Overview ITCMF

www.ivi.ie Executive Overview IT Capability Maturity Framework ITCMF Cover AW.indd 2 24/01/2011 15:45 Contents 1 Welcome to the Innovation Value Institute 3 Introducing the IT Capability Maturity Framework 7 Key Capabilities Marking Increasing IT Maturity 11 Critical Processes Underpinning the IT-CMF 16 References 17 About the IVI Innovation Value Institute, IT Capability Maturity Framework, and IT-CMF are trademarks of the Innovation Value Institute. Many of the designations used by manufacturers and sellers to distinguish their products are claimed as trademarks. Where those designations appear in this book, and the Institute was aware of a trademark claim, the designations have been printed with initial capital letters or all in capital letters. Copyright © 2010 Innovation Value Institute — Martin Curley Seventh Printing: January 2011 Authors: Martin Curley and Jim Kenneally Document Design: Unthink Document Editing: Thomas Keogan, TeKcomm Correspondence regarding this document should be directed to the Innovation Value Institute, National University of Ireland, Maynooth, County Kildare, Ireland. Email: [email protected] Phone: + 353 1 708 6931 Fax: + 353 1 708 6916 Innovation Value Institute (IVI) The Innovation Value Institute is a multi-disciplinary research and education establishment co-founded by the National University of Ireland Maynooth and Intel Corporation. IVI develops frameworks to assist IT and business executives to manage IT for Business Value and to deliver IT-enabled business innovation. IVI is supported by a global consortium of like-minded peers drawn from a community of public and private sector organisations, academia, analysts, professional associations, independent software vendors, and professional services organisations. Contact Us For more information on becoming a member of the IVI Consortium, please contact us at www.ivi.ie, [email protected] or +353 (0)1 708 6931 Membership Steering Patrons National University of Ireland Maynooth Intel The Boston Consulting Group Patrons BP Chevron Cisco Systems Ernst & Young Microsoft SAP Contributors Aupec Limited AXA Technology Services BearingPoint Bord na Mona Cenovus Energy Central Bank of Ireland Centre for Software Engineering Compugen Cork City Council Cork County Council Dublin City Council ESB Fingal County Council Fonterra Co-Operative Group HEAnet Irish Revenue Commissioners iSite Solutions Logica Mainstream Renewable Power Merck Mitovia Quartz Consulting SAS Institute Shell Sumerian Total Wipro Technologies Xilinx Associates Beaumont Hospital CEPIS Dublin City University Galway Mayo Institute of Technology Institute of Technology Blanchardstown National University of Ireland Galway Project Management Institute (Ireland Chapter) United States Airforce Academy University of Bonn-Rhine-Sieg University of Castilla La Mancha University of Limerick ITCMF Cover AW.indd 3-4 24/01/2011 15:45 these executives report that they lack adequate knowledge and the tools which will allow them to manage IT in a sustainable. value-based management approach—an approach which focuses on both process and outcome. and acts as a unifying lens for existing IT frameworks and improving management practices where current knowledge or practices are often poor or non-existent. which is at the heart of our research agenda. there are many competing and conflicting demands such as security. We are excited about the research agenda here at the Innovation Value Institute (IVI). Too often. and budget pressures which make the job of the CIO difficult. business agility. This document presents an executive overview of the IT Capability Maturity Framework™ (IT-CMF™). Co-Directors 01 ITCMF Booklet AW. innovation. Please join us on the journey and help drive a structural change in the profession and industry with respect to how IT creates value. In addition. This research will amalgamate leading academic theory with the best of corporate and public sector experience to foster innovation in the management and usage of IT to optimise business value. We intend to be a centre of excellence for IT Management and IT-driven business value and innovation through the development and use of our IT-CMF. The IT-CMF is a live document which we will continuously update and improve using an open innovation approach.Welcome to the Innovation Value Institute Many executives are struggling to optimise the way they manage and measure the business value of IT investments. Brian Donnellan and Martin Curley. compliance. coherent fashion while optimising the value contribution to the business. There is a gaping hole waiting to be filled by a unifying.indd 1 24/01/2011 15:44 . indd 2 24/01/2011 15:44 .Figure 1 Macro-processes of the IT-CMF Managing IT like a Business Managing the IT Budget Managing IT for Business Value Managing the IT Capability ITCMF Booklet AW. and software systems. CMMI. We expect that the IT-CMF will also be of use in the field of services innovation.Introducing the IT Capability Maturity Framework Since its creation in the 1980s to stimulate improvements in software development processes. The IT-CMF is an emerging blueprint of the key processes encapsulated in the IT capability of an organisation. The fine-grained detail of its maturity levels. We call these broad strategic areas macro-processes in order to emphasise