As soon as she walked into the meeting, Jane Smith knew that the executive on the other side of the desk wanted to buy something that Smith wasn’t supposed to sell: a trumped up rating for the executive’s software development division so that his company could qualify to bid on contracts from the United States Department of Defense.
Smith (not her real name) is one of a select group of experienced IT pros, called lead appraisers, who go into companies and assess the effectiveness of their software
development processes on a scale from 1 (utter chaos) to 5 (continuously improving) under a system known as the Capability Maturity Model, or CMM. The company she was visiting wanted to move up to Level 2, but based on some initial discussions, Smith knew that the company was a 1. Level 1 describes most of the software development organizations in the world: no standard methods for writing software, and little ability to predict costs or delivery times. Project management consists mostly of ordering more pizza after midnight.
After a few initial niceties, the executive leaned across the table to Smith and another lead appraiser who had accompanied her to the meeting and asked, "How much for a Level 2?"
"That’s when I got up and left the room," Smith recalls. "The other appraiser stayed. And the company got its rating."
The stakes for a good CMM assessment have gotten only higher since Smith’s close encounter with corruption some 10 years ago. Today, many U.S. government agencies in addition to the DoD insist that companies that bid for their business obtain at least a CMM Level 3 assessment?meaning the development organization has a codified, repeatable process for an entire division or company. CIOs increasingly use CMM assessments to whittle down the lists of dozens of unfamiliar offshore service providers?especially in India?wanting their business. For CIOs, the magic number is 5, and software development and services companies that don’t have it risk losing billions of dollars worth of business from American and European corporations.
"Level 5 was once a differentiator, but now it is a condition of getting into the game," says Dennis Callahan, senior vice president and CIO of Guardian Life Insurance. "Having said that, there are some Level 3 or 4 startups that we might consider, but they have a lot more convincing to do before I would do business with them. They would be at a disadvantage."
With CIOs increasingly dependent on outside service providers to help with software projects, some have come to view CMM (and its new, more comprehensive successor, CMM Integration, or CMMI) as the USDA seal of approval for software providers. Yet CIOs who buy the services of a provider claiming that seal without doing their own due diligence could be making a multimillion-dollar, career-threatening mistake.
That’s because software providers routinely exaggerate their assessments, leading CIOs to believe that the entire company has been assessed at a certain level when only a small slice of the company was examined. And once providers have been assessed at a certain level, there is no requirement that they test themselves ever again?even if they change dramatically or grow much bigger than they were when they were first assessed. They can continue to claim their CMM level forever.
Worse, some simply lie and say they have a CMM assessment when they don’t. And appraisers say they occasionally hear about colleagues who have had their licenses revoked because of poor performance or outright cheating in making assessments.
Yet CIOs who want to check up on CMM rating claims are out of luck. There is no organization that verifies such claims. Furthermore, the Software Engineering Institute (SEI), which developed CMM and is principally funded by the DoD, will not release any information about companies that have been assessed, even though appraisers are required to file records of their final assessments with the institute.
As American and European companies stampede offshore to find companies to do their development work, they first need to understand what CMM ratings really mean. Yet few CIOs bother to ask crucial questions, say IT industry analysts and the service providers themselves. "Not even 10 percent of customers ask for the proof of our CMM," says V. Srinivisan, managing director and CEO of ICICI Infotech, an Indian software services provider that claims a Level 5 certification. "They inevitably take it for granted, and they don’t ask for the details."
CIOs who don’t ask for the details will not be able to distinguish between companies that are using CMM in the spirit it was intended?as a powerful, complex model for continuous internal improvement?and those that are simply going through the motions to qualify for business. Buying by the CMM number alone could mire CIOs in the same problems that caused them to look offshore in the first place: high costs, poor quality and shattered project timetables?not to mention the loss of thousands of U.S. IT jobs.
"When you talk about something simple like a number and lots of money is involved, someone’s going to cheat," says Watts Humphrey, the man who led the development of CMM and is currently a fellow at the SEI. "If CIOs don’t know enough to ask the right questions, they will get hornswoggled." (For a list of the best questions to ask, see "Twelve Critical Questions," Page 52.)
