Product-led It management has come to the fore in the last few years. Currently, 1-in-3 Fortune 100 companies have a Chief Product Officer, according to a 2023 Product School report. 

The in-demand product managers are playing a more central role in keeping up with the demands of the technology market than in the past. Moreover, they have been relatively untouched by the recent layoffs in the tech sector, adds the report. 

In this article, we will explore the product-based model by comparing it to the more conventional project-based strategy. 

Key differences between project and product IT management

Traditional project management methodologies give a lot of importance to having a clear start and end point and a well-defined schedule for creating the product. The project team focuses on the predetermined requirements. 

The team’s performance is judged on delivering the product within time and budget. Therefore, the output becomes more important than the outcome – product usefulness.

Product-based management is an approach where the outcome is the main focus. This model requires a team focused on a single product or a product group. 

This approach aims to improve the product consistently. The developers use agile product management methodologies for their iterative delivery of new features. 

The difference in focus – output, outcome – creates multiple other differences between the two approaches. Here are four key differences:

Completion Time

The IT project management team starts with a deadline for delivering a specific product. A product management team, on the other hand, updates the product throughout its life cycle. This product-focused strategy ensures a consistently good user experience.

Scope of The Project

The project scope is a central theme in the project-oriented approach, along with the completion time. The team has to deliver, even if recent advancements have made that scope less relevant to the end user’s needs.  

With agile product management, there’s less risk of irrelevance. The regular iterations and delivery allow for more flexibility in making changes if needed. 

Budget Constraints

The project management professional has clarity about the budget because of the project-focused model. The stakeholders set budgets before work starts. However, the budget can also be a limiting factor. For instance, the team must prioritize those ideas and solutions that are budget-friendly

Budgets are not as strictly defined in the more iterative product method. Providing more flexibility with the budget may allow for more creative freedom. However, the flexibility may also increase costs. Therefore, the budget can be a deterring factor when choosing the product-based method. 

Resource Allocation

Probably the most important factor in any project is the people who will bring it to life. The project-led team may consist of professionals working on multiple projects simultaneously. In contrast, the project-based approach has people focused on one product. The singular focus allows team members to get more invested in the product’s journey and usefulness. 

What makes product-driven IT management vital?

A product-driven strategy can help companies deliver an “excellent user experience” because it:

1. Allows companies to be more agile: The iterative approach helps the company reduce its reaction time to new customer trends.
2. Provides better customer insights: Working in short “sprints” helps businesses receive regular feedback before, during, and after the main development phase. 
3. Allows the company to run ideation and development simultaneously: The nature of the management model lends itself to discovering new ideas while developing the product. 

Providing value to the company and the customer is the central theme in successful product-led companies.

Dropbox, for instance, has developed a valuable file storage product that users can share to get more storage credits. Further, Dropbox Plus users get more storage than the Basic plan ones. Therefore, the company aims to ensure sustainability by incentivizing its current user base. 

Compared to a product-led team, a project-based team focuses on what’s decided upfront. So, if a new development is disruptive but out of scope, it may not be considered for the output. Similarly, If the project may benefit from more customer feedback over a longer duration, it wouldn’t be possible without adjusting the deadline. 

Product-led IT models allow companies to deliver customer experiences by evolving according to the demands of their industry. However, most companies are still unaware of how to do product management, according to a 2023 McKinsey report. Consulting a good digital transformation service can help solve this issue.