their complexity and their particular importance in managing IT for business value. storage systems. When the IT organisation engine shown in Figure 1 is in operation. CoBIT. infrastructure assets require maintaining an agile and reliable infrastructure of networks. Similarly. where possible. and aims to return business value on investments that are made in new and ongoing systems. personal workstations. characteristics. The result of a business-like strategy setting is a budget. capabilities. products and services. portfolios of IT projects and programs are managed and monitored such that resources continue to be allocated within the budget and that they are in alignment with the company’s overall strategies and objectives. The budget fuels the mission of the IT organisation. and critical processes provides increasingly specific advice to IT professionals. There are assets of several types to be managed. We call our model the Information Technology Capability Maturity Framework™ (IT-CMF™) to emphasise that it is similar to. All businesses have some assets and a value chain which they use to generate value. IT has customers. Like a business. people. 24/01/2011 15:44 . as shown in Figure 1. At the top level. including infrastructure. complement existing standards and best practice frameworks such as ITIL. and the next step in IT operations is managing the IT budget. A detailed survey of 50 worldwide IT executives showed improved IT maturity to be a good predictor of improved value from the IT capability. In more sophisticated IT organisations. Projects and ongoing operations must be funded and financed. we intend to refine and extend a framework originally developed by Martin Curley in his 2004 book. and knowledge. A core function of the IT-CMF is to act as an assessment tool and a management system with associated improvement roadmaps to help continuously improve. For example. the IT-CMF comprises four key strategic areas of IT management. Managing IT for Business Value. which are typically targetted at specific processes that enable the overall IT capability. develop and manage the IT capability in support of optimised value delivery. and subsequently enhanced in his further research. relationships. shared processors. Systematically improving the maturity of critical processes can improve the overall efficiency and effectiveness of the IT capability in delivering value to an organisation. the IT capability consists of assets and an associated value chain.indd 3 IVI will reference and. 02/03 ITCMF Booklet AW. but different from a classic Capability Maturity Model. the Capability Maturity Model has inspired reuse in many other areas of management. IT leaders set strategies for managing IT like a business. Curley has shared elements of the framework and empirically tested them in workshops with CIOs around the world. which is managing the IT capability of the organisation. The top-down approach taken with the IT-CMF makes its major purposes and usage more clear to executives and line-of-business managers. At the Innovation Value Institute™. It provides a generally reusable solution or design pattern which CIOs can use in their own specific context and environment to improve IT capability and value contribution. This macro-process comprises the value generating activities of an IT business. The IT-CMF was developed based on the synthesis of leading academic research and industry practitioner experience using a design science research paradigm. at the end of the day. Macro-Processes Table 1 IT Capability Maturity Framework /// At the initial level. Measurements are needed to confirm that goals are met. a budget. and IT begins to deliver technology more reliably. /// At the basic level. and stakeholders. A potential project requires a business case. /// The optimising level describes ongoing yearon-year improvements to maintain and improve the business value contributions of IT. no budget. it is our contention that today’s IT organisation should develop and deploy measures of business value. growth in market share. marketing. /// There is still room to grow and. strategies. The concept of tracking direct and indirect expenses emerges with a focus on total cost of ownership. Moreover. which leads us to the final macro-process: managing IT for business value. IT becomes an investment centre returning measured business value. the IT-CMF is a blueprint for incremental improvement across the four macro-processes. IT services are delivered in partnership with IT’s customers. It is the hallmark of a maturity model approach that excellence is achieved incrementally. objectives. when business value outcomes inform IT leaders. who are their business colleagues in manufacturing. There are five maturity levels. and set new goals. But. to understand IT’s return on investment—that is. revise their business plans. and line-of-business managers have no faith in IT. improve business value contributions. The cycle is complete. Maturity Levels Managing IT like a Business Managing the IT Budget Managing the IT Capability Managing IT for Business Value Optimising Value centre Budget amplification Corporate core competency Optimised value Advanced Investment centre Expanded funding options Strategic business partner Options and portfolio management Intermediate Service centre Systemic cost