Business Value Maturity Model

The Business Value Maturity Model

The following is an excerpt from "From Business Strategy to IT Action"

"In previous chapters we discuss NIE practices and their application through the company’s management processes. NIE Practices such as planning, prioritization, and alignment are embedded in the company’s own management processes, with the result that the desired business outcomes are produced. New Information Economics Goals sets the framework for adopting and using NIE practices. Culture creates the environment in which the practices, and management processes, successfully produce the desired results. Expected Business Outcomes states a simple business outcome for the use of the practice.

Considerable limitations on the capability of a company to successfully employ NIE practices originate from the company’s culture and the company’s own capabilities for performing the practice. It is the purpose of Chapter Twelve to introduce a powerful tool, the Business Value Maturity Model, to help a company overcome the two limitations. In short, previously we described the desired business outcomes that we want to produce through the NIE practices; now we introduce “maturity” as an indicator of whether the company can in fact produce the outcomes based on a combination of culture barriers and company capability to act on the results.

Maturity Models have evolved over the last twenty years in areas as disparate as software engineering, project management, non-IT business processes, and data management. They share two basic characteristics. First, they are based on the original work of the Software Engineering Institute, supported by the Federal Government, in developing the Capability Maturity Model (SEI/CMM) for processes around the development of software. Second, they are used to assess the “maturity” of related management processes as a means to improve those processes in order to achieve organizational goals. This is based on the assumption that more effective and more mature management processes will produce better results: better software, better projects, better financial decisions, etc.

The Business Value Maturity Model follows the structure first introduced by the work of the Software Engineering Institute. Beginning in the 1980s, Watts Humphreys and others formalized ideas of growth and organizational change in SEI’s Capability Maturity Model, which focused on the processes and management practices an organization should apply to software development. SEI’s maturity model defines five levels and is used to describe the goals a company should establish for its processes, and the current as-is State of the processes it uses.

The Business Value Maturity Model is built around similar basic expressions of maturity as shown in generic terms in the following figure. The description of each level includes the characteristics of the management processes and their maturity with respect to achieving the desired outcome is the generic model. The complete Business Value Maturity Model includes specific descriptions for each NIE Goal, Culture, and Practice.

The Business Value Maturity Model enables, through assessment and subsequent improvement, more effective and better-connected management processes. “More effective processes” that produce those results can be described:

a. IT and business planning are fully connected and integrated.

b. IT-enabled innovations impact business planning and offer new strategies

c. IT investments are prioritized against business strategy

d. The entire IT spend is aligned with business strategy

e. IT business and technical performance is tracked

f. Business and IT management teams execute the processes that improve IT’s contribution to business performance

g. Planning and management processes focus on the entire IT investment

h. IT and business managers participate effectively in all NIE-enabled processes

What does the Business Value Maturity Model cover?

We are concerned with the maturity of the company’s management processes that do planning, prioritization, and so forth. The Maturity Model accordingly is based on the five NIE practices and three supporting practices. At the same time, we are equally concerned with the overall connections of the management process, both among themselves and with other company processes. Consequently the Business Value Maturity Model also assesses the maturity of the connection of management processes that deal with IT planning to business results, for the purpose of assessing the connections among the processes.

Maturity Model Goals

The goal for using the Business Value Maturity Model is to overcome management culture barriers and improve the company’s ability to act.

A basic point in Chapter Eleven is that management culture is one main determinant of success in adopting NIE practices like prioritization, alignment, and so forth. These practices enable management teams to make the best decisions and take the best actions. This requires the active, and accepting, participation of both business and IT management teams. As we pointed out there, these management teams need to play certain roles, and the management culture may not support those roles. More to the point, the management culture may not respect the results of the processes, and the desired outcomes they are intended to produce.

For example, in a large financial services institution, we successfully introduced the innovation and prioritization practices into their strategic business and IT planning processes. By “successfully introduced” we mean the practices were understood, and the management teams participated fully in the exercises we conducted, and the CEO felt that the exercises were valuable to the management team. However, none of the results appeared in any of the senior managers’ annual plans for the coming year; none of the IT-enabled innovations produced any lasting changes to the company’s strategic plan. Why not? The pervasive management culture did not support the manner in which the practice results were produced, did not support the idea of IT-enabled innovation in the business, and was not capable of producing actions based on “interesting” meetings. However, some progress was made. The senior leadership team for the first time understood the problem. The individual managers who participated for the first time observed the potential for changing how planning was done. A sense of disappointment was evident that the meetings didn’t produce lasting results, along with a sense of missed opportunities. In the long run, progress in changing the culture had begun.

The second main determinant of success in adopting new practices such as alignment and prioritization is the company’s capability of executing the business process in which they’re embedded, and acting on the results produced. As we discussed in chapter one, this is partly an issue of process connections; for example, will the results of a strategic planning process connect to the annual planning and budgeting process?

But we are also dealing with the larger issues: how does one fundamentally change how the company manages its IT? How does one fundamentally affect the behavior of the company itself? The answers lie in setting goals, adopting new practices, and influencing the culture of the company, in a way that both shows the long-term goal (where do we want to be) and the roadmap to getting there.

Excerpt from "From Business Strategy to IT Action"