3 Practices CIOs Can

Learn From Marketplace

Product and Portfolio
Managers

By Remi Gulzar, Senior Director Analyst, KI Leader

Donna Scott, Distinguished VP Analyst
3 Practices CIOs Can Learn From Marketplace
Product and Portfolio Managers
Published 19 June 2020 - ID G00467012 - 10 min read
By Analyst(s): Remi Gulzar, Donna Scott

Initiatives: CIO Leadership of Strategy, Governance and Operating Models; CIO Leadership
of Innovation, Disruptive Trends and Emerging Practices

Life cycle and product portfolio management are key product

management processes for evolving IT products and prioritizing
scarce human and financial resources. CIOs must learn from
marketplace product managers and apply life cycle management
lessons to internal IT products.

Overview
Key Challenges
■ CIOs often struggle to translate the practices and disciplines applied by marketplace
product managers within the context of IT.

■ Digital product management and portfolio-driven life cycle management are often
overlooked when developing IT products. CIOs find it difficult to demonstrate how
the IT organization’s products, services and capabilities support market-facing
products and strategic objectives.

■ Demonstrating how IT products, services and capabilities support market-facing

products and strategic objectives can test even experienced CIOs.

Recommendations
CIOs responsible for IT strategy execution and performance must:

■ Learn about enterprisewide product portfolio and life cycle management by

replicating marketplace managers’ portfolio and life cycle management processes.

■ Prioritize portfolios and products against business objectives by using an IT product

portfolio decision matrix.

■ Increase IT’s contribution to enterprise objectives, business capabilities and marketplace

products/services by managing product portfolios and life cycles effectively.

Gartner, Inc. | G00467012 Page 1 of 12

Introduction
The digital age requires enterprises to respond rapidly to new customer preferences,
changing technologies and competitive threats and disruption (see “The 2019 CIO
Agenda: Securing a New Foundation for Digital Business”). As a result, enterprises must
continuously assure that they are focused on the right initiatives and investments, and
have allocated the right number and kinds of resources to respond.

Marketplace product managers are experienced at orchestrating the right level of

innovation and investment to meet the product’s financial, market share and growth
targets from an enterprisewide or business unit portfolio perspective.

To ensure that IT’s product portfolio aligns with enterprise goals, CIOs must shift to an
enterprisewide approach (see Figure 1).

Enterprise strategy informs enterprise portfolio management, which informs IT product

portfolio management. This then determines the next life cycle increment of an IT product
to deliver to an end user.

Figure 1. Product Life Cycle Management Across the Enterprise

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Speed to market and agility when faced with change are seen as the main goals of a
product-centric approach, after customer satisfaction. The move to digital business is
also a key driver. Project-based funding models and the culture of business and IT teams
are the biggest challenges to adoption of the product-centric delivery model (see “Survey
Analysis: IT Is Moving Quickly From Projects to Products”).

This note focuses on three practices CIOs should adopt to deliver winning IT products that
support the enterprise’s internal and external goals:

■ Replicate the portfolio and life cycle management processes used by marketplace
managers.

■ Prioritize internal IT products and portfolios by using a portfolio decision matrix.

■ Increase IT’s contribution to enterprise objectives by managing IT product portfolios

and life cycles effectively against enterprise requirements.

Analysis
Replicate the Portfolio and Life Cycle Management Processes Used by
Marketplace Managers
The first step in applying an enterprise portfolio and life cycle management approach in
the context of IT is to understand the way that marketplace product managers “manage”
their portfolio. They use two tools — product portfolio management and life cycle
management — to prioritize against business objectives and goals, identifying which
parts of the portfolio need more focus and active management than others. The Boston
Consulting Group’s (BCG’s) growth share matrix exemplifies a typical product portfolio
management approach for external products that measures growth against market
share over a product’s life cycle (see Figure 2).

Gartner, Inc. | G00467012 Page 3 of 12

Figure 2. Boston Consulting Group Product Portfolio Life Cycle Management Matrix

In this example:

■ Top left: Question marks represent new products that have not yet achieved their full
potential but may move into the “stars” category.

