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June 8, 2010

Can IT’s value be measured and would it help?

IT has always sought a Holy Grail cynics may call 'justifying our existence,' aka a metric to measure the value of technology's contribution. Have we found the answer, asks Gary Flood

By Vinod

It’s often very challenging to quantify what exact difference to the organisation an IT project has made assuming it’s regarded as positive in any case.

Help may be at hand in the shape of an interesting framework that’s come out of work by Intel, consultants Boston Consulting and the National University of Ireland, specifically the latter’s ‘Innovation Value Institute‘.

The three have produced version 1.0 of a tool that provides what they claim is an objective way to asses the relative maturity of an organisation’s IT processes the IT Capability Maturity Framework, or the IT-CMF.

Some 36 critical IT processes within a business can be looked at with the IT-CMF in a way that the creators say will let a CIOs test the worth of each IT investment. A weighting of 1 to 5 per process is assigned as a way to get a kind of ‘final score’ to provide an insight into the maturity level of your technology infrastructure, with the ultimate goal of letting you run your IT shop more like a business.

How does it do this? The four core areas are looking at how to ‘managing the IT budget,’ ‘managing IT capability,’ ‘managing IT for business value’ and finally ‘managing IT like a business’. The idea is that the effective management of the IT function within a firm is all about focusing on these four major strategies, with the IT budget essentially the input to the production process, capability as the production engine and IT value as the output.

Managing IT like a business closes the loop, by this argument, by providing the feedback mechanism for adjusting inputs to optimise the output value. These four strategies should then in turn be aligned to the organisation’s overall business strategies and the business context being operating within.

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The framework has already attracted the interest of a number of technology companies, with positive endorsements coming from among others Jan Muehlfeit, chairman of Microsoft Europe, who says, “This framework is all about finding out the value of the ICT and what the optimisation process should be. We need to bring IT much closer to the business.”

And the group acknowledges that the obvious comparison would be the well-established Carnegie-Mellon Software CMM (Capability Maturity Model), which is favoured by among others the US government, which prefers suppliers to be able to demonstrate a high score with the thing. And it has already been test-run, with organisations as diverse as Chevron and Ireland’s largest academic hospital running early evaluations.

If you are interested, you can even get academic training in IT-CMF. A kind of MBA in IT Business Value is just one possible course being built by the Irish academic body involved, which is partnering with a US university called Bentley in Massachusetts to start offering IT-CMF related management qualifications for CIOs.

It’s too early to see if IT-CMF has the ‘answer’ we have long sought that copper-bottomed way of capturing IT’s contribution. But it does seem to have some great potential and is worth a respectful look by any CIO looking for more tools to do his or her job better.

 

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