Why organisations like GovTech are moving from projects to products 

[SINGAPORE] When the Government Technology Agency (GovTech) announced on Wednesday (Jul 15) that it would embark on what it called a two-year workforce transformation, resulting in the retrenchment of 93 employees in its first phase, it insisted that the move was not driven by artificial intelligence. 

Instead, the agency said that it reflected a fundamental shift in how it develops and manages technology – from overseeing projects delivered by external vendors to owning and continuously improving digital products in-house. 

GovTech is not alone in wanting to redesign its operating model. 

According to a 2025 McKinsey report, which conducted in-depth interviews and a survey of 757 senior executives at global companies, around two-thirds of organisations redesigned their operating models over the previous two years.

Meanwhile, about half expected to undertake another redesign over the following two years in response to rapid technological, geopolitical and societal change. 

While the management consultancy’s report did not examine specific operating models, enterprise software platform Planview’s 2024 Project to Product State of the Industry report, based on a global survey of more than 600 respondents, found that over half of the respondents expected 80 per cent of their organisations’ work to be product-oriented within five years. 

So what exactly is a product operating model, and why are some organisations moving away from the traditional project-based approach? The Business Times takes a closer look.   

What is the difference between project and product management?

According to information technology professors Ryan Nelson and Thomas H Davenport, traditional project management revolves around temporary teams that deliver a specific technology system before they are redeployed to work on something else.

By contrast, a product operating model relies on permanent, cross-functional teams that continue to manage and improve digital products after they go live, they wrote in a Harvard Business Review article published earlier this year.

Why are organisations making the switch?

Profs Nelson and Davenport argued that organisations should move from a project-based approach to a product operating model because traditional technology projects often have high failure rates, with emerging technologies such as AI making project outcomes even harder to predict.

They also noted that project teams typically have limited opportunities to learn how a solution is being used or how it should evolve after it is launched.

Under a product operating model, success is measured by longer-term outcomes such as customer adoption, user retention and revenue, rather than whether a project is delivered on time and within budget. 

“The focus isn’t simply on getting new products out there; it’s on delivering ongoing value to customers,” they wrote.

The potential benefits extend beyond customer outcomes. 

Research by McKinsey in 2023 found that companies with a strong digital product focus generated total shareholder returns that were about 60 per cent higher than peers without one, while recording operating margins that were 16 per cent higher. They also brought new offerings to market 40 to 70 per cent faster. 

Beyond financial performance, McKinsey said that product-focused organisations tend to deliver higher-quality solutions, align technology more closely with business needs, respond more quickly to changing market conditions, and report higher employee engagement.

Despite these potential benefits, the transition is far from straightforward. 

In a separate 2023 report, Planview found that only 8 per cent of organisations successfully made the move from projects to products.

Profs Nelson and Davenport said that many organisations struggle because the transition requires strong commitment from senior leadership. 

Companies that failed to make the switch often lacked a clear mandate from the C-suite to adopt a product operating model, they wrote.

In GovTech’s case, the agency’s chairman Chng Kai Fong acknowledged that it could have stretched the transition over many years and relied largely on natural attrition.

Instead, he said that GovTech chose to press ahead because delaying the transition would leave critical systems ageing and widen the gap between what Singaporeans need and what its current operating model can deliver.