using the ivi (innovation value institute) it cmf (it capability maturity framework) to develop a...

Using the IVI (Innovation Value Institute) IT CMF (IT Capability Maturity Framework)to Develop a Business Oriented Information Technology Strategy

Alan McSweeney

May 24, 2010 2

Objectives

• To provide an introduction to the IVI (Innovation Value Institute) IT CMF (IT Capability Maturity Framework)

• To describe how the IT CMF can be used as a basis for establishing a business-oriented information technology strategy

May 24, 2010 3

Agenda

• Introduction to the IT CMF (IT Capability Maturity Framework)

• Using the IT CMF to Define A Business-Oriented Information Technology Strategy

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Innovation Value Institute (IVI) and IT-CMF (IT Capability Maturity Framework)

• IVI is developing an the IT-CMF as a systematic framework for improving IT capability and identifying and prioritising opportunities, reducing cost and optimising the business value of IT investments (see http://ivi.nuim.ie/)

− Based on an Intel framework and initially developed as part of Intel’s IT transformation (see Managing Information Technology for Business Value http://www.intel.com/intelpress/sum_bv.htm)

− Reviewed and tested with 200+ CIOs

• Objectives of IT CMF

− To assess current practices

− To understand opportunity and value of increasing maturity

− To bridge structural gaps in other assessment frameworks

May 24, 2010 5

Disconnect Between IT Investments and Business

• 62% of organisations say they find it difficult to calculate ROI for IT investments

• 45% of organisations say their business value metrics do not accurately capture the value of IT investments

• 52% of organisations say that business executives are sceptical of efforts to measure business value of IT

• Only 41% of organisations perform an ROI assessment for IT budget

May 24, 2010 6

IT CMF High Level Framework

Managing the IT Budget

Managing the IT Capability

Managing IT for Business

Value

Managing IT Like a Business

Provides Alignment Between Business

and IT

Provides Metrics to Close the Loop on Value

• IT CMF structured into four high-level processes for value-oriented IT management

May 24, 2010 7

IT CMF

• IT CMF is a meta-framework that identifies an IT organisation’s maturity in key critical practices− Comprehensive overarching framework that encompasses all relevant IT practices and

sits above implementation frameworks

− Does not mandate the use of specific implementation frameworks

• Identifies the key areas where the organisation wants or needs to improve to deliver business value− Identifies critical gaps in maturity that are preventing IT delivering business value

− Identifies appropriate levels of maturity for the organisation for critical IT processes

• Contains benchmarks to allow an organisation measure itself against similar organisations

• Defines a structure to allow improvements to be measured

• Implementation of specific critical practices improvements devolved to implementation frameworks

• Objective view of IT competency and maturity across all of IT

May 24, 2010 8

IT CMF Meta-Framework

IT Capability Maturity Framework

High Level (Macro) Processes

Detailed Critical IT Processes

Specific Implementation Frameworks for Critical IT Processes

High Level Macro Processes Contains

Detailed Critical Processes

Contains

Provides Measurement Structure for

Current and Future Status of Critical IT

Processes

Implementation Framework



May 24, 2010 9

IT CMF Meta-Framework and Implementation Frameworks

Specific Implementation Frameworks for IT CMF Critical Processes

ITIL (Information Technology

Infrastructure Library)

ISO 20000 (ITSM Standard)

IT Service CMM (Capability Maturity

Model)

ISPL (Information Services Procurement

Library)

eSCM (eSourcing Capability Maturity

Model)

ASL (Application Services Library)

USMBOK (Universal Service Management Body of Knowledge)

PRINCE2 (Projects in Controlled

Environments)

PMBOK (Project Management Body of

Knowledge)

MSP (Managing Successful

Programmes) IT Balanced Scorecard

CMMI (Capability Maturity Model

Integration)

ISO/IEC 12207 Systems And

Software Engineering

DSDM (Dynamic Systems Development

Method)

RUP (Rational Unified Process)

ITIM (Information Technology Investment

Management)

