What is an operating model, and how can it help (or hinder) transformation? Is your operating model enabling success at every level – from operational strategy and delivery to employee experience and customer service?
Modern organisations are navigating rapid change, rising complexity, and growing pressure to deliver tangible outcomes. So how do you ensure your strategy is translated into action? That’s where an optimised operating model comes in.
In this first episode of Strategy to Outcomes: building your digital backbone, Steve Evans is joined by Giulia Emiliani to explore how operating models have evolved, and why they’re more critical than ever to your organisation’s success.
From channel design and customer engagement to sourcing models and data use, your operating model shapes how work gets done, how value is created, and how your strategy – and therefore your goals – are realised.
We discuss:
- Why traditional operating models are no longer fit for purpose
- The layers that make up a modern operating model – beyond people, process and technology
- What signals indicate it’s time to reassess
- How leading organisations are designing for adaptability, data insight and seamless service delivery
- Real-world examples from financial services, utilities, healthcare and the public sector.
This episode highlights why operating models form a core component of CGI’s Digital Backbone – a structured framework of 12 foundational building blocks that enable organisations to move from strategic intent to long-term outcomes, all powered by digital transformation.
Podcast speakers:
- Steve Evans – Senior Vice President, Business Consulting and Advisory, CGI in the UK
- Giulia Emiliani - Vice President, Business Consulting, CGI in the UK
- Transcript
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Steve Evans: Well, hello everyone, and welcome to our ‘Strategy to Outcomes’ series, which we are opening today and look forward to covering a whole range of important topics in the coming weeks. I'm delighted to say that I'm joined today by Giulia, who runs our business consulting practise and we're talking today about operating model, and is your operating model fit for the future? Welcome, Giulia.
Giulia Emiliani: Hi, everyone. Hi Steve. Thank you for having me.
Steve: Great to have you along. So today really, what we're going to get to is we're recognising that organisations are getting ever more complicated and also there is an increased need for speed and speed of change. So, what we're going to get to today really is unpacking that and the important role that operating models play in all of that. So with that, let's get cracking. First question, Giulia. So what do we mean by the term operating model?
Giulia: Right. So an operating model at its core describes how an organisation operates. So, most importantly, talks about how an organisation delivers on its strategy and its objectives, whatever those might be.
And traditionally, we used to talk about operating model in terms of people, process, technology. So, what people process and tech the organisation is to have to enable the strategy or outcomes through desired outcomes to be achieved. Now on largely that view was very internal focused now because the world has become a lot more complex and so have organisations also become a lot more complex.
The way we define an operating model has evolved significantly since then, so we don't talk about operating model anymore, just from a people process technology lens, although this is still very important.
But we now have added so many more layers in the definition of the operating model and I can, you know, give you an overview of 10 layers that we typically look at when we. When we design an operating model, so starting at the customer level, so who are the customers, who consumers of the services or either internal or external, then what channels do they use, what services do they consume and also when we consider the strategy of an organisations, this is all very, very value driven. Now from an operating model perspective, you also need to think about the risk element as well to balance the value as another layer of the operating model.
And we also look at the various sourcing models. So what’s your in-source what’s your out-source, but also how to coordinate that complex ecosystem of external service providers from partners, suppliers and then how it's all feed into the various internal teams within the organisation and finally to the client.
And then of course we will, we will operate model is also the structure of the governance of an organisation in addition to, you know people, process, technology and now even within technology we expand into data AI etc., so that's just to give you a sense of the complexity around you know the operating model and which reflects as well the way in which the world has evolved into being.
And more connected and those are reflected as well in the way an organisation operates those external relationships and how to make it all work to achieve the strategy.
Steve: Well, Giulia, thank you for starting us off there with a definition, I mean clearly operating models are complex and as you've just illustrated, multi layered, but once we now understand the dimensions of an operating model, why? Why is that important?
Giulia: Well, I think without an operating model, the strategy really risks remaining just an abstract thing and almost disconnected to the way an organisation operates, and it can also become difficult for decision makers to even understand why objectives are not being met.
