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tization was working, it just wasn™t giving the answers that the business manager
3. This exhibit is a complete specification of possible leadership team roles. The
exhibit implies that a company must simultaneously and immediately adopt all
nine deliverables and all nine roles for each leadership team. This implication
could be a barrier to doing anything. Rather, adopting NIE practices is an incre-
mental process, and a company can approach the development of these man-
agement roles incrementally as well.
4. See Appendix B for a complete discussion of the management teams and their
roles and responsibilities for processes and outcomes in the Strategy-to-IT-
Action-to-Results Value Chain.
5. F. Warren McFarlan, “Portfolio Approach to Information Systems,” Harvard Busi-
ness Review, September“October 1981, pp. 142 “150.
6. Peter M. Senge, The Fifth Discipline: The Art and Practice of the Learning Orga-
nization (Doubleday Currency, 1990), p. 8.

Chart the Path to Implementation

hapter 12 introduces the Business Value Maturity Model as a tool to
C improve how the company directs and applies IT for maximum value. The
chapter briefly describes this maturity model, shows how it can be used, and
introduces maturity model specifics as
applied to each area of New Informa-
Control Spending and Maximize
tion Economics practices. Here, we Impact on the Bottom Line
make four points:
1 Define the Goals
2 Ask the Right Questions
1. Business strategy to IT action to
results is a chain of events and 3 Connect to the Bottom Line

processes. This chain is constrained 4 Understand Costs and Resources
by the weakest process and the 5 Focus on the Right Things
disconnects between processes. 6 Adopt Effective Process to Produce Action
Management should examine the
7 Tackle the Practical Problems
chain to find the weakest links
8 Make the Right Decisions
and disconnects, and fix them.
9 Plan for the Right Results
2. To examine the chain, manage-
10 Keep Score
ment should assess the maturity of
the company™s strategy-to-bottom- 11 Deal with Culture
line processes, focusing on those ¤ 12 Chart the Path to Implementation
that do planning, innovation, 13 Define What™s Next
prioritization, alignment, and per- 14 Answer the “So What?” Question
formance measurement as well as
portfolio and culture management.
The maturity assessment establishes the current as-is ability of companies
to perform Strategy-to-Bottom-Line Value Chain processes and enables a
decision on what the company needs to do to improve its ability to perform
those processes.
The Maturity Model will identify the weaker, less capable processes,
which the company can then improve. The model can also be used to set


targets for improvement. Such an assessment begins by considering the busi-
ness outcomes such processes should produce, including:
The company gains maximum strategic and operational impact from its
IT investments.
The company excels in innovating through IT in its products, processes,
and performance.
The company consistently chooses the highest impact IT investments.
The company achieves increased returns from its IT activities.
Performance measures lead to improved IT and business performance.
The entire IT investment contributes to business performance.
Once management determines that the company needs improvement
in these areas, the Business Value Maturity Model helps identify specific
opportunities to use NIE practices. The model can also be used to set tar-
gets for making the appropriate improvements.
3. Management should determine and eliminate the management culture bar-
riers to changing its Strategy-to-Bottom-Line processes and adopting NIE
practices. NIE practices give management teams new experiences in dealing
with business and IT decisions. The Business Value Maturity Model helps
to identify the as-is ” and by extension the to-be ” targets of the culture
related to management™s new roles and responsibilities. This is part of chang-
ing the processes, which makes them more effective and raises their matu-
rity levels.
4. Management should connect the company processes that lead from strategy
to the bottom line. While improving the maturity of each management
process is vital, it is equally important to assess the maturity of the col-
lection of processes, taken together, that move the company from strategy
to results. Each individual process can be a silo, unconnected to related
processes. This is the “disconnect” problem described in previous chapters.
To be successful, the company™s management processes need to connect,
both to each other within the Strategy-to-Bottom-Line realm and to the
affected company processes such as budgeting, business strategic planning,
and operational /annual planning. The Business Value Maturity Model is
used to make this assessment, leading to an understanding of the discon-
nects and what actions are needed.