■ Top right: Stars represent products with high growth and high market share (rising
stars).

■ Bottom right: Cows are more in “maintenance” mode with satisfactory innovation;
as “cash cows,” they provide funding for rising stars.

■ Bottom left: Dogs represent products in decline or no longer relevant to strategy and
should eventually be retired or replaced.

Gartner, Inc. | G00467012 Page 4 of 12

Marketplace product managers invest the most resources in the “stars” to drive market
share and growth. That could also entail making product changes to continue growth and
share; unlike traditional products, digital products can be changed rapidly. The goal is to
increase the focus of energy and resources on products with the highest current and
potential value and to reduce the focus on those with limited future return.

As a product matures through its life cycle, the degree of change and activity are highest
during the growth stage, then leveling off. At some point, the focus may shift more toward
optimization — both in market share and cost. Innovation is scaled back to what is needed
to retain customers and achieve a new set of strategic goals. At some point, the product
may have declining value. As a result, the focus will shift more to margin and potential
replacement or divestiture if it no longer fits with enterprise strategy (see Figure 3).

Figure 3. Marketplace Product Life Cycle Management

Gartner, Inc. | G00467012 Page 5 of 12

This approach to managing external products and portfolios can also be applied to
internal IT products.

Prioritize Internal IT Products and Portfolios by Using a Portfolio Decision

Matrix
Just as marketplace product managers use a product portfolio decision matrix to inform
their life cycle decisions, CIOs can apply this approach to internal IT products. Those most
aligned with enterprise business strategy have the highest value potential. Those least
aligned, then, may get less investment and perhaps be retired.

For example, Figure 4 shows a decision matrix that uses “Contribution to Strategic
Business Outcomes” and “Frequency of Change” axes to create four scenarios that invoke
life cycle decisions and alter the IT roadmap. Note that Figure 4 is presented as an
illustration only. CIOs must create a matrix with axes and scenarios that are relevant for
their organization and the enterprise.

Figure 4. IT Product Portfolio Decision Matrix

Gartner, Inc. | G00467012 Page 6 of 12

A balanced IT product portfolio also helps CIOs allocate scarce human and financial
resources to where they can add the most value.

Increase IT’s Contribution to Enterprise Objectives by Managing Product

Portfolios and Life Cycles Effectively
Like external products, internal IT products should be defined by how they are consumed
rather than how they are produced or the functionality they offer. One problem with
demonstrating IT’s contribution to enterprise objectives is that IT tends to focus more on
how their products are made and what features and functionality they offer, rather than on
the value and experience that customers/citizens/consumers seek. To overcome this,
CIOs must:

■ Aggregate internal IT products into enterprise portfolios that contribute to

marketplace product success.

■ Manage IT product life cycles in a way that enables them to prioritize investments
and resources effectively against enterprise portfolio requirements.

Managing the IT Product Portfolio to Support Business Capabilities and Marketplace

Products
The IT product portfolio concept enables CIOs to help business leaders visualize every
component in the portfolio, as well as interrelationships and value to enterprise (or
business unit/capability) strategies. Once IT and business leaders agree on priorities,
CIOs can develop roadmaps that deliver to those priorities, for individual products as well
as the entire portfolio. Figure 5 illustrates an example of internal product portfolios
contributing to external marketplace products.

Gartner, Inc. | G00467012 Page 7 of 12

Figure 5. Example: IT Product Portfolio

Gartner, Inc. | G00467012 Page 8 of 12

Components of internal IT product portfolios and external marketplace products are:

1. IT Technical Services: Internal products that are delivered to IT teams rather than
business or external customers. Some examples include “as a service” products for
infrastructure, platforms and databases.

2. IT Services: Offerings and value propositions for internal customers — offerings

that change based on IT’s role in the enterprise. For example, if IT plays a run-the-
business role, the portfolio will mostly contain application and infrastructure
services. However, if IT enhances business performance, these offerings shift to
higher-value services that drive digital dexterity in the workforce, analytics for better,
faster decision making and business process automation.