Why expected benefits are not being achieved because for whatever change is happening, either external changes or internal or changes internal to the organisation, likely the impact will be felt through more than one layer of the operating model. So more than just technology, those changes might impact, you know, processes or structure, channels services we provide to our customers, etc., etc.
So, really I think for any organisation that is looking to achieve specific outcomes or even a strategy the operating model is really fundamental to enable that.
Steve: And when you look at, then, you know we've got the operating model layers, we've got why it's really important to get the operating model right. Once an organisation configured its operating model in the way that you've described, is that then a position with where the organisation is ready to go is it, is it done and are things fixed or do things change overtime.
Giulia: So, things will continuously change. Now, today organisations rarely embark in those long multi-year operating model design. Some of them did in the past and would document number of processes etc.
Now we see clients or organisations doing a lot less of that and however, what needs to be done and often quite regularly, is those more targeted operating model assessments. So it's typically say 9 to 12 weeks assessment typically in response to a particular change or shift, either it being an external shift either, you know, regulations or new trends, customers wanting different things or even innovations, disruptions, AI etc., or and internal shift to an internal change, for instance, a change of strategy, the corporate acquisition being an M&A or even an IPO?
And, or more precisely change of objectives. Is there specific objectives the organisation is looking to achieve, be it cost reduction or penetrating your markets or customer segments etc.
So, these are the reasons why the operating model needs to be reassessed in a regular way, because, as I said, these change typically impact more than one layer, so it will always be important to check that all the resources are still aligned to achieve the right outcomes, because otherwise you're in the risk of wasting resources ultimately. So, that's one area, but the other area sometimes is retrospectively as well, so, organisations might have spent already significant funds in investing in technology, digital or other changes, and they might need to look back at ‘Are we achieving the outcome or the value that we expect?’, ‘How do we tie this back to the strategy?’
And this is where doing an operating model assessment at this stage is also very, very impactful and powerful because you will help organisations activate the benefit just by tweaking all the layers of the model. So for instance, if there has been a technology implementation ‘Are we really achieving the benefits that we expect of the value or do we need to make other changes to processes or channels or the way we engage with our customers to really realise the benefit of that?’
Steve: Thanks, Giulia. So I mean this is a complex thing so that you know there's the moving market regulation, previous investments that you've described, regulatory changes, these are all having impacts on how well organisations are performing and the operating model we're saying is really key to that.
But how does a client know Giulia if their operating model is right or not?
Giulia: Yeah, I think I think the key thing there would be all day struggling to translate the strategy into outcome. Another symptom, let's say, could be if the organisation isn't realising the value of the benefits or the outcome that they expect from various transformational change initiatives.
Today, do they have the means to understand why they're not achieving the desired the desired benefits? So those are all good reasons to, you know, good signals to say, ‘Well, it's time to have a look at the way we operate’ and perhaps have a look at the operating model as well as of course, as I described, if the organisation is facing a lot of changes, be it internal or external, this is also a good time to reassess whether the organisation is really still aligned to the strategy and desired outcomes.
Steve: Hmm, very nice. And is it fair to say, I mean when we look at the market today and we know there's a lot of change and turbulence in markets that we're seeing, what are you thinking are some of the adaptions that our clients are making to their operating models in today's world to accommodate some of the uncertainty that we're seeing.
Giulia: Yeah. So that's a super interesting question, Steve, and one that I quite enjoyed talking about as well. So thank you for asking the question.
Maybe I'll start by describing the key things that we observing in the market and then now weave those in from a sector perspective. And then I might give you some more specific example of how organisations are adapting their operating model across sectors. So the first theme is really that of designing a flexible or adaptable operating model. So what we mean by that is designing operating models in a way that will help organisations navigate the economic cycles. We as you said, so many things are changing really fast and what organisations are looking to do is be able to scale quickly when opportunities are there, but also be able to navigate the downturn and the way to do this is really by focusing on the fixed cost and reducing the fixed costs as much as possible or trying not to increase that. Looking at the you know layers of the operating model, how can we build adaptability so that organisations don't end up investing recruiting people and times of growth and then engaging in cost cutting in times of, you know, difficult times of difficulty.
