How to Set Up an Effective Ecommerce Tech Organization
This is an excerpt from The CTO Guide to Ecommerce Architectures: People, Process, and Technology (2021) by Matthias Patzak and Paul Vassu.
Without the right organization, every ecommerce architecture described will fail to achieve its objectives. As a CTO, you have to build a working system out of culture, people, process, and technologies that delivers business value. An effective ecommerce organization includes people from marketing, product, and technology who work together with highly aligned common objectives and principles.
Customer-centricity, Lean Agile, and DevOps
The key qualities of this organization are customer centricity, Lean Agile, and DevOps. Customer centricity means that every feature you build delivers value to the customer. Methodologies at hand are Design Thinking and Lean Startup, especially the Lean Startup concepts of minimum viable products and the build-measure-learn cycle. At Amazon, we use a working-backward approach, where we write a press release and FAQs, add visuals to describe the customer, his or her needs and benefits, and any other important aspects of the problem and solution. AWS shares this methodology with its customers.
Lean and agile methodologies like Extreme Programming, Scrum, and Kanban help ensure your organization can build features rapidly and securely with predictable, reliable processes.
DevOps includes all practices to deliver features to customers with predictable, reliable, repeatable, secure, and fast processes. You are good when every team can release features into production at any time, and the duration of a release from source control to production is measured in minutes instead of days.
Cross-functional Product Development Teams
Cross-functional product development teams are at the core of the organization. Cross- functional means people from different functional areas work together to define, build, ship, and run the product, regardless of the functional reporting line of each individual contributor. Typical roles on these teams are product managers, software engineers, usability engineers, designers, and testers.
A healthy team size is around six to ten people. At Amazon, we follow a two-pizza rule, which means teams can’t be larger than you can feed with two (American size) pizzas. We strongly recommend that software engineers on these teams are generalists who can work on every part of the application stack, with a specialized technical expertise. These so-called t-shape or full-stack engineers can typically manage the most important elements of your ecommerce solution. Organizations that use a commercial off-the-shelf (COTS) solution should also use cross-functional teams, even if less software development is required. The software developers are then experts in the configuration of the COTS solution.
Centered Around Long-lasting Products, Not Short-term Projects
High-performing, cross-functional teams are responsible for a business process, such as checkout, product search, recommendations, and payments, across all technological layers (front-end, backend, and database). This is the best way for teams to fully understand customer needs so they can design the software quality for long-term maintainability.
This contrasts with project-based approaches where teams are formed again and again to deliver individual parts of a project. The team’s responsibility for the result ends with the delivery. Maintenance and maintainability are not the priorities. Teams are merely groups of individuals working together.
Delivering Value, Not Features
All members of the ecommerce organization must share the fundamental belief that features do not necessarily deliver value. Too often, we see organizations that can release and deliver changes several times a day, but the KPIs of the organization do not change. The organization delivers output, but no outcome. They build features with the best intentions, but the features do not necessarily meet the needs of the customer.
To overcome this feature-driven mindset, companies need to adopt the build-measure-learn mindset first described in detail by Eric Ries in The Lean Startup: How Constant Innovation Creates Radically Successful Businesses. The hypothesis-driven thinking treats ideas as experiments that need to be tested. The organization should run several A/B tests in parallel to determine how a new idea performs against the current implementation or other possible solutions.
The success of these experiments must be judged based on data. For this purpose, the organization needs strong business intelligence and data analytics skills. Analytics, AI, and ML are essential capabilities of a successful ecommerce organization.
A simple, easy, and stress-free user experience is a key performance driver of every ecommerce site. In addition to product management, engineering, and data skills, user experience design is the fourth discipline the organization needs to master. User experience design includes the appealing look and feel of the front end and streamlined process flows. Especially for user experience, organizations should make decisions based on data and user feedback. Every change to the user experience must be A/B tested.
Loosely Coupled and Highly Aligned
Speed matters in business—for decisions, experiments, deploying new features, and releasing updates. No matter which architecture you choose, to maximize the speed in your organization, set up an organization that is loosely coupled and highly aligned.
Loosely coupled means teams can function as independently as possible from each other and management leaders. To accomplish this, you need to reduce communications and system architecture dependencies in your organization.
Companies should increase autonomy without ending up in anarchy. Managers should decrease involvement in tactical day-to-day decisions and focus instead on the strategic alignment within the organization. To create alignment, use several instruments like principles or tenets, strategy documents, and technology radars. On the other hand, objectives and key results (OKRs) and Kanban Flight Levels are good tools for the tactical orchestration of teams.
If you have questions for Matthias or AWS, please leave a comment on this blog. To learn more, see The CTO Guide to Ecommerce Architectures whitepaper or the Digital Commerce Solutions page, or contact your account team.