Maturity Models for the Evolving Economy

Much has been written about the “New Economy”, and definitions and explanations of it abound. In reality, because we are in a period of time when disruption of one kind or another is almost a daily event, it is not unreasonable to suggest that every single day we face a new economy. Perhaps it is more practical to think of the economy with customers, knowledge and an integrated supply chain at the heart as a continuously evolving phenomenon, rather than something that has reached an end state called “new”.

Computing and telecommunications capabilities – led by the Internet – enable instant access to information. The Internet has made connections with customers, partners and suppliers easy and relatively inexpensive. Commerce and trade are almost location and time independent. However, the “extended enterprise” that operates on a 7 x 24 basis presents endless opportunities and an infinite number of challenges.

This column, the first in a four-part series, discusses the challenges associated with taking action in an economy that is, in effect, a moving target. The benefits of using models to simulate current and desired states is discussed, along with the need to understand the progressive nature of moving along the maturity scale towards “best known practices”. In later columns, the use of maturity models will be discussed in some detail along with suggestions about how they might be applied.

‘eXecuting’ in the Evolving Economy

The economic evolution is true to its definition inasmuch as the economy is developing from a simple to a more complex form, but unlike many other evolutionary events the economic shift has been rapid (even abrupt) and at some stages the climb has been steep. But the evolution continues and its disruptive effect on the business world is unlikely to end any time soon.

Deciding when to adopt a new business model and what it might look like, choosing the most appropriate technologies and deciding when and how to implement them, and last but not least deciding what organizational changes are needed to support other changes may seem to be insurmountable obstacles.

Early adopters blaze a trail that provides a rich set of “lessons learned” from which others can benefit. The challenge of reusing lessons learned by others is complex (multifaceted, transitory, etc.) and there may be difficulty in determining why something succeeded or why it failed.

Oftentimes, the lens through which these initiatives are examined is narrow, failing to consider the interdependencies and potential permutations of the many factors at play. Because they might not suit every situation, these valuable lessons cannot be implemented as “best practices” without careful consideration. There is also the risk that anything considered to be “best practice” today will not necessarily be the “best” tomorrow.

There is in fact no one to copy. In these circumstances it is best to seek out and work towards adopting the best known practices of today, recognize there is always room for improvement, and monitor the need for them to be adapted to suit changing demands.

Modelling the Business

To understand why change is not producing anticipated results, one needs to understand the transformational stages and appreciate the impact they could have on eventual outcomes. To provide some logic and a framework that will help organizations understand the progress they are making in adapting to the demands of the evolving economy, IDC has developed a series of Maturity Models. These models describe progressive indicators of success in achieving “best known practice” associated with key business imperatives and represent the best thinking of today.

A Maturity Model represents a living model of a business as it moves through various stages of implementing or introducing significant change associated with a specific key business imperative. Each model represents current thought in a particular subject area and the “fourth generation” of the model describes the best known practices of today. The assumption is that a fourth-generation organization has a far better chance of success in the 21st century than does a first-generation organization.

The models have been developed based on the premise that a true partnership between IT and non-IT executives is fundamental to success in the 21st century organization. Also, information technology and business objectives are sufficiently interdependent that separation of “best known practice” would be counterproductive. Therefore, the key success drivers and key performance indicators (KPIs) address issues of importance to the overall enterprise rather than specifically to IT or non-IT executives. Over time Key Performance Indicators and Maturity Level Indicators may change as new lessons are learned from IDC’s ongoing research.

Value of Maturity Models

The value of Maturity Models is in their use as tools to help organizations better understand where they are situated in relationship to the “best-known practices” of today; they also help organizations develop an appreciation for the implications of that positioning. They enable organizations to understand why they should move forward, and provide them with an insight into what they need to do in order to advance.

In a world where mergers, acquisitions and partnering arrangements are commonplace, the Maturity Models provide valuable insight into the “non-financial indicators” of corporate value and an indication of where each organization’s strengths and weaknesses lie. This is helpful both as input to the investment decision and also in determining competency duplication, and of course which critical competencies do not exist.

Information technology hardware, software, services and channel organizations can use the Maturity Models to help them better understand their customers and the decisions they are making. Also, these organizations may elect to develop custom Maturity Models for target customers to help in the sales positioning process.

Each Maturity Model is supported by a checklist of criteria, which can be used to verify the accuracy of where an organization perceives itself to be on the maturity scale. The results of this validation will provide important input to the strategic planning process and provide support for proceeding to the next level of maturity.

In Conclusion

The 21st century is here; it is no longer in the future. There is much uncertainty about the economy, who the dominant players will be and what the most successful business model will look like. One thing is clear: organizations most likely to succeed are those that will learn to thrive on the uncertainty. They will be easily identified by their commitment to pushing the edge of best known practices and by their ability to anticipate and adapt to change.

IDC’s Maturity Models provide a practical framework that can help an organization to visualize and act on what must be done for it to execute effectively in the evolving economy. Developed by IDC’s most experienced analysts, these models will facilitate realistic responses to the following key questions:

• How can you learn from your own and others’ experiences? How will you know when we are on the right track?

• How will you manage technology change and cultural change at the same time?

• Are you moving too slowly? Are you trying to move too quickly? Would it be better for you to take a step back and regroup?

• Why aren’t you getting the returns you expected on the last major change initiative?

• Where should your immediate focus be? What key business drivers should you address first?

• What are the “best known practices” in areas that are fundamental to success? How much effort is required for you to implement “best known practices”?

• As a strategic player, how can you make sure your views are heard? What are the ground rules for a meaningful relationship between IT and non-IT executives?

• What do you need to do to ensure that you and your organization can execute effectively in the evolving economy?

Jan Duffy is Group Vice President, Solutions Research, for IDC Canada, and is the author of the recently published “Harvesting Experience – Reaping the Benefits of Knowledge” .She can be contacted at [email protected]

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