So there are many different ways in which organisation can avoid increasing or even decreasing their fixed cost, which enable that adaptability or even you know using, of course, the technology and self-serve etc., ecosystem of partners.
So there are many, many different ways in which organisations can achieve that. And that's a key topic for us also to build an app model that's consumer based where activities and resources follow consumption rather than just being fixed.
So, then the second theme is that of customer engagement strategy.
So, because we'd our customers are, you know, ever more demanding, as we know, and so many more channels as well, in which customers can engage with the organisation, and the importance of understanding who the customer is, what they want and leveraging data as that single view of the customer to really be able to provide that best service or advice, for instance, is also a key theme for clients and is very much interlinked with data and other and channels etc.
Now, the third topic is that of the intelligent client function, so many of our clients are looking to build this intelligent client function, which is effectively a function that orchestrates the provision of services from potentially multiple external parties being suppliers, partners etc., are weaved into what the organisation does, so then to provide the full service to their end customers
So, that's another key focus area for clients, both private and public sector, actually.
And then finally, the fourth team is that of product led operating model and sometimes we talk about DevOps ways of working as well. And this is again is structuring the organisation in a way that breaks functional boundaries or creates cross functional teams that enable the organisation to be closer to the way clients or customers consume their services or their products and brings more innovation.
So, those are the four key themes that we observing from an operating model perspective.
Now, what we the way this has been reflected in the work we do with many organisations across sectors is say financial services and utilities are really focusing on the customer engagement strategy, but also specifically the channels, how do they get to their customers if they are via brokers and others and really investing in that digital customer experience?
Utilities, particularly really focusing on leveraging data as well to understand what their customers want, but also from a sustainability perspective, help others. Of course regulations impacting the sector around carbon emission calculations, scope one and two and three emissions reporting, etc., so this is also very the data focus is really important for the utility sector and then how this impacts the other layers of the operating model from the channels and processes etc.
Now if we move on to other sectors, say public sector and health care, here again the citizen or patient engagement strategy is a key focus area for this sector both in terms of understanding what services citizens or patients’ needs and then creating some efficiencies in the way those services are provided.
The use of digital, of course, being ever so important in enabling those efficiencies, but also linking the wider ecosystem to the service provision. So by creating that single view of the patient or the citizen, understanding who are the various service providers and how does it all come together in a service provision in the most efficient way.
And then finally, in the private sector as well we've seen a lot of focus around that intelligent client function, the coordination of the services provided internally and externally, so you see a key theme here again coming up, which is the importance of connecting the organisation with the external parties; being customers, being suppliers or partners and more and more I see an operating model as a connected flow model, because really this is where organisations will differentiate in the future is being able to connect the data, generate insights and provide the right services to the right customers.
Steve: Giulia, we've covered a lot of ground on this podcast and thank you very much. I think it's been really insightful and the importance of operating model, understanding the dimensions and actually how you can get it right and make sure it's right for the future, I think has really come to the fore.
So thank you, Giulia very much for spending some time with us today.
With that, I'll close off. Thank you, Giulia.
Please look out for us on the ‘Strategy to outcomes’ series and we'll be back in a short while with the next in the series.
And please, like, subscribe in the normal way and look forward to catching up with you on the next one.
Giulia: Thank you so much, Steve.
[END OF AUDIO]
If you want to hear more about our end-to-end Digital Backbone approach, listen to the related podcast episode, surviving today, thriving tomorrow: how a digital backbone enables future-fit organisations.
Listen now to explore how you can build an operating model fit for the challenges of the modern world, and explore our related content:
Discover how CGI’s Digital Backbone framework helps enable outcomes-focused transformation
