Building a Technology Operating Model for Portfolio Companies

The Portfolio Company Technology Challenge

Private equity portfolio companies face a unique technology challenge: they must operate with the efficiency of a large enterprise while working with the budget and team size of a mid-market company. The technology operating model — how the technology organization is structured, governed, and measured — determines whether technology enables the investment thesis or constrains it.

What a Technology Operating Model Covers

A technology operating model defines:

Organization structure: How the technology team is organized — by function, by business capability, or by a hybrid model.

Governance: How technology decisions are made — investment prioritization, architecture standards, vendor selection, risk management.

Delivery: How technology work is planned, executed, and measured — agile practices, project management, capacity planning.

Operations: How technology systems are run — monitoring, incident management, change management, security operations.

Vendor management: How external partners and vendors are selected, managed, and held accountable.

Common Operating Model Problems

The Accidental CTO

Many mid-market companies never intentionally designed their technology operating model. The founding engineer became VP of Engineering, made pragmatic decisions under pressure, and informal practices solidified into "how we do things."

The Over-Engineered Model

Some portfolio companies implement operating models designed for organizations ten times their size. Governance processes and change advisory committees that make sense for a 500-person IT organization strangle a 30-person team.

The Under-Invested Model

Other portfolio companies minimize technology investment to maximize EBITDA. This creates a brittle technology environment that constrains growth. The savings are illusory — technical debt accumulates and eventually requires a larger remediation investment.

Designing the Right Operating Model

Right-Size for the Organization

For teams of 5-15: Minimal formal process. Cross-functional team members. Direct communication. Weekly planning cycles.

For teams of 15-50: Light governance structure. Functional specialization. Bi-weekly sprint cycles. Regular architecture reviews.

For teams of 50+: Formal governance with dedicated committees. Team-level autonomy within platform guardrails. Monthly portfolio reviews.

Align with the Investment Thesis

Growth thesis: Operating model emphasizes speed of delivery and scalable architecture. Governance focuses on enabling fast decision-making.

Efficiency thesis: Operating model emphasizes automation and vendor consolidation. Governance focuses on cost management and standardization.

Platform thesis: Operating model emphasizes integration capability and data platform. Governance focuses on interoperability standards.

Build for the Exit

The operating model should create a technology organization that is attractive to the next buyer:

• Clear documentation of all systems and processes
• Metrics that demonstrate technology performance and business impact
• Reduced key person dependencies
• Modern, maintainable technology stack
• Scalable processes that can grow with the business

Measuring Operating Model Effectiveness

Delivery metrics: Deployment frequency, lead time for changes, change failure rate.

Operational metrics: System availability, incident frequency, mean time to recovery.

Financial metrics: Technology cost as percentage of revenue, cost per transaction, cloud spend efficiency.

Business impact metrics: Revenue enabled by technology, cost savings from automation, customer satisfaction improvements.