New IT management framework focuses on business value

Enterprises such as Chevron and Merck are working together to shape an emerging IT-management best practices framework.

Dissatisfied with the scope and depth of existing IT management frameworks, a group of enterprise CIOs, vendors and learning groups are developing a new rating system for IT functions.

The idea behind the IT benchmarking standard, called the IT Capability Maturity Framework (IT-CMF), is to give CIOs a single, consistent framework for measuring the effectiveness of IT investments and the value of IT to the business -- areas that founding IT-CMF members believe are not addressed by such longstanding frameworks as the IT Infrastructure Library (ITIL) and  Control Objectives for Information and Related Technology (COBIT).

Founding member Chevron Corp. came to that conclusion two years ago when its IT organization and strategy were restructured. "Our IT function was undergoing a transformation, and one thing that we found missing was an overarching framework focused on IT," said Peter Breunig, the company's CTO. "IT-CMF turned out to be the most inclusive one, and more importantly it allowed us to measure ourselves in areas that were important to the business," he said.

Chevron didn't want to reinvent the wheel, but found it was bouncing from ITIL for service management, to COBIT for risk management, to the Capability Maturity Model for project management, with each framework using a different context and vocabulary for IT, Breunig said.

Chevron began working with the Innovation Value Institute (IVI), the research, education and consulting group behind IT-CMF, during its IT transformation in the area of innovation management. Today Chevron is applying the framework to the design and planning of IT organizations, strategic planning, sourcing, benefits assessment realization, and IT leadership and governance.

"The [IT-CMF] assessments are bringing people from IT and from the business together, maybe for the first time, to talk about how we can measure IT value in a defined way, using a common language that the business can relate to," said Jack Anderson, global innovation service program manager at Chevron.

The basic framework behind IT-CMF was developed in 2000 by Martin Curley, global director of IT innovation at Intel Corp., in Santa Clara, Calif., and author of Managing Information Technology for Business Value, when Intel IT was charged with aligning IT's lagging management with accelerating IT projects. IVI was founded in 2006 by Intel, The Boston Consulting Group and the National University of Ireland, Maynooth, where Curley has taught.

"What we found was that Intel's CIOs [in charge of different divisions] were trying to make it on their own, and the goal was to develop a design pattern so they could take a generally reusable management solution and customize it for their own environment," Curley said.

At its core, IT-CMF consists of a rating system called the five levels of maturity that helps IT organizations baseline their capabilities for a given IT process against those of other enterprises. Almost 1,000 enterprises have participated in IT process assessments using the framework. CIOs can conduct a basic self-assessment online, or bring in IVI members who are more advanced in a given process area to review their processes for them.

For example, Chevron's Anderson conducted the maturity assessment of fellow member Merck Research Laboratories' innovation management process.

"The value of IVI is, you get to share practices between companies, which to me is very, very interesting," Anderson said. One IVI concept is that enterprises eventually will become "extraprises" that serve shared customers and companies therefore should begin developing consistent IT practices.

In all, IT-CMF evaluates 36 processes that are divided into four management areas:

  • Managing the IT budget to deliver better performance and value
  • Managing the IT capability in core process areas
  • Managing IT for business value by tying IT investments to business benefits
  • Managing IT like a business by focusing on end users and services versus technology

The processes are evaluated by a technical review committee that gathers data from all the IVI working groups, which are composed of members and IVI staff dedicated to such individual IT processes as enterprise architecture management, investment analysis and performance, and IT leadership and governance.

At Merck, an IVI assessment of the IT innovation management processes inside the Merck Research Laboratories (MRL) division, which has an $8 billion budget, led to an immediate $850,000 in savings for one project alone, a rollout of tablet PCs to clinicians. The assessment gave IT the ability to put a number on the value of IT in terms of reducing the waste of lab resources and time.

"That [$850,000] was a savings realized in a 20-member group, but [the tablet PCs] have since been adopted as a Merck standard for all our [1,500] researchers, so we expect significantly higher savings for the business," said Mike Bevil, manager of IT innovation for MRL.

Where IT-CMF needs to mature

BP's 250-person enterprise architecture group was called on to help shape the best practices for IT-CMF's enterprise architecture management process and assessment tool. The opportunity to shape the direction of a new framework, as well as IT-CMF's focus on IT's value to the business and its broader coverage of IT functions compared to other frameworks, drew BP in as a member, said Vincenzo Marchese, group enterprise architect for BP.

The value of IVI is, you get to share practices between companies.

Jack Anderson, global innovation service program manager, Chevron

The framework is still in its infancy in some ways, however. Marchese believes that the 36 processes could use some pruning; he does not consider 15 of them to be critical, but did not specify which ones. The framework needs to have a little more focus on people as well. "Process is only part of an IT function, it also involves people and tools to be successful," he said. And the IT management framework is a bit cookie-cutter, he added.

That's a problem not lost on George Spalding, executive vice president with IT management consulting firm Pink Elephant, in Rolling Meadows, Ill. "If you're developing an IT maturity benchmark, I don't see how it could be effective for all IT shops unless it is done by industry; and even then, you'd have disagreements in what the benchmarks should be," he said.

If IT-CMF can provide prescriptive guidance, however -- which IVI and its members are doing through case studies, assessment tools, member cross-evaluations and university classes in the U.S. and Europe -- then IVI just might fill such gaps in other frameworks, Spalding said.

Let us know what you think about the story; email Christina Torode, News Director.

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