Developing IT Capabilities

Chapter 15

15-1© 2009 Pearson Education, Inc.  Publishing as Prentice Hall

© 2009 Pearson Education, Inc.  Publishing as Prentice Hall

Developing IT capabilities

IT Executives realize that they may not have standard, verifiable & high performing capabilities across IT dept.

With competitive advantage it’s necessary for a business to revamp the IT capabilities by:

Reducing IT costsGain efficienciesImprove QOS

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5 step IT Capability Management Terminology

Capability – ability to marshal resources to affect a predetermined outcome. (Portfolio Management)

Competency – the degree of proficiency (talent, skill) in marshalling resources to affect a predetermined outcome.

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IT Capability Management Terminology Continued

Processes – well-defined activities within capabilities. (PM-BOK 9 processes)

Procedures and Methods – How-to or step-by-step instructions for implementing a process. (Technical Report)

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Three Enduring Challenges of IT (Feeny and Wilcox, 1998)

Uniting Business and IT Vision

Delivering IT Services

Designing and IT Architecture

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9 IT Capabilities needed to meet the Enduring Challenges

Leadership

Business system thinking (Envisioning)

Relationship thinking (Business engaged with IT)

Architecture planning(Blueprint)

Making technology work(Progressing Rapidly)

Informal buying (procurement)

Contract facilitation(Ensuring success)

Contract monitoring protection

Vendor development(Value added from suppliers)

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Converting IT Capabilities into Organizational Value – a reality

Strategies are needed to build IT Capabilities.

IT Capabilities must be identified, developed, and managed.

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Framework for Developing Key IT Capabilities

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Figure 15.1

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Step 1: Create a Capability Management Office

Create a set of activities, structures policies, and governance principles to advance development of a companies IT capabilities.

The Capability Management Office should be the focal point for capability development and management.

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CMO Management Activities

Define and assign responsibility for all capabilities.

Develop strategies for the development of these capabilities.

Ensure that adequate resources and funding are provided to develop them.

Secure software support for these activities.

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CMO Management Activities Continued

Adopt a continuous capability improvement approach.

Develop organizational training plans.

Report the status of organizational capability performance.

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Step 2: Identify Essential Capabilities Aligned with Business Goals

Capabilities should not be aligned to current business practices only. (Customization)

Identifying capabilities is an introspective analysis of key activities that IT must execute effectively.

Capabilities should be described in business terms. (see page 210)

(i.e. not so much off – level of service, fail-soft mechanism, solution delivery or help-desk provisioning)

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IT Capability Wheel

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Figure 15.2

Firm C where the company feared high IT competence with low business competence

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Step 3: Subdivide IT Capabilities into Key Processes

The result of this step should be sets of well-defined activities that can be measured and managed.

Consider an outside-in approach to capabilities management

(such as Six Sigma, ISO, CMM (Capability maturity model), or CobiT (Control Objective for Information related technology))

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Competencies and Processes

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Table 15.1 Firm B – Generic to business or IT

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Step 4: Assess the Maturity Level of IT Capabilities (CMM)

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Level 1 (initial): Software development follows few rules. The project may go from one crisis to the next.

(depends on skills of software developers)

Level 2 (repeatable): Software development processes are repeatable. Some basic project management used to track schedule and cost.

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Step 4: Assess the Maturity Level of IT Capabilities (CMM) Continued

Level 3 (defined): Software development across the organization uses the same rules and events for project management. Same processes used even under schedule pressure.

Level 4 (managed): Software development controlled using precise measures

(Adjustments of processes to projects are possibly made without a loss in quality)

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Step 4: Assess the Maturity Level of IT Capabilities (CMM) Continued

Level 5 (optimizing): Quantitative feedback from previous projects are used to improve project management.

Maturity levels must be effective in driving continuous improvement.

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Maturity (Assessment) level of one company

No Capability (No Observable value added)

Aware (Clear understanding of need)

Developing (Defined action planned and actively engaged)

Practicing (Demonstrating and achieving value

Optimizing ( Measuring results and measuring continual improvement)

Leading (Recognized proficiency and consistent value contribution)

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IT Capability Progress and Performance Chart

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Table 15.2

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Step 5: Link IT Skills to IT Capabilities

Skills such as:(1) business(2) technical(3) interpersonal (Feeny and Willcocks, 1998)

are mapped to IT capabilities.

Mapping is used by companies to identify the levels for each role that is needed.

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Conclusion

Improvement of IT capabilities and processes will result in enhanced IT investment benefits.

When IT departments identify and develop those capabilities and processes that are vital to the business to advance maturity levels, then the rewards may be dramatic.

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