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IT Strategy Framework
This document discusses the IT Capability Maturity Framework (IT-CMF) which provides a standard framework for linking corporate strategy to IT strategy. The IT-CMF examines the full spectrum of IT management dimensions across four macro processes - managing IT like a business, managing the IT capability, managing IT for business value, and managing the IT budget. It assesses maturity across five levels and provides guidance on best practices to increase maturity levels and maximize business value delivered by IT.
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IT Strategy Framework
- 1. 1 BusinessandITAdvisory,©AllRightsReserved IT Strategy Framework LinkingCorporate Strategy to IT Strategy
- 2. 2 BusinessandITAdvisory,©AllRightsReserved Strategy Linkage - Corporateto IT Strategy Corporate Vision Corporate Strategy Business Strategy Business Strategic Objectives and Aim IT Vision and Strategy Enterprise/IT Architecture IT Business Case and Impl. Roadmap
- 3. 3 BusinessandITAdvisory,©AllRightsReserved Strategy Linkage for Corporateto IT Strategy: IT- CMF Corporate Vision Corporate Strategy Business Strategy Business Strategic Objectives and Aim IT Vision and Strategy Enterprise/IT Architecture IT Business Case and Impl. Roadmap Business Context IT Context • IT Capability Maturity Framework (IT-CMF) provides the IT Strategy linkage for Business Strategy • It is a Standard Framework to Benchmark IT’s Level of Value to Business Managing IT Like a Business Managing the IT Budget Managing the IT Capability Managing IT for Business Value
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- 6. 6 BusinessandITAdvisory,©AllRightsReserved Strategy Why IT- CMFfor IT Strategy IT-CMF differs from other IT frameworks in several fundamental respects. • It is comprehensive. While other frameworks focus on one dimension of IT management—for example, ITIL (Information Technology Infrastructure Library) concentrates on infrastructure and operations, while CMMI (Capability Maturity Model Integration) focuses on application development—the IT-CMF examines the full spectrum of dimensions. • It is holistic and value-focused. Other frameworks tend to focus solely on IT process maturity, which by itself does not create business value. The IT-CMF, however, focuses on the business value delivered by IT and how a combination of process, skills, culture, and tools can maximize that value. •The IT-CMF is also action oriented. An IT-CMF assessment not only confirms the IT organization’s current maturity for a given capability or set of capabilities, it also defines both short- (that is, 12-month) and medium-term (that is, two- to three-year) target maturities and the results the IT organization could expect to achieve by hitting those targets. Further, it identifies the specific steps necessary to achieve those targets, as well as appropriate metrics to use to track progress—and can provide case study examples of companies that have taken similar measures. • Finally, the IT-CMF is not disruptive. Assessments for some frameworks require armies of consultants with clipboards and can be highly disruptive to day-to-day operations. IT-CMF assessments, in contrast, can gather the necessary information and achieve a credible degree of rigor without being obtrusive.
