New operating model reduces cycle time and cost while improving service delivery.
A global telecom with a global development organization that supports multiple complex application/product platforms faced surging demand and an immediate need to reduce costs.
At the same time, the organization had highly complex application architecture that was a result of multiple acquisitions, cumbersome application development, and having multiple application development centers around the globe.
In an effort to preserve its competitive advantage the client asked McKinsey to help reduce cycle time while maintaining quality and reducing cost through a structured holistic transformation.
We recommended several changes over a 12-month period to help transform the organization. Among them, we rationalized the number of locations and vendors, and created centers of excellence around application domains and technology. We also streamlined the project portfolio, segmented projects according to their complexity, and implemented lean/agile development methodologies. In addition, we put rigorous performance management in place, rolled out a new chargeback model, and instituted capability building and a continuous improvement program.
To get there we followed a highly structured approach to discovery, design, and implementation. During the discovery phase we baselined the current organization, conducted analysis to determine the levers and the size of the opportunity, and developed our approach to transformation. Following the discovery phase, we launched the design of a new operating model that defined locations, centers of excellence, partners, new processes, metrics, and capabilities. We rolled these out through an approach that combined both classroom training and in-the-field coaching.
After we were done the client was able to reduce the cycle time by 20-30 percent while maintaining quality and reducing costs by 10-20 percent.