reduction Technology expert ROI and business case Basic Cost centre Predictable performance Technology supplier Total cost of ownership Initial Unmanaged Unmanaged Unmanaged Unmanaged Source: Martin Curley (2007) ITCMF Booklet AW. The IT organisation is six months behind schedule on important programs. and no measures of outcome in monetary or service terms. system outages are common. and tactics. and finance. As Table 1 shows. the IT organisation needs to actively manage IT investments to ensure that value is realised. and the initial level is always unmanaged. Taking into account total cost of ownership. there is no strategy. in turn. at the advanced level.The IT organisation intends that IT capability will provide business value. This level of maturity is often called chaos. no clear operating plan. The estimate may be based on improvements in inventory turns. or in the case of public sector organisations. IT’s track record of delivering solutions that exhibit information or execution superiority over competing organisations means IT is recognised as a core competency and perhaps as an entrepreneurial value centre. citizens.indd 4 24/01/2011 15:44 . IT operational expertise and efficiency begins to flourish. /// The intermediate level shows further improvements. or avoidance of costs due to IT efficiency and IT automation. the IT organisation formally begins considering the return on IT investments. IT is a cost centre with. or yuan. While in the past IT often reported response times and other technical operating measures. distribution. who then study the results. as Figure 1 on page 2 shows. The successful IT organisation finds itself in a virtuous circle as cost savings provide resources for innovative IT solutions which. the business value contribution of IT—we will need to use a monetary metric or a public sector service outcome. euros. What is important is whether an IT investment impacts the bottom line. The fundamental metric of business value is dollars. and the unit cost of delivering IT services begins to drop. the IT organisation is starting to become organised. for example. the quality of service that is efficiently delivered to customers. In other cases. In financial market terms. its leadership will find that they are no longer cost centre managers isolated from the rest of the company and the outside world. when the company’s strategy highlights high quality customer care. This transformation will also require leaders who have a greater degree of situational awareness—ongoing knowledge of the business context in which the company is embedded—whilst also having the technical acumen to know where technology can be applied in order to provide competitive advantage. The IT-CMF in a Business Context As the IT organisation becomes more businesslike. A second message emanating from the IT-CMF is that growth must be balanced across the four macro-processes. IT Capability is in the centre of the company’s activities and shares responsibility for generating business value with the company’s strategists and with the company’s business operations managers. Whilst IT organisations may be better at one or other of the macro-processes. There will be some times when only the most critical IT systems will be affordable and other times when the IT organisation will be asked to deploy capacity rapidly. whilst new IT investments are likely to be targeted to deliver business change that creates new value through improved business efficiency or effectiveness. IT must be precisely aligned with and tightly coupled to both of these business functions in order to provide business value. IT could be on the short list of capabilities for which the company must excel in order to succeed. bearish. Figure 2 IT Capability in Context We define IT capability as the focused strategic deployment of IT resources and competencies in support of the organisation’s goals. For example. Imagine excellence in budgeting with no IT operational competence. For example. Market conditions. IT capability is a bridge between the company’s business strategy and its business operations. As such. In essence. the posture of the organisation with respect to IT can be either bullish. Our concern with business context underscores a fundamental characteristic of the IT-CMF. IT will transform itself into a central part of most companies’ businesses. A disaster. World events can also create and destroy markets or change customer requirements and appetites. the company must produce costeffective output. when a hot market emerges in the manufacturing sector. 