EY – Engineering the engineering org

How can companies design their engineering functions to strike the right balance between market responsiveness and operational efficiency?

Harnessing and optimizing engineering talent is paramount to success in the technology sector, but our experience has shown that there is no single way to accomplish this when it comes to designing an engineering organizational structure. Some structures optimize solution time-to-market, while others optimize operational efficiency. If an organization leans too far in either direction, it risks falling behind competitors in cost structure, innovation or speed-to-market. How can companies design their engineering functions to strike the right balance between market responsiveness and operational efficiency? It is worth noting that what is right for one company in its current form (stage in the product life cycle, competitive landscape, etc.) may not be right for another or for that same company five years from now. In short, there is no right structure — only the right structure at the right time for a given company.

Know your options. There are a wide variety of options when it comes to engineering organizational structures. For this analysis we have grouped them into three categories: vertically oriented, horizontally oriented and hybrid.

  1. Vertically oriented structure where engineering is part of each business unit (BU)
  2. Horizontally oriented structure where engineering is a stand-alone organization
  3. Hybrid structures that use hard and dotted lines to matrix engineers between an engineering organization and BUs

To assess where their company lies on this spectrum, executives can ask themselves questions such as:

  • Who is responsible for meeting customer demands and anticipating market trends?
  • Who owns the product line P&L? Who is responsible for prioritizing engineering investments?
  • Who is responsible for attracting, developing and retaining engineering talent?

by: Barak Ravid, Managing Director, EY Co-head of Technology; Contributors: Barak Ravid
Managing Director, Co-head of Technology, EY-Parthenon, Ernst & Young LLP; Spencer Lee, Vice President
EY-Parthenon, Ernst & Young LLP; Nina Lapachet, Senior Manager, Transaction Advisory Services, Ernst & Young LLP

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