CIOs have long struggled to measure and demonstrate the business value of IT investments. But there’s a relatively new approach to making IT investment and operating decisions — and then proving their value to shareholders — called the IT Capability Maturity Framework.
The IT-CMF approach fills in the gaps of some better-known IT management framework schemes such as Information Technology Infrastructure Library (ITIL) and Six Sigma, according to IT leaders who have used the new assessment tool.
IT-CMF ranks organisations on the maturity of the approach they use to handle 36 IT processes, giving them scores of 1 to 5 in each area, with 5 being the best. The processes are broadly divided into four areas:
• Managing IT like a business by focusing on customers and services.
• Managing the IT budget to deliver better value and performance.
• Managing IT capabilities and developing core competencies.
• Managing IT for business value by linking IT investments to overall business benefits.
Vincenzo Marchese, group enterprise architect at oil giant BP PLC, says that he has used portions of the IT-CMF assessment for two years within an IT group that has 3,000 workers, including 250 architects, who oversee 700 active projects.
IT-CMF is “a key measure to track how we do over time, but it is one measure,” Marchese says. On one facet of IT management called enterprise architecture management, BP was assessed a Level 2 IT-CMF rating in 2008 and rose to a Level 3 in 2009 after making some changes, he says. In another example, when morale in BP’s IT unit was fairly low after a restructuring, the IT-CMF assessment helped identify changes — such as adopting new training programs and well-defined career paths — that helped bring BP up to a Level 4 in that area, Marchese says.
The IT-CMF system was developed by the Innovation Value Institute (IVI), based on concepts in Managing Information Technology for Business Value, a 2004 book by Martin Curley.
IVI was co-founded in 2006 by Intel, Boston Consulting Group and the National University of Ireland. The university uses some IT-CMF concepts in IT management courses, and about 15 other universities in the U.S., Europe and Australia are following suit.
Andrew Agerbak, a principal at Boston Consulting Group, says he reviewed 120 high-level IT-CMF assessments performed on various IT groups, of which more than 20 were detailed assessments, and found the IT maturity level “relatively low” even though some companies that were studied had invested billions of dollars in IT.
One trend Agerbak noticed is that IT shops show “tremendous maturity around getting technology processes approved” by the larger organisation but are “weak” when it comes to their ability to track and describe the benefits of a system once it’s deployed. “Benefits tracking is weak, with no established processes,” and there is frequently no defined, accountable person or group assigned to track benefits, he says.
John Ellenberger, director of research at SAP AG, says the IT-CMF assessment could help IT shops struggling with changes in technology, including the influx of smartphones that workers buy on their own and use for work-related tasks even if the company’s IT department is not prepared to fully support them.
“With the consumerisation of IT, people are buying iPhones and bringing them in, and the IT guys are not getting a lot of help moving applications from laptops to the iPhone,” Ellenberger says. “And Apple is not offering IT training at this point, which puts a lot of pressure on key IT processes and mechanisms that IT-CMF helps deal with.”
Peter Forte, CIO at Analog Devices, says his company is considering using IT-CMF as it continues to adjust to layoffs that occurred more than a year ago. In IT, 30% of his staff was let go, leaving 150 people who spend 80% of their time and resources maintaining systems, with little time to develop new ones, he says. Analog Devices makes 60,000 different signal-processing integrated circuits, and the IT staff is responsible for the systems and networks that support many areas of that work, including those used by design engineers who develop new products.
“With a new CFO, we’re really driving down costs hard,” Forte says. “With 80% of our resources focused on keeping the lights on, we’re out of balance, and some wonder why we shouldn’t outsource IT.”
Facing the outsourcing threat, Forte says he has to transform his IT group from one that has depended heavily on “the knowledge in people’s heads” to one that relies on defined processes. “We really have to move ourselves from people-managed to process-managed,” he says. “And that requires a framework approach, and this IT-CMF is comprehensive and would fit the bill.”