- 7. 7 BusinessandITAdvisory,©AllRightsReserved Level-by-level assessment questionsto determine a company’s strengths and weaknesses Assessment Tool Strategy IT Strategy Components Source: IVI – IT CMF Framework Value of maturity Evidence and anecdotes of value delivered to companies who increased maturity Business value perspective Best practices and case studies of how companies improved maturity Practices Five-level maturity curve framework and supporting evidence Maturity Curve Collection of whitepapers, academic journals, books, and consortium-submitted content Reference Materials Proposed industry standard definition for a set of capabilities Process Definition
- 8. 8 BusinessandITAdvisory,©AllRightsReserved Strategy IT - CMFArchitecture Components • IT Capability Maturity Framework details 4 Macro Processes to manage IT organisations for business value. • These 4 Macro Processes contains details of critical IT processes (35). • Each critical process provides implementation framework with measurement structure for future and current state. 4 Macro Capabilities 35 Critical Components (CC) 256 Capability Building Blocks (CBB) x 5 Individual Maturity Profiles > 800 x Maturity Assessment Questions > 2500 POMS (Practice, Outcome & Metrics)
- 9. 9 BusinessandITAdvisory,©AllRightsReserved Strategy IT - CMFCritical Components Source: IVI – IT CMF Framework Managing IT Like a Business Managing the IT Budget Managing the IT Capability Managing IT for Business Value ITG BPM BP SP DSM CFP RM AA OPD SRC IM VAI IT Leadership & Gov. Bus Process Mgmt. Business Planning Strategic Planning Demand & Supply Mgmt Cap. Forecasting & Planning Risk Management Accounting & Allocation Org Planning & Design Sourcing Innovation Management Value Analytics& Intelligence SCT Sustainable ICT FF BGM PPP BOP Funding & Financing Budget Mgmt. Portfo. Plan. & Priorit. Budget Oversight & Performance Analysis TCO BAR PM Funding & Financing Ben. Assessment Realis. Portfolio Mgmt. EAM TIM PAM KAM RAM SD SP AA UED PPM SM VC Enterprise Arch. & Mgmt. Teac. Infra. Mgmt People Asset. Mgmt Know Asset Mgmt. Research Dev. & Engg. Solution Delivery Service Provisioning User Training Mgmt. UX Design Prog. & Proj. Mgmt Supplier Mgmt. Value Chain Mgmt IP Inv Analysis and Perf. CAM Cap. Assessment Mgmt. • These 4 Macro Processes contains details of critical IT processes (35). • Each critical process provides implementation framework with measurement structure for future and current state.
- 10. 10 BusinessandITAdvisory,©AllRightsReserved Strategy IT - CMFCritical Components Critical Components Definition Maturity Levels CP Performance Metrics CBBs POMs ‘How to’ fundamentals Assessment Questions Case Studies Illustrative examples Training
- 11. 11 BusinessandITAdvisory,©AllRightsReserved Strategy IT-CMF Characteristics Optimising Advanced Basic Intermediate Initial Managing IT Likea Business Managing IT for Business Value Maturing the IT Capability Managing the IT Budget Value Centre Sustainable Economic Model Corporate Core Competency Optimised Value Investment Centre Expanded Funding Options Strategic Business partner Options and Portfolio Management Service Centre Systemic Cost Reduction Technology Export ROI & Business Case Cost Centre Predictable Performance Technology Supplier TCO Ad HocAd Hoc Ad Hoc Ad Hoc MaturityLevels Macro Processes 5 4 3 2 1 • Contribution to Business Value increases as IT organisation matures
- 12. 12 BusinessandITAdvisory,©AllRightsReserved Strategy IT – CMFAssessment View Managing IT like a business Managing the IT capability Managing IT for business value Managing the IT budget 1 2 3 4 5 ITG BPM BP SP DSM CFP RM AA ODP SRC IM SAI FF BGM PPP BOP EAM UTMPAM ICM RAM RDE SD SRPTIM UED PPM SUM CAM TCO BAR PM Risk of competitive disadvantage due to below below-average maturity? Risk of competitive disadvantage due to over-investment? Industry Average The company’s current maturity level • Objective maturity assessment of IT management practices, identifying both gaps and potential over investments • Can be applied across all IT functions or in a selected set of areas
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- 15. 15 BusinessandITAdvisory,©AllRightsReserved Strategy IT-CMF Macros ProcessCharacteristics Managing IT Like a Business Maturity Level Key Capabilities and Characteristics Value Centre • IT is a value centre and publishes value statements regularly • IT and business values are highly aligned • The IT organisation uses balanced sc ore cards to drive continuous improvement • The IT organisation is strongly entrepreneurial Investment Centre • IT is focused on service and usage excellence • IT customer and supplier relationship management are excellent • Funding mechanisms are flexible • IT uses dynamic resource allocation Service Centre • IT is oriented to customers and service • Chargeback and cost accounting systems are in place • Service delivery and management practices are implemented Cost Centre • IT is a cost centre •Asset and cost-centre systems are in place • IT is focused exclusively on technology and process • Some IT processes have been documented Unmanaged • There is no IT strategy • There are no defined IT processes
