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

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

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 2

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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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
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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
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6. IT CMF High Level Framework
• IT CMF structured into four high-level processes for value-
oriented IT management
Provides Alignment
Between Business
and IT
Managing IT Like
a Business
Managing IT for
Managing the IT Managing the IT
Business
Budget Capability
Value
Provides Metrics to Close
the Loop on Value
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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
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8. IT CMF Meta-Framework
IT Capability Maturity Framework
Contains
High Level (Macro) Processes
High Level Macro
Processes Contains
Detailed Critical
Processes Detailed Critical IT Processes Provides
Measurement
Structure for
Current and Future
Status of Critical IT
Specific Implementation Frameworks for Critical IT Processes
Processes
Implementation Implementation Implementation
Framework Framework Framework
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9. IT CMF Meta-Framework and Implementation
Frameworks
Specific Implementation Frameworks for IT CMF
Critical Processes
ITIL (Information IT Service CMM ISPL (Information eSCM (eSourcing USMBOK (Universal
ISO 20000 (ITSM ASL (Application
Technology (Capability Maturity Services Procurement Capability Maturity Service Management
Standard) Services Library)
Infrastructure Library) Model) Library) Model) Body of Knowledge)
PRINCE2 (Projects in PMBOK (Project MSP (Managing
Controlled Management Body of Successful IT Balanced Scorecard
Environments) Knowledge) Programmes)
CMMI (Capability ISO/IEC 12207 DSDM (Dynamic
RUP (Rational Unified
Maturity Model Systems And Systems Development
Process)
Integration) Software Engineering Method)
ITIM (Information
Technology Gartner Total Cost of
Val IT
Investment Ownership
Management)
TQM (Total Quality
ISO 9000 TickIT/TickITplus Six Sigma
Management)
COBIT (Control ISO 38500 (Corporate
ISO 27000 / OCEG (Open
Objectives for Governance of IT Baseline Protection
(Information Security Compliance and
Information and Information Catalogs
Management System) Ethics Group)
Related Technology) Technology)
NASCIO EAMM
TOGAF (The Open Department of Ministry of Defence
Federal Enterprise (NASCIO Enterprise
Group Architecture Defense Architecture Architectural Zachman
Architecture (FEA) Architecture Maturity
Framework) Framework (DoDAF) Framework (MODAF)
Model)
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10. 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 business
value
− Covers entire landscape of IT competency
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11. IT CMF High Level Framework
Managing IT Like a Managing the IT Managing the IT Managing IT for
Business Budget Capability Business Value
Managing IT like a Managing the IT budget Managing the IT Managing IT for business
business involved using involves effective capability is concerned value involves aligning IT
solid professional financial management to with what information investments to overall
business practices and reduce costs to free funds technology and the IT business benefits.
applying them to the IT for investment in organisation can do
function and involves innovative IT solutions collectively for the
shifting the focus from that deliver better value organisation. Underlying focus areas
production and and performance. include value and benefits
technology to a focus on delivery and portfolio
customers and services. Underlying focus areas management.
Underlying focus areas include traditional IT
include budget factory functions like
Underlying focus areas management and solutions delivery and
include leadership, performance sustaining services provisioning
governance, alignment and making new
and management investments and portfolio
processes. planning.
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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 add
value
− Enable IT to be responsive to business needs
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13. IT CMF Framework
• IT CMF framework
closes the loop on Managing Managing
Information IT Like a the IT
Technology Business Budget
delivering value to
the business
Closing the
Loop
Between Cost
and Value
Managing IT
for Realising Managing
and Assessing and
Value Delivering IT
Capability
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14. IT Capability Maturity Framework - Characteristics
IT Capability Maturity Framework
Maturity Level Managing Managing and Managing IT for Managing IT Like
the IT Budget Delivering IT Realising and a Business
Capability Assessing Value
Level 5 Sustainable Organisational core Optimised value IT is a value centre
Optimising economic model competency
Level 4 Advanced Expanded funding Strategic business Options and IT is an investment
options partner portfolio centre
management
Level 3 Systematic cost Technology expert Return on IT is a service centre
Intermediate reduction investment and
business cases
generated
Level 2 Basic Predictable Technology supplier Total cost of IT is a cost centre
performance ownership known
Level 1 Ad Hoc Beginning
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15. IT Value Contribution Increases with Maturity
Maturity Level IT Value Contribution
IT enables and drives business value creation and business
5 opportunities
High Optimising
IT is fully aligned with business strategy and anticipates business needs
4 IT focuses on business value creation
Advanced Value oriented IT management using various industry best practices
Increasing
3
IT directly contributes to business value creation in some areas contribution
Intermediate IT turns toward focusing on business value creation, but is mostly understood as to business
service provider
value as the
IT mainly provides services allowing business to create value IT
2 organisation
Basic IT focuses on delivering solutions for business needs, but not a value creator on
its own increases its
maturity
Low IT disconnected from business value creation
1
Initial IT is not an integral part of value creation
Organisation must be able to translate
IT maturity into business value contribution
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16. IT Capability Maturity Framework – Sample Current
High Level Maturity
IT Capability Maturity Framework
Maturity Level Managing Managing and Managing IT for Managing IT Like
the IT Budget Delivering IT Realising and a Business
Capability Assessing Value
Level 5 Sustainable Organisational core Optimised value IT is a value centre
Optimising economic model competency
Level 4 Advanced Expanded funding Strategic business Options and IT is an investment
options partner portfolio centre
management
Level 3 Systematic cost Technology expert Return on IT is a service centre
Intermediate reduction investment and
business cases
generated
Level 2 Basic Predictable Technology supplier Total cost of IT is a cost centre
performance ownership known
Level 1 Ad Hoc Beginning
May 24, 2010 16

