Developing IT Capabilities Chapter 17 Developing IT Capabilities © 2012 Pearson Education, Inc.  Publishing as Prentice Hall

IT Capability Management Terminology Capability – ability to marshal resources to affect a predetermined outcome. Competency – the degree of proficiency in marshalling resources to affect a predetermined outcome.

IT Capability Management Terminology Continued Processes – well-defined activities within capabilities. Procedures and Methods – How-to or step-by-step instructions for implementing a process.

Three Enduring Challenges of IT (Feeny and Wilcox, 1998) Uniting Business and IT Vision Delivering IT Services Designing and IT Architecture

IT Capabilities needed to meet the Enduring Challenges Leadership Business system thinking Relationship thinking Architecture planning Making technology work Informal buying Contract facilitation Contract monitoring Vendor development

Converting IT Capabilities into Organizational Value Strategies are needed to build IT Capabilities. IT Capabilities must be identified, developed, and managed.

Framework for Developing Key IT Capabilities Figure 17.1

Step 1: Create a Capability Management Office Create a set of activities, structures policies, and governance principles. The Capability Management Office should be the focal point for capability development and management.

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.

CMO Management Activities Continued Adopt a continuous capability improvement approach. Develop organizational training plans. Report the status of organizational capability performance.

Step 2: Identify Essential Capabilities Aligned with Business Goals Capabilities should not be aligned to current business practices only. Identifying capabilities is an introspective analysis of key activities that IT must execute effectively. Capabilities should be described in business terms.

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, or CobiT

IT Capability Wheel Figure 17.2

Competencies and Processes Table 17.1

Step 4: Assess the Maturity Level of IT Capabilities Level 1 (initial): Software development follows few rules. The project may go from one crisis to the next. Level 2 (repeatable): Software development processes are repeatable. Some basic project management used to track schedule and cost.

Step 4: Assess the Maturity Level of IT Capabilities 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 to projects are made without a loss in quality.

Step 4: Assess the Maturity Level of IT Capabilities Continued Level 5 (optimizing): Quantitative feedback from previous projects is used to improve project management. Maturity levels must be effective in driving continuous improvement.

IT Capability Progress and Performance Chart Table 17.2

Step 5: Link IT Skills to IT Capabilities Skills such as (1) business, (2) technical and (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.

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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