It’s Time to Disrupt the Application Organization

January 08, 2021

Contributor: Meghan Rimol

Application leaders must change their organizational structures, governance, culture and leadership styles to thrive in the future of composable business.

In the words of Charles Darwin, “It is not the strongest of the species that survives, nor the most intelligent, but rather the one most adaptable to change.”

A fundamental change is coming in the way businesses compose and consume software. This future relies on applications that can be assembled, reassembled and easily extended, in what’s known as the composable business

“ The biggest challenge application leaders face as they move to the composable business will be changing their organization’s culture ”

“Applications are the core of composable business, yet the application organization as it currently stands isn’t well-positioned to deliver on this promise. The application team is often centrally located and hierarchically structured, making it too slow and disconnected from the business it supports,” says Matthew Hotle, Distinguished VP Analyst, Gartner. 

This disconnect presents an opportunity for application leaders to help transform their organization for the future of composable business. Here’s how application leaders can build an adaptive approach to governance, funding, culture and organization design.

Go where the applications are

Many companies discourage any diffusion of application delivery, fearing a lack of governance or loss of control. However, such diffusion helps the organization redefine the boundaries of their control-oriented structure and move toward a composable business.

Actively work with the CIO and line-of-business leaders to encourage application development and delivery to be done where it’s the most optimal. 

Deliver software via multidisciplinary teams

In enterprises that have begun the transition to composable business, software delivery is often done by “agile” or “fusion” teams. These teams are staffed by individuals with both technology and business skill sets, and they benefit from having members with diverse personal and professional backgrounds.

Gartner research has found that such teams deliver business outcomes 20% faster than their peers. This multidisciplinary approach promotes a flexible and adaptable organizational structure. 

Flatten the organizational structure

The shift to composable business presents an opportunity to reduce several layers of management, as teams are empowered to be more autonomous. Leading enterprises that have already begun this shift have teams organized around flexible and fluid management structures, not just formal reporting relationships.

However, many enterprises aren’t ready to fully overhaul established hierarchical structures. They are not comfortable with self-management, and still look for a single person to be held accountable for the team’s activities.

Application leaders in these organizations must begin to enable more autonomy on their teams. Build trust with senior leaders by piloting teams of individuals with both the right skill sets and the right culture to be autonomous.

Establish an adaptive governance framework

The distributed application function should be treated as an ecosystem. Governance provides connective tissue for the ecosystem by defining who has the right to make decisions, such as who is responsible for specific applications or who has the right to build, buy or compose a new application.

This ensures that individual contributors do not optimize their own work to the detriment of the entire ecosystem. The application organization of the future must democratize these decisions via an adaptive governance framework. This framework ensures that decisions are made where it’s most appropriate for them to be made.

Align funding to applications and products

In the composable business, each application function owns its own budget and dictates the order in which it delivers its roadmaps. The function also owns how it reports business outcomes and business values. 

To achieve this, enterprises must change their funding processes from centrally held “governance boards” to distributing funds to product lines and product managers. These product managers can then make decisions as to how they will spend those funds and achieve intended business outcomes.

Democratization of the governance and funding process is crucial in enabling the application ecosystem to be adaptive, flexible and focused on delivering business value faster.

Understand and adapt culture

The biggest challenge application leaders face as they move to the composable business will be changing their organization’s culture. In conjunction with the CIO and other leaders, the application leader must first identify what the current culture is, create a vision for what it should be in the future and lead by example to form the new culture.

The high-powered teams that are essential to composable business require two key cultural principles:

  1. Trust. Most leadership models are focused on the premise that the “higher” you are in an organization, the more trustworthy your decisions are. To truly democratize decision-making processes, this can’t be the case. Leaders must trust their employees, and employees must trust their leaders.
  2. Accountability. To be trusted, people must be accountable. They need to believe in doing the right thing for their business. Accountability here doesn’t flow top down (“I want to hold you accountable”), but through the organization (“I am accountable to you”).

Using this framework, application leaders can work with senior business leadership to ensure that the application function is focused on providing the best experience that drives business results. Then, they must create an environment that empowers employees to form high-performing teams that are capable of delivering those business results.

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