For far too long, IT organisations have organised themselves around technology platforms, with discrete groups managing different levels of the technology stack, such as networks, servers, databases, applications, and desktop devices.
Budgeting, planning, and reporting to the business have often followed a similar platform-oriented structure. Even worse is the fact that more than three-quarters of IT organisations do not even have a consistent process for measuring the value of IT investments.
Business capability maps provide CIOs with a framework for capturing key characteristics of a firm’s business model and core functions — the business capabilities — which can then be used to assess business needs, understand IT costs, and align investments with strategic priorities. Collected together, the “capability map” of the organisation documents all the capabilities and their relationships that are part of the business operating model and value chain see Figure 1 below.
Capability maps reframe most CIO decisions to focus on business impact
The business functions described in the capability map provide the organising framework for a wide range of decisions and communications. The capability map and the ability to relate IT to the business through the business’ view of itself allow the CIO to:
1. Clarify priorities and uncover common interests. Organising the discussion around an enterprise wide view enables the identification of the key business capabilities and their relative maturities. Discuss each capability in terms of: 1) how core or differentiating it is for business; 2) its relationship to established strategies; 3) current-state gaps; and 4) how dynamic each capability is expected to be over the near and long term.
2. Improve the technology investment process. Because capability maps describe the enterprise as a whole, they provide a way to categorize project proposals according to the capabilities they affect. This allows investment review boards to look simultaneously at all the proposed projects that affect a capability, which enables them to better determine which ones to advance versus which ones to shelve. Multiple systems and projects can be gathered into aportfolio, evaluated as to how well they support the capability, and managed in light of the business’ desire to change or mature the capability.
3. Connect business process and IT change initiatives. The success of large-scale business transformation efforts depends on numerous business and IT projects delivering the right functions at the right time. As projects grow in number and complexity, it becomes more difficult to ensure that each project is moving the organization closer to its goal and that all of the moving parts — the required people, process, and technology changes — remain in sync.
4. Link the “bill of IT” to the business model. Much as a “bill of materials” defines what components comprise a product, the “bill of IT” defines what systems are required to deliver a business process or function. Starting at the top — the capability map — allows IT to identify the key hardware, software, and IT services related to the delivery of each capability. Thus connected, IT can take part in meaningful discussion related to business-oriented functions.
5. Have a better-informed discussion on the right SLAs (service-level agreements). Business-relevant SLAs are more than the determination of the likely performance or uptime of a system at a given budget level. Properly done, service-level management starts with the prioritization of the business capabilities and the concurrent prioritization of the IT services and systems supporting them. Then, the relative business value of different service levels can be weighed against the respective costs to achieve those levels.
6. Meaningfully rationalize the application portfolio. Application rationalization decisions — choosing which applications to keep and which to retire — require more than just a list of applications. Applications either support a part of a business process, such as product design, or embody a whole business process, such as expense reporting. Decisions around which apps to retire and which to keep therefore have process implications that require the buy-in of affected business areas. In addition to the business process implications, an application’s viability — or the viability of all the applications that provide a business function — from a technology or support perspective is an IT concern. Thus, application portfolio rationalization decisions need to integrate a business process view with a systems view.
7. Educate project teams on business context. CIOs often struggle to demonstrate IT’s value to business units that habitually take IT services for granted. Business managers often have little insight into centralized IT’s role in managing the overall technology landscape and finding synergies across lines of business.
8. Guide innovation around business impacts. While the basic capability map for an individual company may not change very much over time, there can be significant change over time within each capability. CIOs can work with the business to define innovative future-state possibilities enabled by new technologies.
Capability maps provide the business-centric view of the organization relevant to the business consumers of IT’s goods and services. CIOs who are not yet embracing such a business-focused planning and communications model should socialize capability maps and their use among key business leaders and in order to accomplish this, IT must define capabilities in a way that resonates with business executives’ thought processes.
CIO’s should also shift the discussion from technical availability to support for the capabilities, and expose the capability map and the relevant decisions broadly within their IT organization. It is important for everyone to understand the “why” of the decisions being made, rather than just the “what” of those decisions. Deep exposure will help to maintain the business focus as projects and systems are being developed or implemented.
Chip Gliedman is VP and Principal Analyst at Forrester Research where he serves CIO professionals. Chip blogs at: http://blogs.forrester.com/chip_gliedman.