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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Why IT- CMF for IT Strategy

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Why IT- CMF for IT Strategy

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Why IT- CMF for IT Strategy
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
Like a Business
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 HocAd Hoc Ad Hoc Ad Hoc
MaturityLevels
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 UTMPAM ICM RAM RDE SD SRPTIM 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
Managing IT Like a Business
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
Maturity Level Key Capabilities and Characteristics
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
Maturity Level Key Capabilities and Characteristics
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
IT-CMF Macros Process Characteristics

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Strategy
Managing IT for Business Value
Maturity Level Key Capabilities and Characteristics
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
IT-CMF Macros Process Characteristics

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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
EnterpriseArchitecture
Agile IT
Architecture

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IT Maturity
Architecture
IT Maturity
Business Silos
Standardised
Technology
Optimised
Core
Business
Modularity
PercentageOfInvestment(0–100%)
HighFlexibilityLowFlexibility
Source: 2005 MIT Sloan Center For Information Systems Research
Global
Flexibility
Local
Flexibility

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To Know More
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