- 16. 16 BusinessandITAdvisory,©AllRightsReserved Strategy Managing the ITBudget Maturity Level Key Capabilities and Characteristics Budget Amplification • A stable IT budget supports the growth demands of the company • Budget allocation are balanced across appropriate portfolios that are based on value performance • IT intensity is actively managed and compared against other key corporate spending categories • Budget is driven by long-term organisation and business roadmaps Expanding Funding Options • IT has attracted multiple sources of funding • Cost savings are shifted to strategic investments or to the bottom line • The IT budget is in compliance with governance and with IT usage principles • The IT budget is aligned with long-term business value Systematic Cost Reduction • Systematic cost reduction processes are in place • IT unit costs are trended and reduced annually • A dynamic baseline IT budget approach is in place Predictable Financial Performance • A defined IT budget exists • IT tracks performance against periodic financial and spending plans • Variance between actual and planned spend remains within a specified control limit Unmanaged • Financial performance is erratic • The IT budget has no clear owner • IT spend is invisible and fragmented • IT funding is not aligned with long-term business value IT-CMF Macros Process Characteristics
- 17. 17 BusinessandITAdvisory,©AllRightsReserved Strategy Managing IT forBusiness Value Maturity Level Key Capabilities and Characteristics Optimized Investment Return • IT performs sophisticated investment and portfolio analysis in order to optimize investments and spend • Returns from IT-enabled investments are equal to or greater than returns from other investment types in the company • Historical data enables accurate predictions of the value of future investments Portfolio and Options Management • IT has a proactive portfolio programme • IT uses an options management approach to pick and manage speculative IT investments • IT weighs risk and value-at-risk as key components of business cases Simple Return-on- Investment and Business Case Disciplines • There is a disciplined use and review of business cases • IT has in place either investment governance or a business value programme • IT uses multi-metric analysis of business cases to determine best quality investments Total Cost of Ownership • IT computes total cost of ownership for major assets • IT tracks total cost of ownership regularly to ensure there is continuous cost reduction • IT computes total cost of ownership for the full life cycle Unmanaged • Decisions are based on cost, not value • There is no comprehension or measure of the value IT provides • Total cost of ownership is rampantly escalating IT-CMF Macros Process Characteristics
- 18. 18 BusinessandITAdvisory,©AllRightsReserved Strategy Managing IT forBusiness Value Maturity Level Key Capabilities and Characteristics Strategic Core Competency • IT enables information and/or execution superiority over competition • A steady stream of solutions provides competitive advantage • IT is recognized as a differentiating core competency Strategic Business Partner • IT leadership is integrated with business leadership • IT delivers solutions that provide value in specific business areas • IT delivers key competitive capabilities in targeted areas • IT leaders understand the business and proactively propose solutions to key opportunities and problems Technical Expert • IT has a track record for delivering quality services that are reliable • The IT organization is sought out as a source of technical expertise • IT provides a reliable utility IT service that is benchmarked on perfomance and cost Utility or Technology Supplier • There is growing respect for the IT organization • The company views IT purely as a cost centre • IT is a cost to be continuously reduced Unmanaged • Users purchase and maintain IT systems • There is no formal IT presence • There is no integration of IT systems IT-CMF Macros Process Characteristics
- 19. 19 BusinessandITAdvisory,©AllRightsReserved Strategy IT Enterprise Architecture Application Architecture Business Architecture Source:Booz & Co Infrastructure Architecture Data/Information Architecture Design and Architecture Principles Operating Model, Program of work, Road Map EnterpriseArchitecture Agile IT Architecture
- 20. 20 BusinessandITAdvisory,©AllRightsReserved IT Maturity Architecture IT Maturity BusinessSilos Standardised Technology Optimised Core Business Modularity PercentageOfInvestment(0–100%) HighFlexibilityLowFlexibility Source: 2005 MIT Sloan Center For Information Systems Research Global Flexibility Local Flexibility
- 21. 21 BusinessandITAdvisory,©AllRightsReserved To Know More Contact Name:Vishal Email: mail@sharmavishal.com Twitter Handle: sharmavishal Linkedin : http://au.linkedin.com/in/sharmavishal01/