04/05 ITCMF Booklet AW. regulatory responsibilities.Mission of the Innovation Value Institute With the IT-CMF revealed. Seasonal markets will affect the company’s capacity requirements. most will find that they will be at about the same level across the four capabilities. as is especially common in more mature markets. with the goal of attaining mindshare and marketshare for a new product. IT capability is what IT can do for the business. Similarly. As Figure 2 illustrates. An agile IT organisation that is capable of shifting focus is. Many of these changes quickly have an impact on IT’s strategy. a company’s focus may well be to increase output at any cost. The entire company is embedded in a business context which is often turbulent. Existing IT solutions primarily enable business continuity to support value generation from existing business operations. When a market shifts to price competition. IT adds value through two primary mechanisms: ensuring business continuity and enabling business change. IT may play a less significant or less visible role—and be an important but non-distinguishing feature. therefore.indd 5 24/01/2011 15:44 . and competition are examples of elements in the business context. One implication of the IT-CMF is that growth is incremental. Companies may aggressively posture IT as a key competitive weapon and a distinguishing feature of their products and services. we can expand on the Innovation Value Institute mission statement to say that the Institute’s work is to build infrastructure which enables IT organisations to measure their maturity across four macro-processes and to identify exactly which process skills and competencies they should focus on next. of critical importance to the company as a whole. as described in Table 1 on page 4. the IT organisation needs to provide solid support to the business organisation for customer care systems. As IT capabilities improve. Changes in these elements affect overall business strategy most sharply. In these senses. the absence of business value assessment competence disables the strategising needed to run IT like a business. or neutral at different points in time. IT posture is reflected in the relationship between business strategy and IT capability. To do so will require improved IT maturity. ITCMF Booklet AW.indd 6 24/01/2011 15:44 . better.indd 7 24/01/2011 15:44 . and metrics needed to deliver specific outcomes in support of value creation. Finer. in support of value creation?” Inspect Table 2 and Table 3 on page 8. 06/07 ITCMF Booklet AW. At this juncture. Broadly stated. but not fine enough. We know what the four processes are and how they interoperate in a high-level. These four macro-processes work together to manage IT capability and deliver business value. along with the capabilities of the IT-CMF. control loop fashion—with IT budget being a primary input which fuels the IT capability to deliver value. Expanded Funding Options. and Table 4 and Table 5 on page 9 to gain an understanding of the characteristics that are defined in terms of process and outcome maturity within the four IT-CMF macro-processes. Where We Have Been The IT-CMF comprises four key capabilities. These characteristics. a specific set of repeatable integrated activities that leverage behaviour. and with overall control provided through managing IT like a business. and best.Key Capabilities Marking Increasing IT Maturity We are half way along a path which leads to the research that the Innovation Value Institute is undertaking. This strategy provides us with specified descriptions of what the IT organisation needs to know and do. For example. methods. The research of the Innovation Value Institute comprises systematic exploration of ways to improve these critical processes. enrich our understanding of the maturity levels and set the stage for the following discussion of critical processes. let us consider where we have been and where we are going. Expanded Funding Options describes the advanced level for the macro-process called Managing the IT Budget. the research agenda will answer the question. “How can IT organisations perform each of these critical processes well. Our final discussion will break down the macro-processes into critical processes—that is. summarised term for each of the levels in each of the macroprocesses. the next category of question is “What competencies are needed to achieve excellence in the four macro-processes?” For our example. Where We Are Going As we drill down. We identified the levels of maturity using a single. exactly which capabilities and characteristics are needed to achieve this level of maturity when managing the budget? The answers to questions of this nature take our thinking about the IT-CMF to a finer grain size. actions. IT is focused on service and usage excellence . IT is focused exclusively on technology and process . The IT organisation is strongly entrepreneurial Investment Centre . Chargeback and cost accounting systems are in place . IT is oriented to customers and service . There are no defined IT processes Table 3 Maturity Level Key Capabilities and Characteristics Managing the IT Budget Budget Amplification .Table 2 Maturity Level Managing IT like a Business Value Centre Key Capabilities and Characteristics . A stable IT budget supports the growth demands of the company - Budget allocations 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 Expanded 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 ITCMF Booklet AW. IT customer and supplier relationship management are excellent . IT uses dynamic resource allocation Service Centre . IT is a value centre and publishes value statements regularly . There is no IT strategy . Service delivery and management practices are implemented Cost Centre . Asset and cost centre systems are in place . IT and business values are highly aligned .indd 8 24/01/2011 15:44 . Some IT processes have been documented Unmanaged . Funding mechanisms are flexible . The IT organisation uses balanced score cards to drive continuous improvement . IT is a cost centre . There is no integration of