17. IT Capability Maturity Framework – Sample Desired
Future High Level Maturity
IT Capability Maturity Framework
Maturity Level Managing Managing and Managing IT for Managing IT Like
the IT Budget Delivering IT Realising and a Business
Capability Assessing Value
Level 5 Sustainable Organisational core Optimised value IT is a value centre
Optimising economic model competency
Level 4 Advanced Expanded funding Strategic business Options and IT is an investment
options partner portfolio centre
management
Level 3 Systematic cost Technology expert Return on IT is a service centre
Intermediate reduction investment and
business cases
generated
Level 2 Basic Predictable Technology supplier Total cost of IT is a cost centre
performance ownership known
Level 1 Ad Hoc Beginning
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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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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
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20. IT CMF Framework – Detailed View
IT CMF Framework
Managing IT Like a Managing IT for Business
Managing the IT Budget Managing the IT Capability
Business Value
IT Leadership and Enterprise Architecture
Funding and Financing Total Cost of Ownership
Governance Management
Business Process Technical Infrastructure Benefits Assessment and
Budget Management
Management Management Realisation
Portfolio Planning and
Business Planning People Asset Management Portfolio Management
Prioritisation
Budget Oversight and Intellectual Capital Investment Analysis and
Strategic Planning
Performance Analysis Management Performance
Demand and Supply Relationship Asset
Management Management
Capacity Forecasting and Research, Development
Planning and Engineering
Risk Management Solutions Delivery
Accounting and Allocation Service Provisioning
Organisation Design and User Management and
Planning Training
Sourcing User Experience Design
Programme and Project
Resource Management
Management
Innovation Management Supplier Management
Performance and Quality
Value Chain Management
Management
Service Analytics and Capability Assessment and
Intelligence Management
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21. Managing IT Like a Business High Level Process –
Constituent Critical Processes (1)
Managing IT Like a Business
IT Leadership and 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
Governance show 20% better performance when governance is aligned with enterprise goals.
Business Process 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.
Management
Business Planning Define and anticipate the company’s demands for IT capabilities and services. Business
planning identifies key objectives and areas for IT investments.
Strategic Planning 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.
Demand and 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.
Supply
Management
Capacity 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
Forecasting and more and sometimes less, to meet shifting needs.
Planning
Risk Management Analyse threats and their potential impacts and develop strategies to mitigate those threats.
Business continuity is ensured by systematically mitigating IT operational risk.
May 24, 2010 21

22. Managing IT Like a Business High Level Process –
Constituent Critical Processes (2)
Managing IT Like a Business
Accounting and 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
Allocation of IT services and to influence the demand for IT services within an organisation.
Organisation 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.
Design and
Planning
Sourcing Identifying and forming supply agreements with vendors and internal providers. Sourcing
results in placing some enterprise activities outside the company, that is, outsourcing.
Resource 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.
Management
Innovation Creating, identifying, funding and measuring information technology based innovations to
generate business value. Companies systematically monitor their environment, adapt with
Management new solutions, and prosper.
Performance and 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 and
Quality value.
Management
Service Analytics 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
and Intelligence 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.
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23. Managing the IT Budget High Level Process –
Constituent Critical Processes
Managing the IT Budget
Funding and 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.
Financing
Budget 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
Management governance model. Careful budgeting leads to continuous unit cost reduction for IT services.
Portfolio Planning 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.
and Prioritisation
Budget Oversight 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
and Performance variance analysis improves forecasts in the future.
Analysis
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24. Managing the IT Capability High Level Process –
Constituent Critical Processes (1)
Managing the IT Capability
Enterprise 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 architecture of IT systems. Achieve effectiveness and agility with technical standardisation and
Management system integration.
Technical 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
Infrastructure delivering IT services.
Management
People Asset 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.
Management
Intellectual Capital 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
Management and gain information or execution superiority.
Relationship Asset 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.
Management
Research, 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.
Development and
Engineering
Solutions Delivery 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.
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25. Managing the IT Capability High Level Process –
Constituent Critical Processes (2)
Managing the IT Budget
Service 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.
Provisioning
User Management 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.
and Training
User Experience 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.
Design
Programme and 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
Project customer needs.
Management
Supplier Encourage cooperative relationships with contractors to create shared value. Achieve more
value from the company’s primary supply base.
Management
Value Chain 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
Management efforts.
Capability 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
Assessment and measurements.
Management
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26. Managing IT for Business Value High Level Process –
Constituent Critical Processes
Managing IT for Business Value
Total Cost of 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.
Ownership
Benefits Establishing a common business value vocabulary, measurement and valuation methodology
to express the potential and document the actual business value returns. Constructing high
Assessment and quality business cases and managing the realisation of actual benefits versus original forecasts
Realisation ensures organisations achieve business value delivery.
Portfolio 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.
Management
Investment Investigate the success of different IT portfolios to inform decisions and make predictions.
These techniques lead to a more precise understanding of investment choices,
Analysis and
Performance
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27. Business Strategy
• The business develops a business
Business Vision strategy that contains defined high
level aims and lower level
objectives
Business Strategy • Each objective will be subject to
challenges that have to be
overcome.
Business Strategic • Achievement of the strategic
Aims objectives needs to be subject to
measurements
Business Strategic
Objectives
Critical Success
Challenges Measurements
Factors
May 24, 2010 27

