Designing a tech operating model? Here are 6 key insights

Unfortunately, there is no, one, easy “off the shelf” operating model that can be applied to all technology functions. Every organisation has different priorities, different cultures, different value propositions and operates in a different environment, therefore the technology operating model is going to be different. However, based on our extensive work on technology operating models in medium to large organisations, across various industries, here are 6 key insights that will hopefully help you when you’re next designing a tech operating model.

Firstly, what is an operating model?

An operating model is like a blueprint that describes how a company or organisation works. It's a way to show how different parts of the business fit together and how they function to achieve their goals.

Think of it as a set of rules and guidelines that help everyone in the organisation understand their roles and responsibilities. It includes things like how decisions are made, how information flows within the organisation, and how tasks are conducted. We always recommend that you should have a well-defined strategy, a set of design principles and an operating model before you make any changes to an organisation structure.

1. Product vs function: understanding the technology service catalogue and value chain

Frequently, organisations build their technology operating models with an emphasis on products or services. Consequently, gaps appear in integral value chain activities like strategic planning and business engagement.

Don’t forget these key enabling activities that won’t be in the service catalogue:

  • Strategy – Why does this product need to exist? How does it align with our strategy? What are our customer's priorities?

  • Planning – What are the commonalities across products? What does the 12-month roadmap look like? What is the consolidated resource requirement? Are economies of scale achievable?

  • Business engagement - The organisation doesn’t have the capacity to engage based on service or product lines so how can we present an aggregate view? How can we best manage change impact across different audiences?

Bridging the gap between service catalogues (a definitive list of the technology services within an organisation) and the value chain leads to a holistic, effective operating model.

2. Value drivers vs enabling functions: the core of your model

Enabling functions and value drivers are equally important and how you choose to manage them is critical. The lines between these two things are getting blurred and this is where weaknesses occur (e.g., hacks). For example, if vulnerability comes from corporate email that is managed by internal IT which then exposes vulnerability in a customer facing product sales app, how do you structure to manage this?

Address these challenges by differentiating enabling functions from value drivers in your value chain, and then test your technology operating model using real-world scenarios.

3. Tackling resource constraints with robust systems

Tech skills within technology functions are frequently constrained, requiring flexibility and dynamic resource allocation. Even though it's impossible to resource to 100%, employing an agile methodology and robust systems for managing people across different projects can prove invaluable. The 4C’s—Capability, Capacity, Contribution, Configuration—can guide these resource allocation decisions.

4. The dev/ops conundrum: similarity is not synonymity

Organisations often face the challenge of determining how to structure their development and operations teams effectively. Traditionally, these teams have been grouped together due to their similar technical skills and the need for collaboration between them. However, as technology landscapes evolve and the demands of businesses become more complex, it is essential to consider whether this grouping is truly optimal. A value chain approach can help assess whether they should be merged or remain separate entities.

5. Building transparency: no more black boxes

The perception of technology functions operating in a "black box," where their activities and decision-making processes are opaque to the rest of the organisation, can have negative consequences. One such consequence is the emergence of shadow IT teams, where individuals or business areas bypass official IT channels and procure or develop their own technology solutions.

To mitigate this issue, it is crucial to design communication activities and business engagement into the organisation's value chain. This means fostering transparent and proactive communication between technology teams and other business units, ensuring that information flows freely, and promoting understanding of the technology landscape.

Additionally, incorporating governance mechanisms into the operating model helps establish clear guidelines, processes, and decision-making structures to govern technology initiatives. This creates a framework for collaboration, accountability, and alignment between technology teams and the wider organisation, minimising the need for shadow IT and promoting effective and transparent technology management.

6. Pursuit of end-to-end accountability

In today’s organisations it is common to see fragmented technology functions across different leaders and business areas, creating silos and operational gaps. Pursuing end-to-end accountability is crucial to streamline operations. It involves assigning ownership of a technology function or process to a single individual or team, ensuring a holistic approach from development to retirement. This approach eliminates silos, minimises operational gaps, and fosters a culture of ownership.

Conclusion

Whilst there is no, one way to design an operating model, there are a series of steps you should always take such as ensuring you understand the priorities and strategic intent of an organisation, crafting a set of design principles to ensure you stay on track, articulating the value chain and then applying a RACI and the 4C’s.

As well as these typical steps, there will be certain considerations for the specific function you are designing for. Here we have presented 6 considerations specific to a technology operating model that will hopefully provide some value for when you’re next undertaking this type of work.

For more information, please feel free to reach out.

 
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