Improving the company™s strategy-to-IT-actions-to-results processes, and
improving their connections, is critical to achieving the business results listed
previously and thereby obtaining greater impact from IT. Our goal is to assess
all of the related management processes, show how to improve and better con-
nect them, and thereby vastly increase the impact IT has on a company™s bottom-
line performance.
Introduction to the Business Value Maturity Model

In previous chapters, we discussed NIE practices and their application through
the company™s management processes. NIE practices such as planning, prioriti-
zation, and alignment are embedded in the company™s own management
processes, with the result that the desired business outcomes are produced. NIE
goals1 set 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 this chapter to
introduce a powerful tool, the Business Value Maturity Model , to help a com-
pany 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, pro-
duce the outcomes based on a combination of culture barriers and company
capability to act on the results.
Maturity models have evolved over the last 20 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 gov-
ernment, in developing the Capability Maturity Model (SEI/CMM) for processes
around the development of software. Second, they are used to assess the “matu-
rity” 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, and so forth.
The Business Value Maturity Model follows the structure first introduced
by the work of the Software Engineering Institute. Beginning in the 1980s, Watts
Humphreys2 and others formalized ideas of growth and organizational change
in SEI™s Capability Maturity Model,3 which focused on the processes and manage-
ment practices an organization should apply to software development. SEI™s matu-
rity model defines five levels and is used to describe both 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 expres-
sions of maturity as shown in generic terms Exhibit 12.1. The description of
each level includes the characteristics of the management processes and their
maturity with respect to achieving the desired outcome.The complete Business
Value Maturity Model includes specific descriptions for each NIE goal, cul-
ture, and practice.

EXHIBIT 12.1 Business Value Maturity Model

Level 5 ” Optimized. Management processes
that apply the practices are central to the company and
continuously improved.

Level 4 ” Managed and Measurable.
Management processes are standard practices; execution
is monitored; outcomes affect the business.

Level 3 ” Defined Process. Management
processes exist to apply the practice, but no company-
wide standards or enforcement.

Level 2 ” Repeatable but Intuitive. No
formal management processes, but the idea is understood
and informally applied to produce the desired outcomes.

Level 1 ” Initial/Ad Hoc. No formal
management processes, but a few managers attempt to
apply the practice informally to produce the outcomes.

Level 0 ” Nonexistent. No management
processes apply the practice to produce the desired

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

IT and business planning are fully connected and integrated.
IT-enabled innovations impact business planning and offer new strategies.
IT investments are prioritized against business strategy.
The entire IT spend is aligned with business strategy.
IT business and technical performance is tracked.
Business and IT management teams execute the processes that improve IT™s
contribution to business performance.
Planning and management processes focus on the entire IT investment.
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
carry out 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
Maturity Model Goals

process, both among themselves and with other company processes. Conse-
quently, 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.

The goal for using the Business Value Maturity Model is to overcome manage-
ment culture barriers and improve the company™s ability to act.
A basic point made in Chapter 11 was that management culture is the main
determinant of success in adopting NIE practices such as prioritization, align-
ment, and so forth. These practices enable management teams to make the best
decisions and take the best actions. This requires the active, and accepting, par-
ticipation of both business and IT management teams. As we pointed out ear-
lier, these management teams need to play certain roles, and the management
culture may not support those roles. More to the point, the management cul-
ture may not respect the results of the processes or the desired outcomes they
are intended to produce.
For example, we successfully introduced the innovation and prioritization
practices into their strategic business and IT planning processes of a large finan-
cial services institution. By “successfully introduced,” we mean the practices were
understood, the management teams participated fully in the exercises we con-
ducted, 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 busi-
ness, and was not capable of producing actions based on “interesting” meetings.
However, some progress was made. For the first time, the senior leadership team
understood the problem. The individual managers who participated observed the
potential for changing how planning was done. A sense of disappointment was
shown when 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 busi-
ness process in which they are embedded, and acting on the results produced.
As we discussed in Chapter 1, 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 a company manages its IT? For example, Exhibit 12.2 shows the
deliverables in the Strategy-to-Bottom-Line Value Chain; in order to produce
them, how does one fundamentally affect the behavior of the company itself?

EXHIBIT 12.2 Management Process Deliverables in the
Strategy-to-Bottom-Line Value Chain

Strategic IT Planning Annual IT Planning
The Business Enterprise: Lines of Business, Departments
7 Business Plan


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