28. Business Strategy Links to IT Strategy
• IT strategy follows from business
Business Vision
strategy
• Ensure the organisation is making
Business Strategy
the best use of IT to deliver on its
strategy
Business Strategic Aims
• Ensure the organisation is using IT
effectively and efficiently
Business Strategic
Objectives
IT Vision
IT Strategy
IT Architecture
IT Implementation Plans
and Business Cases
May 24, 2010 28

29. IT CMF Provides Framework to Link Business
Strategy to IT Strategy
Business Vision
Business Strategy Business
Context
Business Strategic Aims
Business Strategic
Objectives
Managing IT Like
a Business
IT
Context
Managing IT for
Managing the IT Managing the IT
Business
Budget Capability
Value
May 24, 2010 29

30. Current and Future Critical IT Process Maturity
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
0.0 1.0 2.0 3.0 4.0 5.0
Current Maturity Level Targetted Maturity Level
May 24, 2010 30

31. Critical IT Process Maturity and IT Strategy
• Use the IT CMF to
IT Leadership and Governance
identify gaps in critical
Business Process Management
Business Planning
Strategic Planning
IT processes and
Demand and Supply Management
Capacity Forecasting and Planning
Risk Management
Accounting and Allocation
practices that deliver
Organisation Design and Planning
Sourcing
Resource Management
Innovation Management
business value
Performance and Quality Management
Service Analytics and Intelligence
Funding and Financing
Budget Management
Portfolio Planning and Prioritisation
• Implementation of IT
strategy is the process
Budget Oversight and Performance
Enterprise Architecture Management
Technical Infrastructure Management
People Asset Management
Intellectual Capital Management
Relationship Asset Management
Research, Development and
Solutions Delivery
for filling these
Service Provisioning
User Management and Training
User Experience Design
identified gaps
Program and Project Management
Supplier Management
Value Chain Management
Capability Assessment and
Total Cost of Ownership
Benefits Assessment and Realisation
• Creates a business-
Portfolio Management
Investment Analysis and Performance
0.0 1.0 2.0 3.0 4.0 5.0
oriented IT strategy
Current Maturity Level Targetted Maturity Level
that is comprehensive
and realistic
May 24, 2010 31

32. Using IT CMF to Define a Business Oriented
Information Technology Strategy
Identify Gaps Where
Perform High Level Define Overall Plan
the Organisation
Current State to Achieve Planned
Wants or Needs to
Maturity Process Maturity
Improve to Deliver
Assessment Levels
Business Value
Perform Optional
Detailed “Deep
Dives” Into Specific
Critical Processes, if
Required, to Identify
Detailed Gaps and
Issues
May 24, 2010 32

33. IT CMF Provides Framework to Link Business
Strategy to IT Strategy Creating the Business-Oriented IT
Strategy
Delivering on the Business-Oriented
Business Vision Business Context IT Strategy
Business Strategy
Business Strategic
Aims
Business Strategic IT Context Managing IT
Objectives
Like a Business
IT Leadership and Governance
Business Process Management
Business Planning
Strategic Planning
Demand and Supply Management
Managing IT
Capacity Forecasting and Planning
Managing the Managing the
Risk Management
Accounting and Allocation for Business
Organisation Design and Planning
IT Budget IT Capability
Sourcing
Resource Management
Innovation Management
Value
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
0.0 1.0 2.0 3.0 4.0 5.0
Current Maturity Level Targetted Maturity Level
May 24, 2010 33

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 34

35. More Information
Alan McSweeney
alan@alanmcsweeney.com
May 24, 2010 35