Where CMM Comes From
The CMM was a direct response to the Air Force’s frustration with its software buying process in the 1980s. The Air Force and other DoD divisions had begun farming out increasing amounts of development work and had trouble figuring out which companies to pick. Carnegie Mellon University in Pittsburgh won a bid to create an organization, the SEI, to improve the vendor vetting process. It hired Humphrey, IBM’s former software development chief, to participate in this effort in 1986.
Humphrey decided immediately that the Air Force was chasing the wrong problem. "We were focused on identifying competent people, but we saw that all the projects [the Air Force] had were in trouble?it didn’t matter who they had doing the work," he recalls. "So we said let’s focus on improving the work rather than just the proposals."
The first version of CMM in 1987 was a questionnaire designed to identify good software practices within the companies doing the bidding. But the questionnaire format meant that companies didn’t have to be good at anything besides filling out forms. "It was easy to cram for the test," says Jesse Martak, former head of a development group for the defense contracting arm of Westinghouse, which is now owned by Northrop Grumman. "We knew how to work the system."
So the SEI refined it in 1991 to become a detailed model of software development best practices and added a group of lead appraisers, trained and authorized by the SEI, to go in and verify that companies were actually doing what they said they were doing. The lead appraisers head up a team of people from inside the company being assessed (usually three to seven, depending on the size of the company). Together, they look for proof that the company is implementing the policies and procedures of CMM across a "representative" subset (usually 10 percent to 30 percent) of the company’s software projects. The team also conducts a series of confidential interviews with project managers and developers?usually during the course of one to three weeks and, again, depending on the size of the organization?to verify what’s really happening. It’s a tough assignment for the internal people on the team because they are being asked to tattletale on their colleagues.
"It can be very stressful for the [internal] assessment team," says a lead appraiser who asked to remain anonymous. "They have conflicting objectives. They need to be objective, but the organization wants to be assessed at a certain level."
David Constant, a lead appraiser and partner with Process Inc., a software projects consultancy, recalls assessing a company where all the developers had been coached by management on what to say. "I had to stop the interviews and demand to see people on an ad hoc basis, telling the company who I wanted to speak to just before each interview began," Constant recalls. "And the sad part was that they didn’t need to coach anybody. They would have easily gotten the level they were looking for anyway?they were very good."
The new model is much tougher to exploit than the original questionnaire. In 1991, Westinghouse’s Martak recalls telling his management: "This is a different ball game now. If you have a good lead appraiser, you can’t fake it out." Martak led his group to a Level 4 assessment and eventually became a lead appraiser himself.
The depth and wisdom of the CMM itself is unquestioned by experts on software development. If companies truly adopt it and move up the ladder of levels, they will get better at serving their customers over time, according to anecdotal evidence. But a high CMM level is not a guarantee of quality or performance?only process. It means that the company has created processes for monitoring and managing software development that companies lower on the CMM scale do not have. But it does not necessarily mean those companies are using the processes well.
"Having a higher maturity level significantly reduces the risk over hiring a [company with a lower level], but it does not guarantee anything," says Jay Douglass, director of business development at the SEI. "You can be a Level 5 organization that produces software that might be garbage."
That assessment is borne out by a recent survey of 89 different software applications by Reasoning, an automated software inspection company, which on average found no difference in the number of code defects in software from companies that identified themselves on one of the CMM levels and those that did not. In fact, the study found that Level 5 companies on average had higher defect rates than anyone else. But Reasoning did see a difference when it sent the code back to the developers for repairs and then tested it again. The second time around, the code from CMM companies improved, while the code from the non-CMM companies showed no improvement.
Truth in Advertising
Stories about false claims abound. Ron Radice, a longtime lead appraiser and former official with the SEI, worked with a Chicago company that was duped in 2003 by an offshore service provider that falsely claimed to have a CMM rating. "They said they were Level 4, but in fact they had never been assessed," says Radice, who declined to name the guilty provider.
