IT Strategy Framework

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IT Strategy Framework Linking Corporate Strategy to IT Strategy

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Strategy Linkage - Corporate to 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

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Strategy Linkage for Corporate to 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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Strategy Why IT- CMF for IT Strategy

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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.

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Level-by-level assessment questions to 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

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Strategy IT - CMF Architecture 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)

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Strategy IT - CMF Critical 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.

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Strategy IT - CMF Critical Components

Critical Components

Definition Maturity

Levels CP

Performance Metrics

CBBs POMs ‘How to’

fundamentals

Assessment Questions

Case Studies

Illustrative examples

Training

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Strategy IT-CMF Characteristics

Optimising

Advanced

Basic

Intermediate

Initial


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 Hoc Ad Hoc Ad Hoc Ad Hoc

Mat

uri

ty L

evel

s

Macro Processes

5

4

3

2

1

• Contribution to Business Value increases as IT organisation matures

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Strategy IT – CMF Assessment 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 UTM PAM ICM RAM RDE SD SRP TIM 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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Strategy Appendix

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IT Strategy Capability Frameworks

Capability Frameworks

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Strategy IT-CMF Macros Process Characteristics


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

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Strategy Managing the IT Budget


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

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Strategy Managing IT for Business Value


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


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Strategy Managing IT for Business Value


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


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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

En

terp

rise

Arc

hit

ectu

re

Agile IT Architecture

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IT Maturity

Architecture IT Maturity

Business Silos Standardised Technology

Optimised Core

Business Modularity

Per

cen

tag

e O

f In

ves

tmen

t (0

– 1

00%

)

Hig

h F

lex

ibil

ity

L

ow

Fle

xib

ilit

y

Source: 2005 MIT Sloan Center For Information Systems Research

Glo

bal

Flex

ibility

L

ocal

Flex

ibility

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To Know More Contact

Name: Vishal

Email: [email protected]

Twitter Handle: sharmavishal

Linkedin : http://au.linkedin.com/in/sharmavishal01/

IT Strategy Framework

Business

Transcript of IT Strategy Framework