|By Jay Parekh||
|August 27, 2012 07:00 AM EDT||
Are you suffering from double vision in your IT? As odd as it sounds, this is a common occurrence. Line-of-business (LOB) stakeholders often use a different set of criteria to measure IT than IT uses to measure itself. This can lead to a kind of "double vision"that can hurt IT prospects. A cloud-centric IT maturity model is a useful tool for evaluating present IT capabilities and planning future growth. It is increasingly being used to establish present and future success criteria for IT in a common language understood by all parties. In this article, we will discuss three essential dimensions of IT maturity and how they can be applied to help IT decision makers achieve their goals.
The Double Vision
Cloud computing has created two major sets of expectations, which are worth a critical look:
- IT-centric View of Cloud: Historically, many CIOs and IT professionals, perhaps led by the traditional capability-based IT maturity models suggested by IT-focused analyst firms, have believed that managing and improving IT infrastructure, costs, agility, IT service quality, etc., are the primary measures of IT success. When cloud technology became available, they started expecting cloud to be a way to accelerate the achievement of these goals. But this may be a myopic view of how cloud technology will impact the enterprise. We call this the "IT-centric view."
- Business-centric View of Cloud: In contrast, business stakeholders, such as LOB owners, and business CXOs (e.g., CEO, CFO, CSO, COO), have desired solutions that improve business flexibility and speed, reduce business operating costs and create better business differentiation. Such solutions may include management, automation and optimization of business processes, services, activities, transactions, and end-user experiences, examples of which are shown in the Business Value Stack. When cloud technology became available, these business stakeholders started expecting cloud to be a way to deliver highly innovative, flexible, competitive and cost effective business solutions that could be leveraged by both internal business users as well as by enterprise end customers and partners creating significant business advantages for the enterprise. In addition, business stakeholders expected IT to directly or indirectly supply these business-centric cloud-based solutions to help them attain the desired business benefits. In the business stakeholders' view, IT success should be measured in terms of its ability to directly and readily address these business improvements. For them, improvements to IT itself are neither enough nor interesting. We call this the "business-centric view."
Based on the above, we can conclude the following key points:
- IT and business owners have different views and expectations of cloud technologies.
- Cloud is expected to transform both IT and business, and IT is expected to play a major role.
- Business stakeholders use a different set of criteria to measure IT than IT uses to measure itself. Cloud related expectations may amplify this difference.
- Cloud is changing the traditional role of IT, and its success measures.
Even though both IT-centric and business-centric views of IT are acceptable in their own ways, they can cause double vision for IT. If this issue is not resolved it can lead to conflicts and confusion with respect to IT's roles, goals, strategies and priorities, which can potentially lead to IT failure.
This double vision can be resolved if IT can: clearly see the business-centric view described above; fully understand the value it needs to deliver to the business; recognize the role it needs to play; and use the success measures used by business stakeholders.
Need for a New IT Maturity Model
A new IT maturity model is needed to help IT reconcile and resolve the double vision, and to guide both IT and business organizations through cloud-led transformations and beyond.
To address these needs, we have identified the following major requirements for this new model:
- It must be based on the value IT delivers to the business (and not on internal IT capabilities).
- It must focus on the type and maturity of solutions IT supplies to the business (as opposed to maturity levels of IT's own tools, people, processes or projects).
- This model must fully take into account the impacts of modern technologies, like cloud computing, that are driving the transformations of IT and business organizations across industries.
A New IT Maturity Model (Value-based)
This model consists of three categories, or "maturity dimensions," with the following key aspects:
- How the IT organization is viewed by the business (IT's own view may differ)
- Business value of IT, as perceived by the business stakeholders
- Type of solutions IT is expected to supply to the business
- Examples of key solution areas
Using This Model
An IT organization is considered mature in a specific dimension when it becomes a trusted supplier of solutions required in that dimension; they may also achieve maturity in more than one dimension at any point in time.
A key difference between a capability-based model and the value-based model is that some IT organizations may not fit under any of the three dimensions in the value-based model. This situation arises when according to business stakeholders IT is not providing effective solutions. This highlights a key advantage of the value-based model as it helps IT leaders recognize and proactively address circumstances where business leaders may be losing confidence in IT. In addition, it enables IT to more effectively stay apprised of business leaders' needs, resulting in a win-win for both groups.
The latest version of this maturity model and other supplementary content is available here.
The Three Dimensions of IT
These IT organizations are expected to supply effective infrastructure-centric solutions to business stakeholders, often delivered in the form of a cloud with Infrastructure-as-a-Service (IaaS), and/or as virtualized datacenters. These solutions alone support business improvements indirectly. They are rarely capable of directly addressing improvements and automations across business applications, processes, services, transactions, activities or end-user experiences. This is why business stakeholders frequently rate the business value of an infrastructure-centric IT organization fairly low.
