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processes, expectations, and understanding and acceptance of the problems to
be solved. Second, new management practices aren™t effective without consider-
ing all of the interactions between them and how the company behaves in related
areas. For example, prioritizing projects does not achieve anything unless the
results of prioritization affect budgets, affect actual work priorities, and change
business management™s expectations about what IT is to accomplish. The pri-
oritization process must also impact business managers™ understanding of what
they must do to make the process and management behavior changes, in order
to fully implement the IT projects being prioritized.
The Business Value Maturity Model addresses both points. It serves as a
method to help determine the next steps in adopting the principles and practices

of NIE and helps in understanding the relationship between NIE practices and
other related management activities.
The Business Value Maturity Model represents a rational framework that
a company can use to assess and improve its practices to better connect IT activ-
ities to business strategies and, thereby, increase IT™s contribution to shareholder

We adapt the generic maturity model to each of the NIE practices. The idea
is to apply the resulting Business Value Maturity Model to the company™s
processes that address the same issues as the NIE practice. For example, the Pri-
oritization model is applied to any company process that prioritizes IT invest-
ments. Of course, in the absence of any such process, the company™s maturity
would be 0.
The Business Value Maturity Model description is in four parts: (1) a prac-
tice description (from Chapters 8 “10); (2) critical success factors (CSF) for the
application of the practice; (3) keys to maturity for the practice; and (4) the six-
level description of the specific levels of maturity. This appendix gives details
for Parts 1, 2, and 3, including the complete Business Value Maturity Model
for all five NIE practices and the three NIE support practices. This appendix
also includes the process outcome and business outcomes for each practice, at
each maturity level.
We use the Business Value Maturity Model in two contexts. The first deals
with each NIE practice area individually and is described in the following sec-
tion. The second deals with the complete set of processes from Strategy-to-
IT-Action-to-Bottom-Line Results and assesses the maturity of the company™s
processes taken as a group, focusing on connection and completeness.

1. Business Value Maturity Model ” Process Area Descriptions
Chapters 8 “10 describe each of the practices, and Exhibit 12.7 repeats the high-
level description. The practice description establishes what the NIE practice is
intended to accomplish in the company™s management processes. This descrip-
tion is the same for each maturity level.

2. Business Value Maturity Model ” Critical Success Factors
The CSFs express the important factors leading to increased process maturity
using the NIE practices. A close inspection will show that many of these CSFs
are, in fact, culture-based. See Exhibit 12.8. This shows the close connection
between process maturity and the company™s management culture.
This also demonstrates why we use the maturity model approach to deal
with culture change as well as process effectiveness. The same initiatives that
Business Value Maturity Model ” Process Descriptions
New Information Economics Practices
Strategic Demand/Supply Innovation Prioritization Alignment Performance
Planning Measurement
Explicitly connects IT Translates IT opportunities Assesses the business Assesses the business Measures and
strategies and plans to into new business strategic impact of proposed IT impact of the existing IT communicates IT
business strategic intentions and finds new initiatives and prioritizes infrastructure, applications, performance in ways
intentions. ways for IT to support them according to their and services. related to the business
existing strategic judged impact on the and its strategic
Establishes the business Assesses the quality and
intentions. strategic intentions. intentions.
strategic demand for IT, service levels for existing
and then IT™s strategies IT resources, as input to
and plans for the supply demand/supply planning.
of the necessary IT

Strategy-to-Bottom-Line Value Chain”Management Process Connection
Connects the processes doing planning, innovation, prioritization, alignment, and performance management with themselves and with the other
appropriate company processes.

New Information Economics Support Practices
IT Impact Management Portfolio Management Culture Management
Focuses business and IT management on IT™s Obtains, manages, and reports consistent and Understands and shapes management
value proposition”IT™s current and potential complete information about all IT assets and beliefs, values, and principles pertaining to
contributions to the business”in order to resources, covering applications, infrastructure, the role and value of IT, including how IT
produce the greatest value for the businesses IT services, and IT management can contribute to the shareholder value.
IT serves.
Establishes baseline, business value, and
Develops senior IT and business performance information for the entire IT
management™s capability to enable and investment.
execute the key management processes
required to achieve IT™s value proposition.
Business Value Maturity Model ” Critical Success Factors
New Information Economics Practices
Strategic Demand/Supply Innovation Prioritization Alignment Performance
Planning Measurement
Company strategy is Management monitors Company strategy is Company strategy is The value of current IT
defined in understandable IT™s performance and defined in understandable defined in understandable activities is assessed by
terms. contribution to business terms. terms. evaluating their impact
success, and understands on strategic intentions.
Business and IT managers New IT investments are Business management is
business impact.
have common described in business responsible for assessing Resources are allocated
understanding and Management understands terms, especially their the existing service and and budgeted based on
commitment to company cause and effect of proposed impact on quality levels and support explicit cause-and-effect
strategies. existing efforts and can strategic intentions. for strategic intentions of connection to strategic
extrapolate into new existing IT investments. inte ntions.
Business and IT Business management is
business opportunities.
organizations understand responsible for assessing Resources for support of Resource and process
how IT activities support Business and IT have a the likely impact of IT existing investments are portfolios exist for
company strategies. common view on how IT initiatives on strategic allocated and budgeted purposes of value
can contribute to the intentions.
IT planning is intended to based on explicit assessment,
derive IT actions from New IT investments are contributions to strategic performance
company strategies. Business and IT managers organized into resource inte ntions. management, quality
have clear roles and and process portfolios for and service level
Existing IT investments are
participate actively in purposes of value assessment, and
organized into resource

shaping new business assessment. resource commitment.
and process portfolios.
opportunities with IT.

