How an organization structures and operates its technology function profoundly affects its ability to deliver value. The technology operating model—encompassing organizational structure, processes, governance, and sourcing—determines execution capacity, innovation potential, and business alignment.
This guide provides a framework for designing technology operating models that position organizations for strategic technology value rather than just operational delivery.
Understanding Operating Models
What an Operating Model Encompasses
Technology operating models include:
Organization: How people are structured, roles defined, and teams organized.
Processes: How work flows through the organization—from demand to delivery to operation.
Governance: How decisions are made, priorities set, and performance managed.
Sourcing: How capabilities are acquired—internal, outsourced, or sourced from vendors.
Technology: Platforms, tools, and automation supporting the operating model.
Culture: Norms, behaviors, and values shaping how work happens.
Why Operating Models Matter
Operating model determines:
Execution capacity: What the technology organization can accomplish.
Responsiveness: How quickly technology can respond to business needs.
Innovation: Whether new ideas are encouraged and implemented.
Cost efficiency: Whether resources are deployed effectively.
Talent: Whether the organization attracts and retains skilled people.
Business alignment: Whether technology delivers what the business needs.
Operating Model Framework
Dimension 1: Organizational Structure
How people are organized:
Traditional functional model:
Organized by technical specialty: infrastructure, development, operations, security.
Pros: Deep technical expertise, clear career paths, economies of scale.
Cons: Handoffs between functions, slow delivery, silos.
Product/platform model:
Organized around products or platforms with cross-functional teams.
Pros: Ownership of outcomes, faster delivery, accountability.
Cons: Potential duplication, coordination challenges.
Hybrid models:
Combinations: platform teams with shared services, chapters and guilds.
Considerations: Balance ownership with expertise and efficiency.
Organizational design principles:
- Minimize handoffs and dependencies
- Clear ownership and accountability
- Appropriate team size and scope
- Balance stability with adaptability
Dimension 2: Delivery Approach
How work gets done:
Agile transformation:
Moving from project-based to product-based, from waterfall to iterative:
- Cross-functional product teams
- Iterative delivery with regular releases
- Customer feedback integration
- Continuous improvement
DevOps integration:
Combining development and operations:
- Continuous integration and delivery
- Automated testing and deployment
- Shared responsibility for production
- Rapid recovery and improvement
Portfolio management:
Managing work across the organization:
- Demand management and prioritization
- Resource allocation and capacity planning
- Benefits tracking and value measurement
- Strategic alignment
Dimension 3: Governance
How decisions are made:
Decision rights:
- What decisions does IT make vs. business vs. jointly?
- Where do architectural decisions sit?
- Where do priorities get set?
- How are trade-offs resolved?
Governance bodies:
- IT leadership team
- Architecture review boards
- Investment committees
- IT-business steering groups
Standards and policies:
- Technology standards and architecture principles
- Security and compliance policies
- Vendor and sourcing policies
- Data governance
Performance management:
- Metrics and measurement
- Review and accountability
- Continuous improvement
Dimension 4: Sourcing Strategy
How capabilities are acquired:
Sourcing options:
Internal: Full-time employees developing and operating technology.
Staff augmentation: External resources working under internal direction.
Managed services: External provider managing defined services.
Outsourcing: Significant functions performed by external providers.
SaaS/cloud: Consuming capability as service rather than building.
Sourcing strategy development:
- Which capabilities are core vs. commodity?
- Where does internal expertise create value?
- What are external market options?
- How do we manage vendor relationships?
Multi-sourcing management:
Most organizations use multiple sources requiring:
- Service integration and management
- Vendor relationship management
- Consistent service delivery
- Risk management across providers
Dimension 5: Talent and Culture
People and how they work:
Talent strategy:
- What skills does the organization need?
- Build vs. buy (develop vs. hire)?
- Talent acquisition in competitive markets
- Retention and development
- Career paths and progression
Culture elements:
- Innovation and experimentation
- Collaboration and knowledge sharing
- Learning and continuous improvement
- Accountability and ownership
- Psychological safety
Ways of working:
- Remote, hybrid, or in-office
- Collaboration tools and practices
- Meeting and communication norms
- Work-life integration
Design Approach
Assessment
Understanding current state:
Current state analysis:
- How is the organization structured today?
- What are current processes and governance?
- What's working and what isn't?
- Where are pain points and opportunities?
Benchmark comparison:
- How do peers organize technology?
- What are industry best practices?
- What's appropriate for organizational context?
Target State Design
Defining the future operating model:
Strategic requirements:
- What does business strategy require of technology?
- What capabilities are needed?
- What performance is expected?
Design choices:
- Organizational structure decisions
- Governance framework definition
- Sourcing strategy selection
- Process and methodology choices
Transition planning:
- How to get from current to target state
- Phasing and sequencing
- Change management requirements
- Risk mitigation
Key Takeaways
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Operating model is strategic: How technology is organized affects strategic capability, not just operational efficiency.
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Context matters: There's no single right operating model. Design should reflect organizational strategy and context.
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Balance tensions: Operating models balance competing priorities—agility vs. control, ownership vs. coordination, internal vs. external.
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Talent is foundational: Operating models work through people. Talent strategy is core to operating model design.
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Evolution is continuous: Operating models should evolve as strategy and context change.
Frequently Asked Questions
How often should we revisit our operating model? Major redesign is rare (every 3-5 years); continuous evolution is healthy. Reassess when strategy changes significantly or operating model clearly isn't working.
Should we consolidate or federate technology? Depends on organizational structure, business diversity, and need for agility vs. scale. Hybrid models often work—shared platforms with federated delivery.
How do we change operating models without disruption? Phased implementation, careful change management, pilot approaches, and clear communication. Major reorgs are disruptive; minimize by maintaining stability where possible.
What's the right size for product teams? Generally 5-9 people (two-pizza team concept). Large enough for capability; small enough for communication and accountability.
How do we evaluate outsourcing vs. internal delivery? Consider: strategic importance, market availability, cost comparison, risk, and transition cost. Core capabilities often stay internal; commodity typically sources externally.
How do we attract talent in competitive markets? Compelling work on modern technology, learning and growth opportunities, competitive compensation, strong culture, and flexibility. What attracts varies by role and market.