Val ITGartner Total Cost of

Ownership

ISO 9000 TickIT/TickITplusTQM (Total Quality

Management)Six Sigma

COBIT (Control Objectives for

Information and Related Technology)

ISO 38500 (Corporate Governance of

Information Technology)

ISO 27000 / (Information Security Management System)

OCEG (Open Compliance and

Ethics Group)

IT Baseline Protection Catalogs

TOGAF (The Open Group Architecture

Framework)

Department of Defense Architecture Framework (DoDAF)

Ministry of Defence Architectural

Framework (MODAF) Zachman

Federal Enterprise Architecture (FEA)

NASCIO EAMM (NASCIO Enterprise

Architecture Maturity Model)

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Specific Implementation Frameworks

• There are multiple specific overlapping implementation frameworks across many specific areas of IT competency such as:− Enterprise Architecture − Service and Application Management, Provisioning and Sourcing− Programme and Project Management− Software Lifecycle Management− Value and Investment Management− Data Management− Quality Management− Governance, Security and Risk Management− Business Management and Support− Business Analysis

• Each deals with a specific area and not the bigger picture

• IT CMF is concerned with the whole of IT and focuses on businessvalue− Covers entire landscape of IT competency

May 24, 2010 11

IT CMF High Level Framework

Managing IT for business value involves aligning IT investments to overall business benefits.

Underlying focus areas include value and benefits delivery and portfolio management.

Managing the IT capability is concerned with what information technology and the IT organisation can do collectively for the organisation.

Underlying focus areas include traditional IT factory functions like solutions delivery and services provisioning

Managing the IT budget involves effective financial management to reduce costs to free funds for investment in innovative IT solutions that deliver better value and performance.

Underlying focus areas include budget management and performance sustaining and making new investments and portfolio planning.

Managing IT like a business involved using solid professional business practices and applying them to the IT function and involves shifting the focus from production and technology to a focus on customers and services.

Underlying focus areas include leadership, governance, alignment and management processes.

Managing IT for Business Value




May 24, 2010 12

IT CMF Framework

• Contains−Assessment approach to determine an IT organisation's maturity

− Best practices associated with outcomes and metrics for their measurement

• Benefits−A comprehensive and detailed framework to collect and provide

management information on critical processes within the IT function of an organisation

− Processes designed, selected and defined as those that ensure that IT delivers business value

− Provides a view of the level of maturity of the IT function

− Identifies areas where effort should be focussed in order to addvalue

− Enable IT to be responsive to business needs

May 24, 2010 13

IT CMF Framework

• IT CMF framework closes the loop on Information Technology delivering value to the business

Managingthe IT

Budget


Managing and

Delivering IT Capability

Managing IT for Realising

and AssessingValue

Closing the Loop

Between Cost and Value

May 24, 2010 14

IT Capability Maturity Framework - Characteristics


Managing IT for Realising and Assessing Value

Managing and Delivering IT Capability

Managingthe IT Budget

BeginningLevel 1 Ad Hoc

IT is a cost centreTotal cost of ownership known

Technology supplierPredictable performance

Level 2 Basic

IT is a service centreReturn on investment and business cases generated

Technology expertSystematic cost reduction

Level 3 Intermediate

IT is an investment centre

Options and portfolio management

Strategic business partner

Expanded funding options

Level 4 Advanced

IT is a value centreOptimised valueOrganisational core competency

Sustainable economic model

Level 5 Optimising


Maturity Level

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IT Value Contribution Increases with Maturity

Maturity Level

3

Intermediate

High

Low

4

Advanced

2

Basic

5

Optimising

1

Initial

IT enables and drives business value creation and business opportunities

IT is fully aligned with business strategy and anticipates business needs

IT focuses on business value creation

Value oriented IT management using various industry best practices

IT directly contributes to business value creation in some areas

IT turns toward focusing on business value creation, but is mostly understood as service provider

IT mainly provides services allowing business to create value

IT focuses on delivering solutions for business needs, but not a value creator on its own