IT systems Table 5 Maturity Level Key Capabilities and Characteristics Managing IT for Business Value Optimised Investment Return . IT enables information and/or execution superiority over competition . IT leaders understand the business and proactively propose solutions to key opportunities and problems Technical Expert .Table 4 Maturity Level Key Capabilities and Characteristics Managing the IT Capability Strategic Core Competency . IT computes total cost of ownership for the full life cycle Unmanaged . IT uses multi-metric analysis of business cases to determine best quality investments Total Cost of Ownership . Total cost of ownership is rampantly escalating 08/09 ITCMF Booklet AW. A steady stream of solutions provides competitive advantage . IT has in place either investment governance or a business value program .indd 9 24/01/2011 15:44 . IT delivers solutions that provide value in specific business areas . There is no formal IT presence . IT is recognised as a differentiating core competency Strategic Business Partner . IT provides a reliable utility IT service that is benchmarked on performance and cost Utility or Technology Supplier . IT performs sophisticated investment and portfolio analysis in order to optimise investments and spend . IT leadership is integrated with business leadership . not value . IT weighs risk and value-at-risk as key components of business cases Simple Return-onInvestment and Business Case Disciplines . There is no comprehension or measure of the value IT provides . Historical data enables accurate predictions of the value of future investments Portfolio and Options Management . Returns from IT-enabled investments are equal to or greater than returns from other investment types in the company . IT is a cost to be continuously reduced . Users purchase and maintain IT systems . There is a disciplined use and review of business cases . The company views IT purely as a cost centre . IT has a proactive portfolio management program . Decisions are based on cost. IT has a track record for for delivering quality services that are reliable . There is growing respect for the IT organisation Unmanaged . IT delivers key competitive capabilities in targeted areas . IT computes total cost of ownership for major assets . IT uses an options management approach to pick and manage speculative IT investments . IT tracks total cost of ownership regularly to ensure there is continuous cost reduction . The IT organisation is sought out as source of technical expertise . Figure 3 Critical Processes of the IT-CMF Managing IT like a Business Managing the IT Budget Managing the IT Capability Managing IT for Business Value ITG FF EAM TCO BPM BGM TIM BAR PM BP PPP PAM SP BOP KAM DSM RAM CFP RDE RM SD AA SRP ODP UTM SRC UED IM PPM SAI SUM SICT CAM ITCMF Booklet AW.indd 10 24/01/2011 15:44 . Portfolio management. for example. IT capability has a demonstrated ability to move markets. the challenge is to take on boardlevel responsibilities and participate in all facets of the company’s activities. and innovative IT organisation and participate in company-wide business decision making. critical processes immediately lead to critical skill sets. career paths are vastly better marked with an explicit and clear list of critical processes to master. Similarly. and the scope of skill requirements is ever-broadening. These are the processes that enable capabilities and determine the characteristics of the four macro-processes. /// For the IT line manager. 10/11 ITCMF Booklet AW. The CIO must also provide leadership as the IT organisation becomes a hybrid of both technical and business expertise. IT is no longer a function of finance. Investors and directors are well aware that a keen IT strategy is a necessary enabler of enterprise success. he or she would want to be assured that IT is maturing and that best-known practices are in place. critical processes highlight the importance of top-level guidance.Critical Processes Underpinning the IT-CMF For the IT-CMF. While the board and investors will not expend effort in unnecessary overanalysis of the IT strategy. IT capabilities emerged over three decades ago as both an opportunity and a risk. Across a wide spectrum of businesses. To succeed.indd 11 24/01/2011 15:44 . On the other hand. Examine Table 6 on page 12 for an overview of the IT-CMF’s critical processes. differentiate products. IT’s senior leaders will need to speak the language of business while continuing to provide technology oversight to projects and programs. While the MD may not care to know about each critical process. The depth of necessary skills can be daunting. /// For the CIO. and to the IT-CMF in general. Portfolio Management recognises the value of IT. While it may have inherent difficulties. efficient. /// For IT senior leadership. These IT line managers need to assemble teams that know what to do and how to do it. the CIO must both cultivate a mature. /// For the MD or CEO. and change entire industry landscapes. and to measure the business value consequences of its initiatives and daily activities. There is a range of different perspectives with respect to the IT-CMF’s critical processes in particular. Study Table 7 on page 13. critical processes are the key activities and procedures that must be defined and mastered to enable an IT organisation to