CIOs and other IT leaders have long struggled to measure and then demonstrate the business value of IT investments, and that challenge has generally become more difficult during the recession of the last two years.
A relatively new approach for making IT investment and operating decisions and then proving their value to shareholders, called the IT Capability Maturity Framework (IT-CMF), can offer IT leaders some help, several IT executives at multinational businesses said at a conference in Boston on Wednesday.
The IT-CMF approach fills in the gaps of some better-known IT management framework schemes such as ITIL (Information Technology Infrastructure Library) and Sixth Sigma, several officials said.
IT-CMF measures 36 different IT processes within an organization on five levels of maturity, rated from one through five, with five as the highest. The 36 processes are broadly divided into four areas of management: Managing IT like a business, to focus on customers and services; managing the IT budget to deliver better value and performance; managing the IT capability and developing core competencies; and managing IT for business value by linking IT investments to overall business benefits.
One speaker, Vincenzo Marchese, group enterprise architect for British Petroleum, said 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 said. On the IT-CMF scale, he said one facet of IT management called “enterprise architecture management” was assessed in 2008 at a level two, and rose to a level three in 2009 after some changes were made.
In another example, with morale within IT ranks fairly low after a restructuring, the IT-CMF assessment helped identify changes, such as new IT training programs and well-defined career progression paths, that helped bring that area up to level four, Marchese noted.
The IT-CMF has been under development by the Innovation Value Institute, the event’s sponsor, and is based on concepts in a 2004 book by Martin Curley, Managing IT for Business Value .
IVI was co-founded in 2006 by Intel Corp., the Boston Consulting Group and the National University of Ireland, Maynooth. National University uses some IT-CMF concepts in IT management courses, and NUI officials said about 15 other universities in the U.S., Europe and Australia are adding IT-CMF concepts to their curriculums.
Andrew Agerbak, a principal at Boston Consulting Group, said he had 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” in a larger organization, but are “weak” at being able to track and describe the benefits of the technology, once implemented. “Benefits tracking is weak, with no established processes and often no defined, accountable benefit owner,” meaning a person or group assigned to track benefits, he said.
John Ellenberger, director of research for SAP AG, said the IT-CMF assessment could help IT shops struggling with changes in technology, including the influx of smartphones that workers buy and use for work-related tasks on their own, even if the company’s IT department is not prepared to fully support them.
“With the consumerization 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 said. “And Apple is not offering IT training at this point, which puts a lot of pressure on key IT processes and mechanisms which IT-CMF helps deal with.”
Peter Forte, CIO at Analog Devices Inc., said 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 lost, leaving 150 workers who spend 80% of their time and resources maintaining IT systems, with little time to develop new ones, he said. Analog Devices makes 60,000 different signal processing integrated circuits, and the IT staff supports the systems and networks that support many areas of work, including the design engineers who are developing new products, he said.
“With a new CFO, we’re really driving down costs hard,” Forte said in an interview. “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 said he has to move 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, and that requires a framework approach, and this IT-CMF is comprehensive and would fit the bill,” Forte said.