IT disconnected from business value creation

IT is not an integral part of value creation

IT Value Contribution

Increasing

contribution

to business

value as the

IT

organisation

increases its

maturity

Organisation must be able to translate

IT maturity into business value contribution

May 24, 2010 16

IT Capability Maturity Framework – Sample Current High Level Maturity








Level 2 Basic








Level 4 Advanced



Level 5 Optimising


Maturity Level

May 24, 2010 17

IT Capability Maturity Framework – Sample Desired Future High Level Maturity








Level 2 Basic








Level 4 Advanced



Level 5 Optimising


Maturity Level

May 24, 2010 18


• Current High Level Maturity • Desired Future High Level Maturity

• IT CMF defines a processes for measuring and benchmarking current and future IT organisation maturity

• Identifies the key areas where the organisation wants or needs to improve to deliver business value

• Identifies critical gaps in maturity that are preventing IT delivering business value

• Identifies appropriate levels of maturity for the organisation for critical IT processes

May 24, 2010 19

IT CMF Framework – Detailed View

• Four high-level processes consist of 36 lower level detailed processes

• Comprehensive overarching framework that encompasses all relevant IT practices

May 24, 2010 20

IT CMF Framework – Detailed ViewIT CMF Framework


Managing the IT Budget Managing the IT CapabilityManaging IT for Business

Value

IT Leadership and Governance

Business Process Management

Business Planning

Strategic Planning

Demand and Supply Management

Capacity Forecasting and Planning

Risk Management

Accounting and Allocation

Organisation Design and Planning

Sourcing

Resource Management

Innovation Management

Performance and Quality Management

Service Analytics and Intelligence

Funding and Financing

Budget Management

Portfolio Planning and Prioritisation

Budget Oversight and Performance Analysis

Enterprise Architecture Management

Technical Infrastructure Management

People Asset Management

Intellectual Capital Management

Relationship Asset Management

Research, Development and Engineering

Solutions Delivery

Service Provisioning

User Management and Training

User Experience Design

Programme and Project Management

Supplier Management

Value Chain Management

Capability Assessment and Management

Total Cost of Ownership

Benefits Assessment andRealisation

Portfolio Management

Investment Analysis and Performance

May 24, 2010 21

Managing IT Like a Business High Level Process –Constituent Critical Processes (1)

Analyse threats and their potential impacts and develop strategies to mitigate those threats. Business continuity is ensured by systematically mitigating IT operational risk.

Risk Management

Anticipate the shifting needs for IT capabilities and plan to deliver them in a timely fashion. Capacity planning provides the company with the right amount of IT resources, sometimes more and sometimes less, to meet shifting needs.


Achieve a balance between supply and demand for IT services which is both efficient and sufficient. Cost-effective and business-proficient IT systems are delivered at an optimal cost.


Sets the vision, mission and objectives for the IT organisation which directs IT capability to directly address the organisation’s overall strategies. Business and IT strategy is aligned on a clear set of concrete actions that ensure an effective translation of plans into IT capability requirements and business value.

Strategic Planning

Define and anticipate the company’s demands for IT capabilities and services. Business planning identifies key objectives and areas for IT investments.

Business Planning

Document and manage the IT organisation’s work flows and business processes. An accurate inventory of processes and work flows can substantially improve IT efficiency.


Provides the decision rights and accountability framework to encourage behaviours that lead to the achievement of the organisation’s IT business value goals. Top performing companies show 20% better performance when governance is aligned with enterprise goals.



May 24, 2010 22

Managing IT Like a Business High Level Process –Constituent Critical Processes (2)

IT performance monitoring, modelling, and analysis to establish a clear understanding of the relationship between business processes and the underlying IT infrastructure and processes to sustain and optimise the delivery of IT services for business value. Provide required data for planning activities. The IT organisation leverages this knowledge as an integral component for efficient operations and effective planning.


Close the loop through the use of balanced scorecard or other techniques to maximise aligned output. Continuous multi-dimensional management leads to higher levels of performance andvalue.


Creating, identifying, funding and measuring information technology based innovations to generate business value. Companies systematically monitor their environment, adapt with new solutions, and prosper.


