What is an Operating Model

Operating Model

What is an Operating Model

Strategy and Operations

“The art of leading, in operations large or small, is the art of dealing with humanity, of working diligently on behalf of men, of being sympathetic with them, but equally, of insisting that they make a square facing toward their own problems.” -S.L.A. Marshall

Establishing the correct level of process standardization and integration is a fundamental building block for identifying an organization’s strategic road map and target enterprise architecture. The strategic road map and reference architecture (current and target architecture) sets the stage for the development of the IT investment portfolio. These are critical tools for aligning the business and IT capability that will enable an organization to achieve its strategic intent and answers the question, “What are we attempting to accomplish?”

The critical need of organization's today is to align the IT strategy with the business strategy, establish the target enterprise architecture or desired IT capability, determine the right mix of IT assets (services, information, applications and infrastructure) and execute the IT project portfolio while optimizing the use of the organization's resources while remaining agile enough to response to market variability. The operating model provides the guidance necessary to reduction duplicative  services, contracts, solutions and commodity technologies (laptops, desktops, servers and data centers) while providing the blueprint for business transformation.

The operating model will also assist management with breaking down organizational silos and building a better alignment between the business's needs and the IT Service organization's delivery capabilities.

 So, what are the challenges with defining an organization’s Operating Model? What are the culture and implementation challenges of transforming an organizations Operating Model? “For Lenovo’s IT organization, charting how to support the new operating model was daunting. Inherited legacy IT systems had to be replaced by an enterprise-resource-planning (ERP) system that could foster standardized processes yet remain flexible enough to handle important variations in local markets. Rolling out a global IT system is an enormous challenge that many CIOs have taken on but few have managed to pull off,” according to a McKinsey interview with Xiaoyan Wang in an article titled, “The IT factor in a global business transformation: An interview with Lenovo’s CIO.”

For many organizations the requirement is to determine which operating model quadrant is positioned to support their desired process integration and standardization needs. According to Jeanne W. Ross, Peter Weill and David C. Robertson in the book Enterprise Architecture as Strategy, “the operating model is a choice about what strategies are going to be supported.”

There are 4 types of operating model positions according to Ross, Weill and Robertson; they are:

  • Diversification (Low process integration / low process standardization)
  • Coordination (High process integration / low process standardization)
  • Unification (High process integration / high process standardization)]
  • Replication (Low process integration / high process standardization)

Operating Model

Microsoft SharePoint and Project Server solutions can enable organizations to move to the unification quadrant if high integration and standardization are required. These applications are designed to support a global integrated business process and for increasing visibility of the investments portfolio into a single web view.  They also support the elimination of overlapping processes, administration, and standardization of workflows to enable better governance compliance.

Project Server Project Inventory:

Project Server Dashboard - OM

Project Governance Workflow:

Project Governance Workflow - OM


Are you using SharePoint and Project Server to help enable your organization's current and target operating model? What are the benefits of conquering these challenges for your organization?

Additional Resources



Gerald J. Leonard

Gerald J. Leonard is an international expert on the topics of Developing A Culture That Works, Strategy Implementation, and Project Portfolio Management. He is the author of Culture Is The Bass: 7 Principles for Developing A Culture That Works, and the upcoming book, Workplace Jazz: How Emotionally Connected Teams Thrive and Sustain Results. He is the CEO of Principles of Execution (PofE), a Certified Minority Business Enterprise with over 20+ years experiencing working with large Federal and State Governments and Multi-National Corporations. Gerald provides an insightful and unique way of combining his experience and expertise as a professional bassist and a certified Portfolio Management Professional consultant. Find out how you can work with Gerald as your business coach or attend one of his upcoming programs