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
May 24, 2010 4
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
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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
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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
Implementation Framework
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
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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
Managing the IT Capability
Managing the IT Budget
Managing IT Like a Business
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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
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IT CMF Framework
• IT CMF framework closes the loop on Information Technology delivering value to the business
Managingthe IT
Budget
Managing IT Like a Business
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 Like a Business
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
IT Capability Maturity Framework
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
Managing IT Like a Business
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
IT Capability Maturity Framework
Maturity Level
May 24, 2010 17
IT Capability Maturity Framework – Sample Desired Future High Level Maturity
Managing IT Like a Business
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
IT Capability Maturity Framework
Maturity Level
May 24, 2010 18
IT Capability Maturity Framework
• 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
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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 IT Like a Business
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
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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.
Capacity Forecasting and Planning
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.
Demand and Supply Management
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.
Business Process Management
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.
IT Leadership and Governance
Managing IT Like a Business
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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.
Service Analytics and Intelligence
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.
Performance and Quality Management
Creating, identifying, funding and measuring information technology based innovations to generate business value. Companies systematically monitor their environment, adapt with new solutions, and prosper.
Innovation Management
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.
Organisation Design and Planning
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.
Accounting and Allocation
Managing IT Like a Business
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.
Portfolio Planning and Prioritisation
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.
Funding and Financing
Managing the IT Budget
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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.
Relationship Asset Management
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.
Intellectual Capital Management
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.
People Asset Management
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.
Technical Infrastructure Management
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.
Enterprise Architecture Management
Managing the IT Capability
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.
Value Chain Management
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.
User Experience Design
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.
User Management and Training
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.
Service Provisioning
Managing the IT Budget
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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,
Investment Analysis and Performance
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.
Portfolio Management
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.
Total Cost of Ownership
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
Managing the IT Budget
Managing the IT Capability
Managing IT for Business
Value
Managing IT Like a Business
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
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
Enterprise Architecture Management
Technical Infrastructure Management
People Asset Management
Intellectual Capital Management
Relationship Asset Management
Research, Development and
Solutions Delivery
Service Provisioning
User Management and Training
User Experience Design
Program and Project Management
Supplier Management
Value Chain Management
Capability Assessment and
Total Cost of Ownership
Benefits Assessment and Realisation
Portfolio Management
Investment Analysis and Performance
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
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
Enterprise Architecture Management
Technical Infrastructure Management
People Asset Management
Intellectual Capital Management
Relationship Asset Management
Research, Development and
Solutions Delivery
Service Provisioning
User Management and Training
User Experience Design
Program and Project Management
Supplier Management
Value Chain Management
Capability Assessment and
Total Cost of Ownership
Benefits Assessment and Realisation
Portfolio Management
Investment Analysis and Performance
Current Maturity Level Targetted Maturity Level
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
Managing the IT Budget
Managing the IT Capability
Managing IT for Business
Value
Managing IT Like a Business
IT Context
0.0 1.0 2.0 3.0 4.0 5.0
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
Enterprise Architecture Management
Technical Infrastructure Management
People Asset Management
Intellectual Capital Management
Relationship Asset Management
Research, Development and
Solutions Delivery
Service Provisioning
User Management and Training
User Experience Design
Program and Project Management
Supplier Management
Value Chain Management
Capability Assessment and
Total Cost of Ownership
Benefits Assessment and Realisation
Portfolio Management
Investment Analysis and Performance
Current Maturity Level Targetted Maturity Level
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