Optimise the use of IT resources deployed in response to business or organisational priorities. Dynamic resource allocation provides agility to IT organisations and the companies they serve.

Resource Management

Identifying and forming supply agreements with vendors and internal providers. Sourcing results in placing some enterprise activities outside the company, that is, outsourcing.

Sourcing

Review and reorganise as necessary the alignment between the IT organisation and company needs. Stable organisations are increasingly rare in the dynamic world of today’s business.


The policies, processes and tools used for calculating and distributing the costs of IT. Range of methods such as chargeback, transfer pricing, and allocation may be used to manage the cost of IT services and to influence the demand for IT services within an organisation.



May 24, 2010 23

Managing the IT Budget High Level Process –Constituent Critical Processes

Periodic offline review of IT spending vs. IT plan, which provides stimulus for re-profiling or reprioritisation of budgets. Oversight certifies that the budget targets are being met and variance analysis improves forecasts in the future.

Budget Oversight and Performance Analysis

Allocate the IT budget to projects and activities based on factors such as risk management. Historical returns data informs portfolio planning to improve the investment mix.


Active, ongoing review and adjustment of the IT spending plan to systematically ensure that allocated budgets are being spent effectively and are within budget parameters and governance model. Careful budgeting leads to continuous unit cost reduction for IT services.

Budget Management

Understand how, why and from where IT is funded. Determine the scale, scope and sources of funding for IT the IT Budget and assign financial resources to IT activities.



May 24, 2010 24

Managing the IT Capability High Level Process –Constituent Critical Processes (1)

Deploy systems and solutions which efficiently address the company’s IT requirements and opportunities. IT solutions are delivered with the cost, schedule, functionality, and quality the company needs.

Solutions Delivery

Formally investigate new information technologies and the opportunities they provide. IT R&D can deliver prototypes of innovative IT systems, white papers, or patent filings.

Research, Development and Engineering

Enhance the relationship between the IT organisation and the company’s business units. IT will share in the risks and rewards associated with the overall business of the company.


Cultivate the suite of applications, the information in the company databases, and the accumulated knowledge of how to deploy IT. Support all aspects of the company’s value chain and gain information or execution superiority.


Manage and train personnel to be successful contributors to the IT organisation. Create a culture where IT is customer focused to provide the company with business value.


Optimise IT infrastructure (including client, network, storage, and server) to support the business. Provide an on-demand capability which is efficient and reliable as a platform for delivering IT services.


Provide the necessary models and practices for defining, planning and managing the business and IT capabilities by developing the IT Capability business, data, application, and technical architecture of IT systems. Achieve effectiveness and agility with technical standardisation and system integration.



May 24, 2010 25

Managing the IT Capability High Level Process –Constituent Critical Processes (2)

Regularly inventory the IT organisation’s capabilities and realign its organisational structure as needed. Demonstrate gains in IT maturity and efficiency with capability and performance measurements.

Capability Assessment and Management

Optimise integration and performance of overall IT value chain processes in support of overall value delivery. Successful alignment leads to maximum leverage of the IT organisation’s efforts.


Encourage cooperative relationships with contractors to create shared value. Achieve more value from the company’s primary supply base.

Supplier Management

Cultivate the ability to manage programs and projects to be on time, on budget, and on target. The costs of schedule overruns are avoided and the quality of IT solutions is matched to customer needs.

Programme and Project Management

Create solutions based on user experience to deliver what users want and need. Business value is maximised when excellent IT solutions are put to maximum usage.


Maximise user proficiency and ensure users acquire the right skills at the right time. Usefulness and ease of use are the hallmarks of a successful IT solution.


Provide reliable IT services to support the company’s objectives and strategies. Data centres, help desks, and service solutions are in position to support IT’s customers.



May 24, 2010 26

Managing IT for Business Value High Level Process –Constituent Critical Processes

Investigate the success of different IT portfolios to inform decisions and make predictions. These techniques lead to a more precise understanding of investment choices,


Regularly examine the mix of IT projects and the allocation of resources among them. New investments can be compared to ongoing projects in the portfolio.


