As enterprises rush to keep pace with the demands of the AI era, one operating model is quickly emerging as the standard: the product-aligned operating model (PAOM).
According to HCLTech’s latest global research, The Blueprint to AI-led Operating Model, enterprises across industries are rapidly pivoting away from traditional structures with 88% already moving toward PAOMs.
Legacy, functionally siloed operating structures are hindering transformation and making industries vulnerable to disruption. According to Pawan Vadapalli, corporate vice president and global head of digital business services at HCLTech, these organisations have already begun transitioning to this approach—but almost all of them are struggling to make it work.
“Our research highlights that while organisations are embracing the product-aligned operating model, all customers—100% of them—said they face challenges in execution,” Vadapalli told AIM. From aligning people and processes to overhauling tech stacks and restructuring teams, the transformation is easier said than done.
And that’s exactly where HCLTech is betting big with its proprietary Fenix framework.
The product-aligned operating model isn’t just a fancier version of Agile or DevOps. Vadapalli says it is a fundamental evolution.
“Agile focuses on iterative delivery at the team level, and DevOps optimises the software development lifecycle,” he explained. “Product-aligned operating models go further. They restructure the entire organisation around value streams to align IT and business outcomes.”
Higher ROI with PAOM
PAOMs are about embedding accountability, agility, and innovation into the very core of the organisation. This means cross-functional teams are responsible for delivering continuous value throughout the entire product lifecycle.
It’s a model that scales agility across the enterprise and helps drive what Vadapalli calls the “Total Experience” for every stakeholder. While generative AI continues to dominate boardroom conversations, Vadapalli argues that the real ROI from it only materialises when it’s embedded within a product-aligned framework.
“Organisations with a product-aligned operating model are achieving up to 4x higher ROI on their AI investments,” he said. One striking example he gave is a large Swedish equipment manufacturing company that partnered with HCLTech to develop an enterprise AI platform.
By restructuring around a product-centric model, the company now delivers AI-driven use cases every three weeks—cutting across personas and value streams.
“This kind of velocity and alignment simply isn’t possible without a model that connects business objectives directly to AI initiatives,” Vadapalli noted.
These transformations are supported by foundational layers, such as DevSecOps and platform engineering. AI isn’t an add-on — it’s woven into the service and value stream strategy from the outset, helping enterprises automate, optimise, and iterate at scale.
The Real-World Roadblocks
However, getting there is challenging, especially for traditional industries like manufacturing and healthcare. Vadapalli pointed out that 9 in 10 organisations struggle with leadership alignment. “Without leadership buy-in, cultural shifts stall,” he said.
Legacy tech systems only compound the issue, creating cost and complexity burdens that slow down modernisation efforts.
A third of organisations are still using outdated technology, while 22% lack meaningful metrics to measure their success. Many still rely on KPIs focused on software output rather than business outcomes like customer satisfaction and time-to-market.
Siloed operations, skill gaps, and change fatigue further weigh down the transition. “HCLTech’s approach embeds leadership alignment, AI-powered insights, and a value-stream focus from the beginning,” Vadapalli said. “We help clients design for transformation, not just implementation.”
A big concern for many CIOs is becoming dependent on specific tools or vendors. HCLTech’s platforms—Fenix and AI Force—are designed to avoid this trap, he notes.
“Fenix is purpose-built to bridge digital strategy and execution,” Vadapalli explained. It helps enterprises rewire business architecture using composable and consumable technology layers, allowing for modular decisions without being locked into proprietary systems.
AI Force adds intelligence by integrating AI across existing data pipelines. “It connects data across silos, adds Responsible AI safeguards, and enhances your current tech stack—without forcing you into a specific vendor ecosystem,” he said.
Closing the Gap Between Strategy and Execution
One of the less-discussed challenges in enterprise AI adoption is the disconnect between leadership vision and mid-level execution. HCLTech’s research indicates a clear gap between what CXOs plan and what frontline teams deliver.
Bridging this gap, according to Vadapalli, requires a multi-pronged approach: designing teams around value delivery, shifting to outcome-driven OKRs, and establishing value-based funding models that direct investments where they have the most impact.
Change management also plays a critical role. Enterprises need a purpose-led transformation that encompasses not only new tools but also new ways of working.
While generative AI has undeniably accelerated the urgency for transformation, Vadapalli is clear that the product-aligned model is not just a response to AI, it’s part of a larger operating shift toward long-term resilience.
“Without a unified model like this, organisations risk underleveraging their GenAI investments,” he warned. The product-aligned operating model helps remove internal friction, allowing enterprises not only to survive disruption but also to thrive in it. “It’s about customer-centricity, agility, and sustainable growth,” Vadapalli said.
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