3. IT Product Lines or Services Aligned to Business Capabilities: The application

portfolio. It is typically organized by the business capabilities it supports, enabling
CIOs to prioritize, optimize and better align the portfolio to enterprise strategy and
execution.

4. Business Capabilities Managed as Products: The portfolio of capabilities in the

enterprise that enable the business to deliver on its value proposition and succeed
in its goals or mission.

5. Products to Market: Products and services that are delivered to external customers
in the marketplace.

CIOs looking to gain more influence and recognition in the business need to align their IT
products and life cycle increments to business capabilities, managed as products (box 4)
enabling marketplace products to win in their respective markets (box 5). This must be
built on a foundation that recognizes which IT products to develop, mature and retire.
CIOs will leverage IT technical services (box 1), IT services (box 2) and IT products linked
to business capability (box 3) portfolios to drive IT product decisions. They will have to
master IT product management in their own organization before venturing out into the
business and contributing to marketplace products.

Managing Internal IT Product Life Cycles

CIOs can apply a life cycle management process to internal IT that is similar to what
marketplace product managers use (depicted earlier in Figure 3). However, while those
managers may focus on external-product-related phases such as inception, growth,
decline and retirement, CIOs likely would focus on phases that fit internal IT product life
cycles, as shown at the bottom of Figure 6.

Gartner, Inc. | G00467012 Page 9 of 12

Figure 6. Life Cycle Management for Internal IT Products

These internal IT phases are:

■ Product Vision, Strategy and Planning: This phase captures the “why” and “what” of
an IT product in a meaningful way and provides the organization and product team
with a clear description of what success entails. Decisions in this phase are much
broader than the product itself. Each decision challenges the strategy and proposes
alternative evolution roadmaps.

■ Design and Development: Whatever is being designed will evolve through this phase,
generally from prototype, to pilot, to MVP, to commercial-grade product, usually
through many iterations. IT product teams deliver incrementally either through a
product- or project-centric delivery model, or both. Either way, teams have decision
rights to achieve their outcomes.

■ Adoption and Optimization: In this phase, the product evolves from limited release
to general release and is monitored intensely through detailed, real-time business
intelligence. The design and development phase and this phase are similar to the
growth phase in the marketplace product life cycle shown earlier in Figure 3.

Gartner, Inc. | G00467012 Page 10 of 12

■ Maintenance and Utilization: As the product achieves its goals, it needs less activity
and change; the roadmap will begin focusing on optimizing cost and value, and
incremental improvements. Some product resources will be moved to higher-priority
products. Sometimes, threats or opportunities may drive the product back to design
and development for improvements.

■ Retirement and Replacement: IT product managers should continuously analyze

and assess the stage of any given product in the life cycle, gauging whether or not
the product’s value proposition is declining. Note that a decision to retire or replace a
product could occur in the product vision, strategy and planning phase as well by
tying the decision to enterprise goals and objectives.

Recommendations

■ Adopt and synchronize the product portfolio and life cycle management practices of
marketplace product managers to optimize investments in internal IT products that
support enterprise and business outcomes.

■ Determine where to focus product and life cycle management within the IT portfolio.

■ Start with recognizing IT technical services, IT services and IT product lines or

services aligned to business capabilities portfolios establishing IT product
management practices within IT.

■ As more value is delivered, focus on increasing the effectiveness of IT products

in the business. Support business capabilities as products and products to
market to enable the business to deliver on its value proposition and succeed in
its goals or mission.

Recommended by the Authors

Some documents may not be available as part of your current Gartner subscription.

The CIO’s Essential Guide: Digital Product Management

Leveraging Digital Product Management for Digital Business Transformation and
Optimization

How CIOs Can Determine Which IT Services to Manage as Products and Crucial Steps for
Early Success

Prepare Now for the Future of Digital Product Management

Hire Product Managers Who Fit the Unique Stages of the Product Life Cycle

Gartner, Inc. | G00467012 Page 11 of 12

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