Establishing a common business value vocabulary, measurement and valuation methodology to express the potential and document the actual business value returns. Constructing high quality business cases and managing the realisation of actual benefits versus original forecasts ensures organisations achieve business value delivery.

Benefits Assessment and Realisation

Track and control direct and indirect costs associated with IT infrastructure and systems. Total cost of ownership better informs the budgeting and portfolio management processes.


Managing IT for Business Value

May 24, 2010 27

Business Vision

Business Strategy

Business Strategic

Aims

Business Strategic

Objectives

ChallengesCritical Success

FactorsMeasurements

Business Strategy

• The business develops a business strategy that contains defined high level aims and lower level objectives

• Each objective will be subject to challenges that have to be overcome.

• Achievement of the strategic objectives needs to be subject to measurements

May 24, 2010 28

Business Strategy Links to IT Strategy

• IT strategy follows from business strategy

• Ensure the organisation is making the best use of IT to deliver on its strategy

• Ensure the organisation is using IT effectively and efficiently

Business Vision

Business Strategy

Business Strategic Aims

Business Strategic

Objectives

IT Vision

IT Strategy

IT Architecture

IT Implementation Plans

and Business Cases

May 24, 2010 29

IT CMF Provides Framework to Link Business Strategy to IT Strategy

Business Vision

Business Strategy

Business Strategic Aims

Business Strategic

Objectives




Value


Business Context

ITContext

May 24, 2010 30

Current and Future Critical IT Process Maturity

0.0 1.0 2.0 3.0 4.0 5.0



Business Planning

Strategic Planning



Risk Management



Sourcing

Resource Management





Budget Management


Budget Oversight and Performance






Research, Development and

Solutions Delivery




Program and Project Management

Supplier Management


Capability Assessment and





Current Maturity Level Targetted Maturity Level

May 24, 2010 31

Critical IT Process Maturity and IT Strategy

• Use the IT CMF to identify gaps in critical IT processes and practices that deliver business value

• Implementation of IT strategy is the process for filling these identified gaps

• Creates a business-oriented IT strategy that is comprehensive and realistic

0.0 1.0 2.0 3.0 4.0 5.0



Business Planning

Strategic Planning



Risk Management



Sourcing

Resource Management





Budget Management









Solutions Delivery





Supplier Management








May 24, 2010 32

Using IT CMF to Define a Business Oriented Information Technology Strategy

Perform High Level Current State

Maturity Assessment

Identify Gaps Where the Organisation

Wants or Needs to Improve to Deliver

Business Value

Perform Optional Detailed “Deep

Dives” Into Specific Critical Processes, if Required, to Identify

Detailed Gaps and Issues

Define Overall Plan to Achieve Planned

Process Maturity Levels

May 24, 2010 33

IT CMF Provides Framework to Link Business Strategy to IT Strategy

Business Vision

Business Strategy

Business Strategic

Aims

Business Strategic

Objectives

Business Context




Value


IT Context

0.0 1.0 2.0 3.0 4.0 5.0



Business Planning

Strategic Planning



Risk Management



Sourcing

Resource Management





Budget Management









Solutions Delivery





Supplier Management








Creating the Business-Oriented IT Strategy

Delivering on the Business-Oriented IT Strategy

May 24, 2010 34

Benefits of Using the IT CMF Framework to Create the Business-Oriented IT Strategy

• IT CMF is a comprehensive overarching framework that encompasses all relevant IT practices− Agnostic of specific implementation frameworks

• Covers entire landscape of IT competency

• IT CMF is business-value oriented

• Contains benchmarks to allow an organisation measure itself against similar organisations

• Defines a structure to allow improvements to be measured

• Identifies the key areas where the organisation wants or needs to improve to deliver business value

• Identifies critical gaps in maturity that are preventing IT delivering business value

• Identifies appropriate levels of maturity for the organisation for critical IT processes

• Ensures the IT strategy is soundly anchored on delivering business value

May 24, 2010 35

More Information

Alan McSweeney

[email protected]