While digital transformation is at risk of becoming a cliché, the underpinning principles are anything but. At its core, digital transformation – or digitalization – are processes that enable businesses to serve their customers virtually, including industries that in the past would never have considered an online presence, like dry cleaners and pizza parlors. If the global pandemic has done nothing else, its shown business owner the importance of digitally interacting with customers anywhere, at any time.
This is why investment in digitalization is expected to grow from $1.2 trillion in 2019 to $2.3 trillion in 2023. As such, companies that previously haven’t spent much time thinking about technology are now increasingly investing in understanding how technology is developed, how quickly it can be integrated into their business, and how well it responds to customers’ needs.
Digital Product Management is an evolving set of practices that are intended to address the shifts occurring in technology management because of digitalization. As part of Value Stream Management, DPM allows organizations to prioritize their most valuable investments and prove the ROI to the business.
DPM is really a story about the way people perceive spending money on technology. For a long time, companies would decide they needed something from the technology shop – a piece of software or a system – to accomplish a particular goal, like launching a new product or modernizing HR. They would then go through a rigorous process of figuring out what they needed, who should work on it, what it was going to do, how much it would cost, and so on. They would then run it through multiple layers of approval, develop a project charter and send it through one or more steering committees to get it funded.
This was not change-friendly. With every adjustment, the process was repeated because the funding might change. It was a rigorous, onerous process that emphasized control over innovation. As companies increasingly embrace the new digital world, they’re recognizing the old business operations need to materially change in order to support an ever-evolving digital mode of operation and interaction with customers.
How DPM Impacts the Enterprise
Regardless of the business model, the goal is to create synergy within the organization so that everyone is working together. This is especially true with digitalization because it breaks down geographic barriers, enabling companies to change, monitor and integrate technology from anywhere in the world.
For instance, a retail company in Europe might decide it wants to deploy a new mobile shopping experience on the continent. Instead of allowing branches in different countries to choose their own technology, plans and processes, the retailer decides it’s better to have one common experience across all countries.
Once the company rolls out the mobile platform, it must coordinate the various components across siloed business units. It needs a new model for managing the investment because each branch is now investing in a co-funded operation versus just being responsible for its own.
In addition, a mobile platform has no definitive end date. Instead, it’s an enduring asset that will last if we can make it work for us. That lack of clearly delineated end lines marks a complete shift from a project-driven model to a product-driven model, where you can effectively manage the company’s value streams.
Moving to DPM is not as simple as changing labels. You can’t simply change project managers into product managers or say that you once funded projects and now you’re funding products, while continuing to do the same processes. Instead, companies must recognize that real change is required.
How DPM Creates Real Change
Real change requires companies to identify the products, which sounds obvious and easy, but it’s not:
- A product is sustained: A product is any recurring investment into technology that has an indefinite lifespan.
- A product is managed against a strategy: There is somebody who's in charge of its care, upkeep and success, and this person or team is also responsible for communicating product’s value.
- A product has a common audience: A product should serve a common, consistent group of stakeholders that can be easily identified in a few words or phrases. Here the customers are key contributors.
- A product has a common delivery organization: It should have an entirely dedicated delivery organization. This enables firms to make a single decision at the beginning of the fiscal cycle to fund a delivery team versus making constant funding transfers for every change made to a product or service.
One of the major benefits of Broadcom’s ValueOps solution is its flexible nomenclature, which allows a company to call its products by any name, including platforms, systems, and capabilities.
For instance, a government agency might not think it has any products and, thus, struggles to understand how to incorporate DPM in its handling of value streams. However, by drilling down with specific questions about funding – What do you fund? What do you call the things that you fund? How do you distribute your money? – the organization is able to identify its products as something called “capabilities.”
The next step is to determine if you use product managers or project managers. Project managers are tasked with finishing a particular job and then move on to something else. By contrast, product managers are responsible for the indefinite, long-term care of the product.
Finally, identify the stakeholders benefiting from the products, as well as the organization responsible for its delivery. By going through all these steps, any company can identify the products comprising their value streams.
Benefits of DPM
Within Value Stream Management, DPM has several benefits:
- DPM removes considerable layers in the governance process: Project management requires users to articulate every detail of what's going to be delivered, justify it at length and fund it, and any changes require that process to be repeated. By contrast, DPM ensures stakeholders agree on the value being generated. As such, they commit to funding the product for an entire fiscal term.
- DPM keeps stakeholders in the loop: The stakeholders who provide funding for a product need to maintain accountability to understand how the money they provide is being used. With Broadcom’s ValueOps solution, stakeholders can conduct regular roadmap reviews, which show what has been accomplished and what’s being planned next. Stakeholders can engage with product management, review their roadmaps, and provide feedback.
- DPM fosters agility: Instead of getting bogged down in processes, DPM enables changes to be made on the fly. Users can move things around during the roadmap review and see the impact of different changes. Doing so improves time to market and simplifies the Capex process. Additionally, it frees up time for product managers to focus on delivering value for customers.