Strategy-to-Bottom-Line Value Chain Management Process Connections
Managers and business functions responsible for each company process understand the goals for connecting the processes.
Capability of senior management team to understand and enable the connection of the appropriate management processes.

New Information Economics Support Practices
IT Impact Management Portfolio Management Culture Management
Capability of senior management team to IT management processes to obtain and Managers in all areas of the business
understand, enable, and execute the key apply portfolio information. have a common understanding of and
management processes on which IT™s commitment to enterprise strategic
IT management understands how to
contribution to the business depend. intentions.
apply portfolios and portfolio information in
Capability of IT management to define the IT planning, innovation, prioritization, alignment, Manager™s roles are clearly defined to
value proposition”its current and potential and performance measurement. assure proper participation and avoid any
contributions to the business”and disconnects created by an organization™s
Business management understands how
communicate it within the IT organization existing culture.
to apply portfolios and portfolio information
and to the business organizations IT serves. in making investment decisions. Managers are expected to be responsive
Success in communicating IT™s value to change combining “strategy to action”
proposition throughout the company, and the thinking with the ability to react to
role each organization and manager plays in unexpected events and business change.
carrying it out.
Business Value Maturity Model ” Keys to Maturity
New Information Economics Practices
Strategic Demand/Supply Innovation Prioritization Alignment Performance
Planning Measurement
The degree to which business The degree to which business The degree to which business The degree to which business The degree to which IT
and IT planning operate and IT planning operate and IT planning operate and IT planning operate performance measures
together. together. together. together. are linked to business
The capability of business
How, and the degree to How, and the degree to Ability of business
managers to assume an
which, business planning which, business planning management to understand The degree to which IT
enterprise view of, and
explicitly considered IT explicitly considered IT existing IT investments performance measures
understand the business
innovations and inputs, and innovations and inputs, and and judge their impact on are tracked and integrated
impact of, IT initiatives.
IT consequences as outputs. IT consequences as outputs. strategic intentions. into IT planning and
other decision-making
How, and the degree to The degree to which business Ability of managers across Willingness of business processes.
which, IT planning explicitly and IT can accept and react the enterprise to take an management to examine all
considers business strategies. to new visions, potentials, enterprise-wide view of investments periodically,
and opportunities created by initiatives and strategic and assign and re-assign
IT. intentions. resources based on current
Cultural willingness of the assessments rather than
company to investigate new historic patterns.
business ideas, especially
those not originating with
business management.

Strategy-to-Bottom-Line Value Chain”Management Process Connections
The degree to which senior management supports the goals of connection.
The degree to which the management process owners understand the goals for connection.
The maturity of the individual company processes”consistent with the NIE practices and support practice areas.

New Information Economics”Support Practices
IT Impact Management Portfolio Management Culture Management
Degree to which senior business management The degree to which IT assets and resources The degree to which business and IT managers
understands the IT value proposition: its current are described in portfolios. have a common understanding of and
and potential contributions to the business. co mmitment to enterprise strategic intentions.
The degree to which management processes
Degree to which senior business and IT effectively acquire, maintain, and apply portfolio The degree to which managers™ roles are clearly
management understands, and enables, the information. defined to assure proper participation and avoid
processes necessary to carry out IT™s value The degree to which portfolios and portfolio disconnects created by an organization™s existing
proposition. information are used in management decision- cu lture .
Degree to which the IT organization, its making processes.
management and staff, understand the IT value
proposition and the role each plays in carrying it out.
Degree to which the business organization
understands IT value proposition and the role the
business organization plays in carrying it out.

are needed to make the processes effective are also needed to affect the culture.
More important, the experience that the senior business and IT management
teams have in applying the NIE practices and achieving increased levels of matu-
rity, are exactly the experiences necessary to change the underlying management
Examination will also show that the CSFs have considerable commonality.
This is probably not surprising since all of the NIE practices are targeted on sim-
ilar objectives.

3. Business Value Maturity Model ” Keys to Maturity
Each NIE practice produces deliverables that move the company from strategy
to action. The keys to maturity, shown in Exhibit 12.9, combine CSFs with the
essential outcomes for each practice. These keys to maturity form the founda-
tion for the maturity model, and the expression of increased levels of maturity
are based on these keys. Just like the CSFs, many of these keys to maturity are
management culture-based.

The ideas of maturity models have developed over the last three decades to
describe how a company and its management team can develop and grow in the
use of information technology. Their origins lie in the ideas of “stages” or
“phases” that a company goes through as it adapts its cultures and management
practices to manage and apply technology. These ideas represent the organiza-
tional growth and learning that occurs as new methods and technologies affect
how managers operate.
Richard Nolan had perhaps the earliest and most widely understood mes-
sage, expressed in his Four Stages of EDP 7 The four stages (Initiation, Conta-
gion, Control, and Integration) were used to describe how management issues
changed as the organization gained more experience with information technol-
ogy. Nolan™s stage theory expresses the organizational development and growth
that occurs as the organization matures in the use of information technology.
Nolan observed that the transformation from one stage to the next requires
explicit changes in organizational process and policy.
Beginning in the 1980s, Watts Humphrey and others formalized ideas of
growth and organizational change in the Capability Maturity Model, focused
on the processes and management practices that a company applies to software
development. This maturity model expressed five stages of maturity and was
used to define the goals a company may have for its processes and the current
as-is state of its current processes. The Capability Maturity Model has been
developed extensively by the Software Engineering Institute and is widely used
in companies to assess and develop their capabilities in software development.
Chapter 12 Appendix B: The Development of Maturity Models

As stated, the maturity model that SEI has developed identifies the charac-
teristics of each stage. For example, at maturity level X, a management process
has the characteristics of Y. Those characteristics of Y then also serve, in ad-
vanced stages, as the definition of the goals the company would set for its man-
agement processes. Consequently, the maturity model is both an assessment tool


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