When done correctly, CMM is a costly, time-consuming effort. The average time for a company to move from Level 1 to Level 5 is seven years, and the expense of building a really robust, repeatable software development process with project and metric tracking is many times the cost of a CMM assessment (which alone costs about $100,000). For small companies short on funds and staff, or startups, forgoing business while building a software process capable of receiving a Level 5 assessment may seem more risky than fudging a number?especially when your customers don’t know enough to ask about it. And mature companies that already have a high CMM level may not want to risk the disruption, cost and potential disappointment of getting assessed again regularly.
Officials at the SEI deny that companies are exaggerating or lying about their CMM claims.
"There is no one who will declare ’We are CMM Level 3 as an organization,’" says the SEI’s Douglass. "They’ll say they are Level 3 in this development center or that product group."
Not true. A quick Nexis search revealed four companies?Cognizant, Patni, Satyam and Zensar?claiming "enterprise CMM 5," with no explanation of where the assessments were conducted or how many projects were assessed, or by whom. Dozens more companies trumpet their CMM levels with little or no explanation.
Indeed, all of the services companies we interviewed for this story claimed that their CMM assessments applied across the company when in fact only 10 percent to 30 percent of their projects were assessed. That’s partly because experts say that assessing every project at a big company would be too unwieldy and expensive.
Yet few of those same experts support the idea that assessing a 10 percent slice of projects?even those considered to be representative of all the different types of work a company does?should lead to claims of "enterprisewide CMM." Vendors argue that there is logic behind these claims. The higher CMM levels (3 and above) require that a company have a centralized process for software development and project tracking, among other things. Since everyone across the company is supposed to use that same process that was used in the projects that were assessed at Level 5, for example, all projects across the company can be assumed to be at Level 5.
But as soon as you dig beneath the surface, the logic falls apart. The process may have changed completely since the assessment was performed. Indeed, Indian services companies in particular, where the most CMM Level 5 assessments have been reported, are growing so quickly?some adding as many as 50 to 60 new developers a week?that avoiding change is nearly impossible. The company also may have changed the types of work it does and perhaps acquired other companies along the way that were not assessed at any level. And if the company does not have an excellent training program for all its project managers and developers?so they can work at the same level as those in the projects that were assessed?the assessment means little.
CMM is a "snapshot in time," says the SEI, and it encompasses only the projects that were assessed. Furthermore, if the snapshot was taken more than two years ago, most experts say, it will have yellowed so badly that the company is probably no longer at the same maturity level.
Now that CMM has become table stakes for billions worth of business, some believe that providers should bite the bullet and get all their projects assessed if they are going to claim "enterprise Level 5 CMM."
"If I were a CIO and a company was telling me their entire company was CMM 5, I’d want all the people on my project to have gone through the assessment," says Margo Visitacion, a Forrester Research analyst and former quality assurance manager at a software development company. "[The service providers] are getting millions in business from their CMM levels. Why shouldn’t they have all of their developers go through an assessment?"
How Much for That Certification?
Appraisers continue to cheat too, according to their colleagues. The pressure on appraisers, in fact, is higher than ever today, especially with offshore providers competing in the outsourcing market. Frank Koch, a lead appraiser with Process Strategies Inc., another software services consultancy, says some Chinese consulting companies he dealt with promised a certain CMM level to clients and then expected him to give it to them. "We don’t do work for certain [consultancies in China] because their motives are a whole lot less than wholesome," he says. "They’d say we’re sure [certain clients] are a Level 2 or 3 and that’s unreasonable, to say nothing of unethical. The term is called selling a rating."
Will Hayes, quality manager for the SEI Appraisal Program, would only acknowledge one recent case of an appraiser who had his license revoked by the SEI for improperly awarding a company a Level 4 assessment. However, it’s difficult for the SEI to know exactly how much cheating is going on because it does not monitor the claims that companies make about CMM.
"Are there organizations out there claiming Level 5 who have never submitted the information to the SEI? I’m sure that there are," says SEI’s Douglass. That’s little comfort to CIOs who would rather not discover a false CMM claim the hard way?by seeing their projects fail.
