Modern Development, Part 2: Five Pillars for Transformative Success

In Part 1 of this two-part series, we discussed KPMG’s holistic approach to modern software development and delivery that has evolved to help both CIOs and the broader enterprise understand the complex interactions required to successfully achieve transformative outcomes.

An integrated approach to product and service development, across the customer value stream, is essential — as today’s digital operating models include significant ripple effects throughout the technology environment that must be addressed. According to Steve Bates, Principal at KPMG, as companies mature on their transformation journey, there are critical building blocks and sequencing that they can’t ignore. “To achieve agility at scale, you can’t do it in functional silos, or bits and pieces,” he says. “We’ve seen the failure of agile programs over the past few years, because companies lacked the executive sponsorship and commitment to change the culture, didn’t use a thoughtful, phased approach or treated it as an IT project and missed all of the other interdependencies when trying to scale it.”

Bates breaks down KPMG’s modern development and delivery approach into five key pillars:

1. Product and portfolio management: From ideation to funding

Building products quickly and cost-effectively does not deliver value if the customer doesn’t want it.  Modern delivery is more than just being fast; it is about creating products and services that the customer wants, at the right time, in a way they want to consume it.  Organizing around the customer means that strong, empowered product managers work closely with the customer every step of the way, employing methods like design thinking, modern UX, value stream and journey mapping, and leveraging reusable assets like user stories, architectural patterns, and pre-defined process models.

Another key enabler is transforming how products are funded. Traditional IT budgeting and planning does not support the agility required to experiment, fail fast, redeploy capital into new investments while shutting down others.

“Increasingly, it’s very difficult to separate what a product is and where technology stops,” says Bates. “In the traditional paradigm, to invest in a project, I would have to go to through a monolithic function with very bulky linear processes, with a complete idea of what I wanted to deliver against a multitude of requirements. And if there wasn’t funding in the beginning of the year or it wasn’t in the queue, then I couldn’t innovate.” That, he says, is not what modern delivery is about.

Instead, product owners need to work with finance and business leaders like VC firms, who can invest almost anywhere and then quickly change and move in a different direction. Today’s value stream means it’s necessary to be able to fund an idea very quickly, rather than putting something in the pipeline for three months from now. By releasing a pilot or minimally viable product with a small investment and gauging customer response, the business can choose the next incremental step without over-committing to an annual budget, or tying up capital, resource and capacity over long periods of time. “It’s about funding quickly, releasing small amounts of capital and getting quick wins or fails,” he says. “Then, you can double down if it’s a winner and have the ability to create a pipeline of new ideas and fund the next new thing.”

2. The modern operating model: Supporting a unified customer outcome

Thriving in a digital world means delivering fast, reliably and cost-effectively while delighting your customer.  This requires a shift in the traditional technology operating model from siloed, uncoordinated groups with different goals, tools, processes and cultures to an integrated, product-oriented team supporting a unified customer outcome.  

How do you drive adoption, incentivize the right behaviors, remove manual steps and disparate tooling, and reduce the time to make critical decisions? As organizations with huge legacy environments and technology debt architect their new platforms and services, there are a variety of choices that have to be made. What do they have to do to tie back to their original legacy systems? What do they need to build new? Can they develop a new digital veneer while modernizing the core over time? Where is this product in the value chain, in terms of investment strategies? That’s where modern architecture comes in, enabling the organization to break down these large applications into increasingly smaller components, or microservices, that can be decoupled and re-assembled with repeatable patterns and exposing data in open APIs. 

“For the first time, a lot of organizations are saying, what do these applications really do, what work do they perform?” says Bates. “Modern architecture allows organizations to equate services to their value to the business. It’s not necessarily about simply the functionality that apps deliver on their own, but challenging why we perform the work the way we do, what business problem are we trying to solve with technology and if we’re delivering value out of that platform.”

For most companies, the next several years will be spent in a hybrid environment operating between legacy and modern digital operating models.  This environment, which exists as organizations respond to digital transformation and adopt more agile methods while still managing legacy systems and projects, requires a very different set of architecture skills, adds Bates. “Architecture in general is a highly sought after skill set, but finding folks that think, design, and integrate the way we’re talking about is rare skill set,” he explains. “Organizations need to elevate the importance of the architecture discipline and use smart sourcing or develop that skill to keep pace with what’s next.”