plan and deliver IT solutions. they will most certainly monitor the outcomes of IT strategy—namely the business value derived from IT. /// For the stakeholders and the board of directors. and Table 10 on page 15 to understand the critical processes in greater detail. It has always been true that IT has collections of initiatives and activities. Table 8 and Table 9 on page 14. is a step up from project-by-project decisions. Budget Oversight and Performance Analysis Managing the IT Capability . Program and Project Management . Capacity Forecasting and Planning . User Training Management . Enterprise Architecture Management . and Engineering . Organisation Design and Planning . Supplier Management . Business Process Management . Service Provisioning . Budget Management . Benefits Assessment and Realisation . IT Leadership and Governance . Sourcing . Knowledge Asset Management . Portfolio Planning and Prioritisation . Accounting and Allocation . Relationship Asset Management . Technical Infrastructure Management . Solutions Delivery . Service Analytics and Intelligence . Sustainable ICT Managing the IT Budget . Risk Management . Portfolio Management Source: Martin Curley (2007) ITCMF Booklet AW. Business Planning .indd 12 24/01/2011 15:44 . Development. Capability Assessment and Management Managing IT for Business Value . Demand and Supply Management . Total Cost of Ownership . People Asset Management . Strategic Planning . Innovation Management . User Experience Design . Research. Funding and Financing .Table 6 Macro-Process Critical Process Critical Processes for the IT-CMF Managing IT like a Business . modeling. Document and manage the IT organisation’s work flows and business processes. . Sustainable ICT SICT . Risk Management RM . reuse. outsourcing. IT performance monitoring. . Adoption of IT-enabled business processes can deliver positive sustainability benefits across the enterprise and beyond. . funding and measuring IT-based innovations in order to generate business value. Strategic Planning SP . processes and tools used for calculating and distributing the costs of IT. Align IT processes and practices with the core principles of sustainability. . Define and anticipate the company’s demands for IT capabilities and services. Anticipate the shifting needs for IT capabilities and plan to deliver them in a timely fashion. Cost-effective and business-proficient IT systems are delivered at an optimal cost. Business Process Management BPM . Review and reorganise as necessary the alignment between the IT organisation and company needs. and prosper. Companies systematically monitor their environment.indd 13 24/01/2011 15:44 . Capacity planning provides the company with the right amount of IT resources. adapt with new solutions. . Management of processes and work flows can substantially improve IT efficiency. sometimes more and sometimes less. . Business Planning BP . Business continuity is ensured by systematically mitigating IT operational risk. Achieve a balance between supply and demand for IT services which is both efficient and sufficient. Accounting and Allocation AA . i. Innovation Management IM . Identifying and forming supply agreements with vendors and internal providers. Creating. that is. to meet shifting needs. Organisation Design and Planning ODP . Stable organisations are increasingly rare in the dynamic world of today’s business. . . Demand and Supply Management DSM . recycle. mission and objectives for the IT organisation in line with the firm’s overall strategies. Capacity Forecasting and Planning CFP .e. . Provides the decision rights and accountability framework to encourage behaviours that lead to the achievement of the organisation’s IT business value goals. and analysis to establish a clear understanding of the relationship between business processes and the underlying IT infrastructure and processes – in order to sustain and optimise the delivery of IT services for business value.Table 7 Critical Process Purpose and Results Critical Processes for Managing IT like a Business IT Leadership and Governance ITG . . Source: Martin Curley (2007) 12/13 ITCMF Booklet AW. The policies. . Business and IT strategy is aligned to ensure an effective translation of plans into IT capability requirements and business value. . reduce. Sourcing results in placing some enterprise activities outside the company. Top performing companies show 20% better performance when governance is aligned with enterprise goals. Sets the vision. A range of methods such as chargeback. and develop strategies to mitigate those threats. . Business planning identifies key objectives and areas for IT investments. transfer pricing. Service Analytics and Intelligence SAI . Sourcing SRC . and allocation may be used to manage the cost of IT services and to influence the demand for IT services within an organisation. identifying. Analyse threats and their potential impacts. The IT organisation leverages this knowledge as an integral component for efficient operations and effective planning. Service Provisioning SRP ITCMF Booklet AW. .indd 14 . IT R&D can deliver prototypes of innovative IT systems. Deploy systems and solutions which efficiently address the company’s IT requirements and opportunities. IT solutions are delivered with the cost. Data centres. . Enhance the relationship between the