These IT organizations are expected to fully understand business-centric needs and usage of business applications, and supply effective platform and application automation solutions. These solutions typically enable the management, automation and optimization of business applications, including packaged apps, custom apps, composite apps, highly modular apps, cloud-only apps, or special purpose apps such as mobile apps, Big Data apps, and social apps. To be fully effective, these solutions may also require IT to drive appropriate levels of integration, customization, configuration or personalization. These solutions are typically delivered through various models, such as private, public, hybrid or community clouds with Platform-as-a-Service (PaaS), Software-as-a-Service (SaaS), or with application component-based services such as Middleware, Database, Testing or other such services offered in the XaaS model. Since almost all internal and external business users of an enterprise directly or indirectly use business applications, the business value of application-centric IT is generally rated to be at the medium level.
These IT organizations fully understand short and long-term business challenges and are expected to supply effective business improvement, automation and optimization solutions, and help drive business innovations, business differentiation and competitive advantages. Many of these solutions are capable of fully leveraging the most appropriate combination of technologies that are best for the business problem they are solving. Examples of such technologies include business process management, business activity management, business transaction management, business intelligence, business analytics, business-centric collaboration, mobile or social networking technologies, and the right set of delivery models including private, public, hybrid or community clouds. These business-centric solutions, typically created through collaboration between IT and business organizations, are designed to directly address improvement, management, automation and optimization of business processes, services, transactions, activities, etc. This is why the business-centric IT organizations are awarded the highest level of business value.
Key Points to Note About This Model
Model is three-dimensional
Each dimension represents a specific type of value, and a corresponding set of solutions. Although the solutions across all three dimensions are interrelated, the three dimensions themselves are neither sequential, nor incremental, nor dependent on each other. Each dimension independently reflects IT maturity within that specific value area, and the model does not imply a roadmap for transitioning from one dimension to another.
In contrast to traditional "capability"-based models, this is a "value"-based model. This model focuses on the external value of the solutions that IT supplies to the business stakeholders, as opposed to traditional models that primarily focus on IT's operational capabilities (capability maturity) with respect to IT's own internal tools, technologies, processes, people and projects.
In this value-based approach, the value of IT is determined directly by the business stakeholders based on the effectiveness of solutions IT provides to the business. This is called the "business value of IT".
This model is constructed to explicitly focus on the solution-related aspects of IT. In each dimension, IT is expected, and required, to supply a very specific and distinct set of solutions required in that dimension. It is assumed that IT is capable of, and effectively uses, all internal IT tools, technologies, people and processes, as needed for that specific dimension. But these IT capabilities are not explicitly referenced in the model because they are not part of the value-based or solution-centric success measures of IT.
Model is time-based
At any given time, an IT organization may have different levels of maturity in each dimension. A 3D IT maturity map can be created by independently plotting the maturity level of an IT organization in each of the three dimensions. IT maturity levels of an IT organization or its inclusion in a specific dimension may change over time as organizations transform, solutions change or value measures change.
Focus is on business and business stakeholders
In each dimension, IT is expected to supply business-centric solutions that provide significant value to business stakeholders - which include business CXOs, line-of-business owners (VP Sales, VP Marketing, VP HR, VP Finance, VP Mfg, VP Support, etc.), internal business operations staff, and end customers and partners.
Success measure is the business value of IT
In this model, IT's level of success, and IT's level of maturity within a dimension, are measured only in terms of the of value of the solutions that IT supplies to the business, i.e., the business value of IT. It is foreseeable that IT may have its own view regarding the business value of IT, but only the value receiver, i.e., the business stakeholders, can (and should) assess the business value of IT. Internal IT maturity aspects related to IT's own internal use of IT technologies, people and processes are neither weighted nor factored in the success measure. Tying the IT success to only a single external measure (i.e., the business value of IT) removes the possibility of double vision.
IT is in charge, but solutions can come from any source
In each dimension, IT is expected to understand and act in accordance with the business objectives, requirements and priorities that are specifically applicable to that dimension. Then, they can identify and implement the most effective structure and delivery models for the required solutions - whether they are built internally by the IT organizations, or acquired from external vendors, built through outsourcing to third parties, or acquired from external service providers, like public clouds, or developed directly by the business units themselves, or through any combination of these means and delivery models such as private, public, hybrid or community clouds, or physical and/or virtual and/or hosted, and/or on-demand, and/or outsourced datacenters.
IT Maturity is Pre-Requisite for Cloud Maturity
A business-centric IT organization is in the best position to deliver a complete and mature cloud solution with high-business value. The following figure relates the three value-based dimensions of the IT maturity model to the three major types of clouds. Additional information on Cloud Maturity is available here.
Conclusion and Recommendation
This value-based maturity model of IT can be a very important tool to guide CIOs and business CXOs if their goal is to increase the strategic value of IT within the enterprise and across enterprise customers and partners.
CIOs should be asking: To what extent does your IT organization focus on improving business value of IT as opposed to improving IT's own tools, processes, people and projects? Do your business stakeholders fully trust and rely on IT for highly effective application-centric and business-centric solutions? Are you regularly polling your business stakeholders?
Business CXO, or a LOB owner, should ask the following questions: What business value does your IT organization actually deliver? What solutions provided by your IT organization deliver high business value? Have you clearly communicated all these to IT?
This value-based IT maturity model can be a framework for such discussions.
This article introduced the new value-based IT maturity model. Information on how to put this model to work and other related content is available here.
The views expressed in this article are those of Jay Parekh and do not necessarily reflect the views of Oracle or any previous employer.
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