Tag: Operating Model

  • Why Does DevOps Require A New Operating Model?

    Why Does DevOps Require A New Operating Model?

    For many, redesigning the operating model is table stakes for a successful DevOps transformation. But have you ever wondered why? Popular wisdom will have you believe that the main reason for operating model redesign are to…

    “Improve collaboration between business and IT”
    “Realign metrics”
    “Take full advantage of the new tools”
    “And even jump start culture change”

    While these are all good reasons, frankly they miss the point. Experience suggests there is a more practical reason – match ownership with desired output.

    What do we mean by that? Well first, lets look at how the current model works.

    There a no real owners in IT

    DevOps is about optimizing the flow of work across the Software Delivery Lifecycle. But who owns this end to end flow – idea conception to release? Who owns the cycle time? And who it responsible for improving it?

    The short answer is everyone. Business, architects, and engineers own the planning phase. Developers own development and testing. Operators own releases. The PMO owns the project plan. And the business owns the funding.

    And yes in theory all of these groups are supposed to get along. Unfortunately it rarely happens. Incentives and metrics force them to optimize their silos but not the overall flow. the current operating model encourages tribal siloed mentality. It’s the reason why finger pointing is elevated to an art form and “CYA” is your ticket to getting promoted.

    One can argue that the CIO does own it all. But, in my humble opinion, CIOs have to tend to hundreds (if not thousands) of applications. Making it impossible for them to play an active role on a daily basis.

    Which brings me back to my earlier point…having too many owners is just as good as having no owners. Rectifying this misalignment is the main reason why so many CIOs choose to change the operating model. Even when it may seem risky at the onset.

    In fact many have found that fixing the ownership problem actually accelerates the DevOps transformation.

    If you want to make dramatic progress create a single owner for each application

    There are lots of names for this type of operating model. Some call it a product model, others call is squads, IBM calls it cell. But the essence is the same – for every application, create a single owner, that manages a cross functional team, has end to end authority, and is measured on business outputs.

    This owner is responsible for the entire delivery lifecycle. They manage both the inputs (resources, process, tools, infrastructure etc.) and the outputs (business impact, features, time to market, quality, productivity etc.).

    This does four things. First, managers that are the most familiar with the application and its users can now finally optimize the inputs in order to maximize the outputs. Second, by pushing authority to the front lines, you create a sense of true ownership. Pride (or shame) are powerful motivators for quality.

    Third, by decoupling the teams you get rid of bureaucracy, give rise to friendly competition, and localize the risks. And fourth, the reason why most CIOs go through with the change despite the risks, it provides you with a one throat to choke.

    You can, of course, continue to implement DevOps in the current operating model. But it’s almost impossible to overcome the operating model inertia. A move to a product model can actually accelerate your transformation. The model serves as a catalyst for the organization move past the “old way” of working in silos and create “new ways” of working with the flow.

    Create your one throat to choke and see how quickly things change.

    — Mustafa Kapadia

  • Transforming the Annual Budgeting Process For DevOps

    Transforming the Annual Budgeting Process For DevOps

    The annual budgeting and planning cycle is the one process that touches all of IT. It has impact on how decisions are made, teams are organized, work is delegated, projects are started (and/or ended) and responsibilities are allocated Yet, few people think about realigning and transforming the budgeting process for DevOps.

    The Problem with Current Budgeting Processes

    The annual budgeting process is inherently flawed. It requires executives to predict the future (sometimes 12 months in advance), allocate resources accordingly and lock in the funding. And if that is not bad enough, once budgets are set, they spend the rest of the time reconciling between today’s needs and yesterday’s predictions.

    Add in personal agendas and organizational politics, and you end up with a system that sucks time, energy and ambition. For an organization looking to be more nimble and responsive, our current budgeting process has the exact opposite effect.

    Budgeting Process for DevOps: 3 Options

    Some organizations are taking a much different approach to help cope with the dynamic demands.

    1. Shorter Cycles and Frequent Reviews

    Learning from our European friends, some organizations are moving to a shorter budgeting and review cycle. The traditional construct of annually funding projects remains, but plans and allocations are revisited quarterly or on a rolling basis. Both business and IT are continuously reprioritizing what features to fund and jointly collaborating on making go/no-go decisions.

    The benefit of such a system is that it allows teams to allocate funds dynamically within the project—it forces teams to think in terms of a minimum viable product, and mistakes in allocations can be quickly corrected. However, there are two major drawbacks. First, funds cannot be reallocated across projects, forcing executives to still wait for the annual cycle. And second, if the quarterly review process is not streamlined, it can create a climate of constant budgeting, where managers end up spending more time jockeying for funds instead of doing real work.

    2. Product-Based Funding

    Others have been experimenting with product-based funding. Here applications and the associated resources are grouped into product teams and are given a share of the total budget. This budget is primarily managed by the chief product owner (represented by either the business/IT), which then further distributes it to her product owners. Just like in the last model, the chief product owner collaborates with the business to decide on go/no-go activities. In addition, it also allows chief product owners to reallocate funds across both products and projects within their portfolio. And the product owners are responsible for executing on the minimum viable feature sets within their allocated funds.

    The benefit of this model is in its simplicity. Instead of making bets on projects, CFOs just have to decide on how the budgets are spread across various product groups. Chief product owners and product owners have freedom to allocate their share as they see fit. As a result, budget decisions are pushed as close to the front line as possible, allowing for greater flexibility and improved market response times.

    A prerequisite to this method requires IT to move from the functional organizational model to a product model—not an easy task. As for the drawback, product owners have a tendency to fund the new/sexy work while ignoring routine maintenance work. To get around this, some organizations force teams to reserve a piece of the budget for maintenance and paying down technical debt.

    3. Venture-Based Funding

    While not my favorite, venture-based funding is a model a small handful of companies are experimenting with. Just like Silicon Valley-style venture capitalists (VCs), an executive board funds ideas for minimal viable products. Based on the effectiveness of the product, additional funding is granted to the teams.

    The promise of this model is to seed lots of ideas and fund only the ones that work. The benefit is greater transparency and reduced financial risk. The drawback is that most companies are not wired like VC firms. A “sink or swim” culture gives rise to other problems. When viability is all that matters, why should employees follow any of the corporate rules, security policies, best practices or infrastructure requirements, to name a few? And if the idea is good, what prevents the developers to seek out actual seed funding and create a new competitor?

    Changing your budgeting process for DevOps is not an easy undertaking. There are significant risks and short-term disruptions to address as the new process takes hold. But one thing is sure, a DevOps transformation must eventually include a budget transformation as well.

    About The Author / Mustafa Kapadia

    Mustafa-KapadiaMustafa Kapadia is the Service Line Leader for IBM’s DevOps practice, a business advisory practice focused on helping large enterprises transform their software & application delivery. He has over 17+ years of experience in the tech. space, both as a service provider and a management consultant.

    Prior to joining IBM, Mustafa was a management consultant with Deloitte’s Strategy & Operations practice. He lives in San Francisco Bay Area, is an avid blogger (when time permitting), a speaker, and adviser to start ups.

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