeking to create new revenue streams for the businesses. "I do believe that is the right way to run your organization today more than ever in order to remain competitive and create competitive differentiation," Piddington says.

Banking on a product-led organization

TD Ameritrade CIO Vijay Sankaran's first brush with product-led management started in the late 2000s at automotive giant Ford, which began building discreet applications to support product lines.

Sankaran brought this ethos with him to the online broker, which he says was entirely a project-based organization. To be more responsive to clients and associates, Sankaran organized IT into groups who build and support platforms for the broker's business units, including retail, trader and clearing systems.

Convinced that the only way this product-led model would work is by crafting software in rapid, iterative cycles, Sankaran initiated a shift toward agile development, beginning with the business-facing technology teams. He is currently expanding it to TD Ameritrade's infrastructure groups, where it is used in provisioning portals and infrastructure-as-a-service efforts. With 70 percent of IT operating in agile today, the broker has more than doubled its throughput. Sankaran is further accelerating deployment with DevOps automation that will shorten release cycles to as little as 30 minutes.

Transitioning to a product management practice required some change management around delivery cycles. Sankaran says the biggest challenge has been getting his project managers accustomed to working with start and stop dates to shift gears toward iterative releases that launch minimally viable products into the market. Yet Sankaran says the challenges are worth it. "I'm a big believer in product-led technology organizations and I wouldn't do it any other way," Sankaran says.

Matriculating to private cloud software provider

Managing IT with a product mindset is a must for Marist College CIO Bill Thirsk, who says students and faculty alike expect to access their academic information from their PC and mobile devices anytime from anywhere. The digital era means end users no longer have the patience to hear a CIO say a new app or portal will be available in two to three months.

Embracing agile and DevOps methods, Thirsk has pre-packaged upgrades for products such as finance and student modules, as well as Marist’s website, to roll out at off-peak times such as 2 a.m. when the changes will have the least impact on users.

Recognizing that Thirsk’s IT staff was skilled at delivering a continuous stream of updates, Marist’s board of directors challenged Thirsk to offer similar solutions to other private higher-education institutions. Using a private cloud supported by mainframes and other IBM servers, Thirsk replicated the course management applications, ERP software and other functionality that runs Marist for use by St. Elizabeth College, New England College, Lasell College and other institutions.

The institutions all pay Marist to access this “college in a box” based on their consumption of capabilities. The revenue, which Thirsk reinvests in Marist’s private cloud, is modest. But Thirsk says the idea is to enable small private colleges, many of which are struggling to stay afloat in a highly competitive higher education industry, to remain viable.

“We don't want to be the last private college in the U.S.,” Thirsk says.