There is a way to prove whether the assessment was done, but it may be hard for CIOs to get the evidence. Appraisers are required to submit formal documentation of all their assessments to the SEI and to customers. Lead appraisers must write up something called a Final Findings Report that includes "areas for improvement" if the appraiser finds any (they usually do, even with Level 5 companies). But there is no requirement for the content or format in the reports to be consistent across appraisers or companies. Only the methods for arriving at the final number are consistent. According to one appraiser who asked not to be named, companies will often ask appraisers to "roll up" the detailed findings into shallow PowerPoint presentations that don’t give a very good picture of the company and its software development processes. "The purpose of the report is to tell companies where they need to improve?that’s the whole point of CMM," she says. "But they make us write these fluffernutters that can gloss over important details."
The Final Findings Report is what company officials present internally to the big brass and to customers knowledgeable enough to ask for it. But there’s no obligation to do it. They can declare their CMM level without producing any evidence. They can even hire their own lead appraisers inside the company and assess their CMM capabilities themselves. They don’t have to hire a lead appraiser from the outside who might be under less pressure to give a good assessment. And they can characterize their CMM level any way they want in their marketing materials and press releases.
SEI officials say they are not in the business of controlling what companies say about their assessments. Nor will they reveal to the public which companies have been assessed or what the assessments consisted of. "We weren’t chartered to be policemen?we’re a research and development group," Hayes says.
Instead, the SEI exerts control through the relatively small lead appraiser community (approximately 220 are authorized to do CMM assessments). From the beginning, the SEI has reserved the right to discipline or even remove appraisers who cheat or do their jobs badly. But in the early days, the SEI rarely followed through on those threats, say longtime appraisers.
More recently, the SEI toughened up the CMM itself and plans to completely replace it (as of December 2005) with a broader, more in-depth model called CMMI. In the process, it has increased the training requirements and controls on appraisers. According to Hayes, under CMMI, the SEI reviews each appraisal that comes in for irregularities. And under CMMI, appraisers have to file a report called an Appraisal Disclosure Statement that clearly states which parts of the organization and projects were assessed, as well as all the people who took part in the assessment (though assessed companies are not required to reveal that report publicly, either). The SEI, along with the lead appraiser community, is also developing a "code of ethics" for appraisers.
Yet if CIOs want to get the true picture about appraisers, to check if they’ve ever been reprimanded for performing faulty assessments or thrown out altogether for cheating, they are out of luck. The SEI will not reveal any information about errant appraisers.
And the SEI has no intention of becoming a governing body like the American National Standards Institute (ANSI), which controls ISO 9000 certification in the United States. ANSI requires companies to be reassessed every six months if they want to maintain their ISO 9000 certification and reassesses all its appraisers each year. "No one has asked us to become a governing body, and that’s not our mandate. And if we did, what would that solve?" the SEI’s Humphrey asks. "It wouldn’t excuse anyone from doing their homework."
Indeed, CIOs who look to CMM for guarantees won’t find them, says Rick Harris, director of application development for OnStar, a division of GM that provides communications inside the company’s vehicles. He recalls confronting a manager from one of his CMM Level 5 offshore outsourcing companies who did not know how to do a testing plan for software. "My people had to train him to do it," he says. On another occasion, Harris’s staff discovered that the offshore provider had fallen far behind schedule in one of its projects but had not told him. "You’d think a Level 5 company would have told me months before that the schedule was slipping and we needed to do something," he says.
Problems like those can damage CIOs’ credibility inside IT and with the business?especially if they used a CMM level to defend a decision to move development offshore or use a particular outfit. As Harris has learned, what matters is what’s behind the impressive-looking number. Is there a verifiable commitment to quality, process and training? Can companies demonstrate improvements they’ve made over time in customer delivery times, developer productivity and defect density? Will the project managers that went through the assessment be assigned to your project? If the answer to any of these questions is no, then a CMM Level 5 isn’t worth much.
There is still no substitute for deep due diligence. "The real test is when you get into the trenches and see whether these companies bring their capabilities to bear," says Harris. "Do their people and processes hold up under pressure? In my experience, in some cases they have and others they haven’t."