How to Design a Software Engineering Organization to Deliver Business Value
Oftentimes, software engineering organizations evolve dynamically and are shaped by precedent or internal politics in a dynamic and rapidly changing business environment, preventing deliberate design. To deliver real business value, software engineering leaders they must continuously improve their organizational structures and delivery models to achieve both digitization efficiency and digital transformation.
Evaluate Alternative Design Software Engineering Organization and Delivery Model
Design effectively software engineering organization that delivers business value, software engineering leaders must begin by understanding the IT operating model (ITOM) directed by their CIO. This model shapes how talent, performance management, organizational structure and delivery models are set up to achieve business objectives.
Software engineering practices must be consistent with ITOM and use its principles to address current challenges. After that, they should assess whether their current organization is effectively supporting the business goals.
Each organization is unique, shaped by its own competitive needs and internal strengths. Software engineering leaders must properly assess these strengths and challenges to determine how best to use their chosen operating model to have the greatest impact on delivering business value.
Design an Organizational Structure and Delivery Model
The design of a software engineering organization is shaped by the context of the industry, the strategic role of the software and the size of the business. Apart from these variables, every functional software engineering organization includes several important functions. This includes setting a clear software strategy and roadmap, allocating resources to support those strategies and ensuring delivery by various teams focused on business value.
An effective organizational structure must address both formal roles and a less transparent delivery model. A delivery model helps define how teams work together to achieve results and should be purpose-built to support digital optimization or transformation.
Building Flexibility
Adaptability is essential in modern software engineering organizations. Group structures must be designed for flexibility so that value can be delivered quickly across a variety of structures, domains and projects. Both developing and evolving organizations need ways to realign delivery as priorities move, ensuring that they grow, contract or refocus efforts as needed.
While hierarchical structures provide control, networked models enable greater responsiveness. Overly rigid categories can hinder innovation by mirroring communication barriers in system design.
Service-Oriented Operating Model vs. Value Optimized Operating Model
Now that they have identified which ITOM their CIO is targeting, software engineering leaders must choose between service-oriented and value-enhanced models to design the software engineering organization and its delivery method.
In a service-oriented operating model, IT acts as a high-performance service provider that enables the business. Emphasizes digital optimization through strong engagement of IT and business stakeholders.
Product managers, project management offices, business relationship managers and business planners play an important role in guiding demand management and prioritizing funding decisions. Software engineering leaders typically oversee all internal software programs including application selection, development, improvement, maintenance and modernization.
In a value-driven organization, IT and software engineering are part of the business itself. A matrixed approach is needed that focuses on digital transformation with an emphasis on improving the experience of both internal users and external customers.
Here, responsibility for business applications or analytics can sit outside of core engineering work so leaders can focus exclusively on delivering high-value results for their teams.
This structure reduces divisions so that more employees can contribute directly to strategic goals while reducing overhead costs associated with traditional administrative layers.
Build a Business Case
By building a strong business case for change, software engineering leaders can help secure buy-in and clearly link organizational structure to the delivery of measurable value. Software engineering leaders should focus on strategic alignment and value rather than ROI. The business case they build should show how the chosen organizational patterns support the business model, strategy, operational structure, and ITOM.
The business case framework starts with the business model and strategy laid out by the CEO and the board. Then, important things like cost optimization, innovation, or new product development shape the business structure and must be communicated to teams with results measured against organizational goals and key results.
The choice of ITOM directly shapes the design of the business case. Software engineering leaders drive digital development or transformation by aligning strategic goals with the value stream, using a service-based or value-based model.
In summary, software engineering leaders must take a proactive approach to refining their organizational structures and delivery models to achieve both digital development and digital transformation. By focusing on digital optimization, transformation and increasing business value, software engineering leaders can ensure their teams are set up for success.
