Why Product Managers Are Essential For Digital Transformation

The pace of digital transformation has accelerated sharply over the past two years. Already a trend with huge momentum behind it, the pandemic brought an overnight requirement to shift to a more digital approach, which meant that digital transformation was suddenly a number one priority for many organizations.

The pandemic also accelerated a trend in how customers use and buy products. This has led to organizations increasingly employing product managers to oversee product strategies. Not only does this help ensure more efficient and effective delivery of products, but product managers have become an essential part of any organization’s digital transformation.

The growing importance of product managers

People expect an exceptional product experience, and if they don’t get it, they can easily go elsewhere. A key challenge for many organizations now is the smooth transition from a sales-led growth model to a product-led one.

However, if an organization can deliver such a product experience, it increases loyalty, reduces churn, and can have a tangible impact on growth. It’s a significant shift to make – effectively driving and bringing together user acquisition, expansion, conversion, and retention using the product itself.

Organizations are also adopting product management strategies to manage internal products – not products that are sold but those that support various business capabilities. Such products would previously have been approached as projects. But with a need to be more agile, business-oriented, and to increase efficiency, IT teams are increasingly shifting from project-oriented to a product-oriented approach.

This shift to tie development investment with business outcomes requires a further shift, in mentality and approach. The role of product manager is increasing, while project managers are decreasing. Without this shift, any product program will struggle to achieve its goals. But employing a product manager has an undoubted impact on digital transformation too.

Digital transformation challenges

Before embarking on a digital transformation initiative, business leaders need to be aware of the critical challenges that other businesses have faced in their journey. These can vary across industry, geography, organization size, and much more, but commonalities can be found.

ERP consultancy and business transformation firm Panorama Consulting Group recently published a report on some of those common digital transformation challenges. Their list of key challenges included:

  1. A lack of dedicated IT skills within the organization
  2. A lack of organizational change management
  3. Ever-evolving customer (internal or external) needs
  4. A lack of defined strategy around digital transformation
  5. On-going budget concerns and constraints
  6. Ineffective data management
  7. Inefficient business processes

An internal product manager can effectively mitigate these risks and address the challenges.

Lack of dedicated IT skills: While product managers are a jack of many trades, they know how to work with stakeholders of various skill levels across many departments to get things done. They know who can do what, how they can help, and where the gaps are.

Lack of organizational change management: Product managers are not change management experts (from an organizational perspective), but they know how to change products and processes towards incremental improvements. They can also rally their team around common goals and maintain motivation as they work towards success.

Evolving customer needs: This is partly why product managers have jobs. They are constantly focused on understanding the problems that customers face presently while also anticipating problems that customers may have in the future as their needs change. An internal digital product manager is not focused on addressing customer needs, rather their concern is addressing the needs of their business (their business users are their customers).

Lack of a defined strategy: Product managers work with goals in mind. Goals for their product, goals for their customers, goals for their users, and goals for their business. Digital transformation should never be done simply as a marketing opportunity or to use budget so that it’s available the following year. Instead, it should always be done with specific goals in mind and measurable results to assess progress.

Budget concerns and constraints: while product managers are not always in charge of budgets, they are very familiar with working within constraints to accomplish goals. No product manager has unlimited resources and team members with which to work. So, they constantly prioritize and make trade-offs to focus on the right things at the right time.

Ineffective data management: data is the lifeblood of decision-making for product managers. If data is not currently being collected or referenced for decision-making, then a product manager can assist with getting this initiative started.

Inefficient business processes: internal product management improves business processes by providing the right tools and aligning with business departments to understand their requirements. It’s an important difference between this and the traditional project-focused approach to internal products which was often inefficient and ineffective. Deploying product management allows teams to have a more iterative approach with the business users, focusing on value instead of features and aligned to business outcomes.

Digital transformation has stepped up a gear since 2020. Organizations that do not adapt to digital will struggle enormously to find their place in the world. Success depends on many variables but appointing a product manager can undoubtedly play a significant role.

Malte Scholz, airfocus 
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Malte Scholz is CEO and founder, airfocus