IT organisation and the company’s business units. white papers. Create a culture where IT is customer-focused in order to provide the company with business value. . . value is leveraged throughout the organisation. functionality. Achieve effectiveness and agility with technical standardisation and system integration. By identifying. Portfolio Planning and Prioritisation PPP Budget Oversight and Performance Analysis BOP . Determine the scale. and server) to support the business People Asset Management PAM . Provide reliable IT services to support the company’s objectives and strategies. Historical returns data informs portfolio planning to improve the investment mix. . Budget Management BGM . Allocate the IT budget to projects and activities based on factors such as risk management. Formally investigate new information technologies and the opportunities they provide. and technical architecture of IT systems. Source: Martin Curley (2007) Table 9 Critical Process Purpose and Results Critical Processes for Managing the IT Capability Enterprise Architecture Management EAM . storage. capturing.Table 8 Critical Process Purpose and Results Critical Processes for Managing the IT Budget Funding and Financing FF . Periodic offline review of IT spending versus IT plan. which is efficient and reliable. Provide the necessary models and practices for defining. Technical Infrastructure Management TIM . IT will share in the risks and rewards associated with the overall business of the company. application. Solutions Delivery SD . Manage and train personnel to be successful contributors to the IT organisation. which provides a stimulus for re-profiling or reprioritisation of budgets. . Active. as a platform for delivering IT services. Optimise IT infrastructure (including client. . Provide an on-demand capability. . . and Engineering RDE . 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 the governance model. Careful budgeting leads to continuous unit cost reduction for IT services. . help desks. Development. Research. Find a balance between capital expenses and operating expenses to optimise total cost of ownership. planning and managing the business and IT capabilities by developing the business. maintaining and sharing knowledge assets. scope and sources of funding for IT. Knowledge Asset Management KAM . or patent filings. Relationship Asset Management RAM . classifying. 24/01/2011 15:44 . . network. Oversight certifies that the budget targets are being met and variance analysis improves forecasts in the future. Promote a collaborative culture and define practices and actions to guide employees in harnessing knowledge assets as part of their work. and quality the company needs. . schedule. data. and service solutions are in position to support IT’s customers. and assign financial resources to IT activities. . Create solutions that increase both business productivity and satisfaction of end users. Ensure that all proposed investments are executed within their set parameters and remain in line with business objectives. Portfolio Management PM . Create the support. The costs of schedule overruns are avoided and the quality of IT solutions is matched to customer needs. . . Assessment roadmaps are defined and put forward for realisation to improve the organisation's capability. Total cost of ownership better informs the budgeting and portfolio management processes. User Experience Design UED Program and Project Management PPM Supplier Management SUM Capability Assessment and Management CAM . Maximise user proficiency and ensure users acquire the right skills at the right time. Construct high quality business cases and manage the realisation of actual benefits versus original forecasts to ensure organisations achieve business value delivery. Regularly examine the mix of IT projects and the allocation of resources among them. Benefits Assessment and Realisation BAR . Encourage cooperative relationships with contractors to create shared value. Usefulness and ease of use are the hallmarks of a successful IT solution. .Table 9 cont’d Critical Process Purpose and Results User Training Management UTM . repeatability. and effectiveness to assess the IT capability. . . Establish a common business value vocabulary. Source: Martin Curley (2007) 14/15 ITCMF Booklet AW. . Source: Martin Curley (2007) Table 10 Critical Process Purpose and Results Critical Processes for Managing IT for Business Value Total Cost of Ownership TCO . and on target. . and a measurement and valuation methodology to express the potential business value returns and to document the actual business value returns. . Achieve more value from the company’s primary supply base. Track and control direct and indirect costs associated with IT infrastructure and systems. Cultivate the ability to manage programs and projects to be on time. . Business value is maximised when excellent IT solutions are put to maximum usage. reliability. . on budget. .indd 15 24/01/2011 15:44 . MIS Quarterly Executive. November. JL. Market Management to Transform the IT Organization. University of California. PB. 2007. Crosby. Vol. Curley. How IT Creates Value. V. A. JG. Harvard Business School Press. CRITO paper. Volume 3 (1). To Optimize Payback. Humphrey. Volume 3 (1). A. 2006. MISQE. Markus. ML. 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