3. Scaling agile teams: Creating a fully-connected enterprise across departments

Agile development is not a new concept, and has matured a great deal — though the original ideas of creating collaborative change, of being more customer-centric, consistently releasing incremental value, and operating a less formal, less-siloed culture remain. But organizations continue to struggle to take these ideas beyond small team populations in a world where the impact of their efforts on stakeholders and consumers is growing more and more extensive.

The key to scaling agile teams, says Bates, is to understand that agility is not only an IT concept, but is a shift to a fully-connected enterprise that applies agile concepts to all. “Many of the greatest benefits around agile get lost because companies lack a management frame of reference to understand the impact of change outside the IT department,” says Bates. Executive leadership needs to fully understand the expectations that the customer, or the business, is now absolutely critical to the day-to-day development of solutions. “So organizations run into a wall and get stuck in their hybrid model, automating bits and pieces, incrementally improving some portions of the process, but falling short of the promise. It’s really hard for little development or ops teams to scale beyond their functional view because the business was never really brought into it,” he adds.  If you’re going to scale to an agile, lean business, he emphasizes, you can’t just change behaviors within the context of the delivery organization.

4. Risk and governance: Upstream control from inception to end

Modern delivery is also disrupting the traditional paradigm of IT risk management, governance and control. There are guidelines, frameworks, and improvement standards such as CobIT, COSO, ITIL, and CMM that have helped organizations manage technology risk and compliance over the past 20 years.  These guides traditionally rely upon policies, process documentation, plans, and rigorous execution to reduce risk and create stability.  However, the nature of the constantly, rapidly changing environment of modern delivery requires a more agile governance and control structure. 

As a result, says Bates, organizations are struggling to harmonize risk and regulatory frameworks with agile/DevOps methods to protect the enterprise. “There’s a whole new set of thinking around the role of emerging tech risk management, internal audit, cyber, privacy and data protection and controls,” he says. “CIOs and CISOs are grappling with new levels of complexity as well as both volume and a pace of releases that is a multiple of what they had done in previous years.”

There is a myth that modern delivery requires no documentation, shuns control, and is seen as an unstructured process.  While it is true that more emphasis is placed on working the software instead of maintaining the project plan, the agility gained through modern delivery is not in opposition to stability. While methods like Waterfall do rely on significant documentation and plans, the very nature of today’s technology landscape results in frequent and rapid changes to the plan.

“For the past decade, IT control has increasingly become a compliance exercise, with areas like security and compliance as siloed and downstream functions,” Bates explains. Now these areas are “shifting left” and are becoming integrated through the entire value chain of the product. “The product or service needs to be secure and controlled from inception to end,” he says. “This doesn’t mean simply checking the box earlier in the process, but embedding the skills and talents of these specialists to help design, develop, deploy and continuously improve the product.”

5. Data as an asset: Embracing APIs and modern architecture

These days just about everything is digital and increasingly connected.  Every piece of data collected on transactions, customers and internal processes becomes an asset that can be mined to improve the product or customer experience. The challenge is that while many of these digital points are proliferating, many remained chained to monolithic legacy systems. The key is unlocking the value of this data to create new value to win in the market.

“Leaders are taking a hard look at changing their architecture to open up entirely new value chains through microservices, open APIs, and allowing people from both inside and outside to hook into their data,” says Bates. “It’s a design principle — that our data is open, reusable and exposed to all of our developers and product owners, and that we will create select sets of data that exposed to partners, developers, or consumers.”

Adoption of modern delivery is driving open and collaborative behaviors, open source tool chains, and reusable APIs. At the heart of all that, says Bates, is data. “When you’re running a modern development shop, there is a balance of unlocking the power of data to the business as an asset while still ensuring development in a secure fashion,” he says. “Modern architecture decomposes the environment into reusable parts and a centrally managed set of controls and governance over data quality. Modern development seeks to address those issues so that data is both open and shared, controlled and governed — and when put to use, the most powerful asset the business has.”