1. IT Mark and CMMI Integrated quality models for software companies economic aspects
George Sharkov Director
European Software Institute - Center Bulgaria
For internal educational use only! All data copyrighted by ESI, SEI, ESI Center BG, or respective sources as indicated

2. Presentation content ESI Center Bulgaria Profile
IT Mark - the approach for increased competitiveness of SMEs
Short profile of the CMMI related activities under the framework of RCI/USAID
Conclusions

3. ESI & ESICenters Alliance
ESI Center Bulgaria
2003 – PPP: State Agency ICT, BASSCOM, ESI
CMMI, BITS. ITMark, ITcard
ESI (Bilbao, Spain)
Established 1993, by EC & Basque Govt.
ESI Bilbao, Spain
ESI Center Bulgaria Sofia
ESI Center Tec de Monterrey Guadalajara, Mexico
ESI Center SSEAC Shanghai, China
ESI Center UNISINOS Rio Grande do Sul, Brasil
ESI Center Victoria, Australia

4. ESI Center Bulgaria - a successful PPP
ESI Center Bulgaria (established 2003) Recognition for regional capability and Solution for industry maturity and competitiveness in Eastern Europe
COMPETE BY EXCELLENCE !
Founders
Nter
Partners
State Agency on IT and Communications
United Nations Development Program

5. Compete by excellence – what is escellence?
Corporate Excellence is a feature of an organizational entity that manifests how incomparably excellent it is when assessed adhering to success criteria (ISO, CMMI, 6 Sigma etc.); excellence refers always to excellent performance concerning the best methodologies in the world and it manifests in official certification according to them.

6. Corporate excellence PERSPECTIVES
Corporate excellence is a balanced model. Kaplan and Norton structured it in four perspectives:
Customers perspective
Financial perspective
Processes perspective
Learning perspective

7. Corporate excellence – FINANCIAL
The RESULT produced by the corporate excellence is high profitability
The major goal of the companies is to produce profit for their shareholders rather than have the “ideal company”
Corporate excellence is a tool for sustainable financial results
The key social impacts of corporate excellence are higher employment and increased fiscal stability

8. Corporate excellence – CUSTOMERS
The corporate excellence is CERTIFIED by the customers
Understanding, predicting and managing the customers expectations are critical:
low cost <-> creativity and efficiency
coding <-> complex solution
outsourcing <-> partnership with the clients
competition <-> “coopetition”
The right moment to position the region by
unique long-term competitive advantages – talent, innovation, quality!

9. Corporate excellence – INTERNAL
The corporate excellence is BASED on good internal processes
PROCESS
Heroic
effort
Mature
software
business
TYPICAL!
Unprecedented
system
PRODUCT
Bad
Good
“The quality of a product is largely determined by the quality of the process that is used to develop and maintain it.”
Based on TQM principles as taught by Shewhart, Juran, Deming and Humphrey.

10. Cost of Nonconformance
Cost of Quality (CoQ)
Crosby describes Cost of Nonconformance as the extra cost incurred because a product or service wasn’t done right the first time.
Cost Categories
Internal Failures
+ External Failures
Cost of Nonconformance
Cost of Conformance +
Prevention
+ Appraisal =
Cost of Quality

11. CMMI maturity levels – the standard5
Focus on process improvement
Optimizing
Measurably increased process capabilities
Quantitatively Managed 4
Process measured and controlled
Use of statistical and other quantitative techniques in managing the processes and results
Defined 3
Process characterized for the organization and is proactive
Commonality among projects allows more uniform estimation of performance.
Managed 2
Process characterized for projects and is often reactive
Requirements flow in.
Plans are developed in accordance with policies.
Activities are performed in accordance with plans.
Measurements and reviews occur at defined points.
The product flows out and (usually) works 1
Performed
Process unpredictable, poorly controlled and
reactive
Requirements flow in.
A product is (sometimes) produced by some amorphous process.
The product flows out and (we hope) works.
Source: Mike Phillips, CMMI V1.1 and Appraisal Tutorial

12. How widely are CMMs used?
SW-CMM
CMMI
The red areas are countries where at least a CBAIPI has been performed
The table lists those countries where a SCAMPI has been performed
Note: CBAIPI is the SW-CMM equivalent of a CMMI SCAMPI eg a formal assessment.
*** THIS SLIDE SHOULD BE UPDATED REGULARLY FROM THE SEI WEB SITE ***
Source: SEI, Process Maturity Profiles for SW.CMM and CMMI, March 2006

13. What Types of Organisations use the CMMs?
SW-CMM
CMMI
Percentages of assessments conducted split by type of organisation
*** THIS SLIDE SHOULD BE UPDATED REGULARLY FROM THE SEI WEB SITE ***
Source: SEI, Process Maturity Profiles for SW.CMM and CMMI, March 2006

14. Time to move up
Average time to move from Level 1 to Level 2 is 22 months
75% of companies took between 16 and 40 months to move from Level 1 to Level 2
*** THIS SLIDE SHOULD BE UPDATED REGULARLY FROM THE SEI WEB SITE ***
Source: SEI, Process Maturity Profiles for SW.CMM and CMMI, March 2005

16. Corporate excellence for SMEs
How to support local organizations, vast majority of which are SMEs, to achieve corporate excellence?

17. Compete by excellence
Balanced IT Scorecard
“TRANSLATES” CORPORATE STRATEGY
INTO ACTIONS
ESI Center Bulgaria is a partner of those who model and improve integrated processes, strategic management, software engineering and quality management.
“We work with software development and IT companies, high-tech enabled manufacturing and telecommunications, banks, financial and insurance institutions, defense and security, public administration.”
Capability Maturity Model Integration
CUSTOMIZED APPROACH IN CONSULTING AND APPRAISALS
Information Technology Mark
QUALITY SEAL FOR SMALL&MEDIUM ENTERPRISES

18. ITMark characteristics
Inexpensive, quick and cost effective
In addition to the Software & Systems processes the program includes appraisals of Business Management and Information Security Management, ignored by other models
Based on world recognised models, utilizing solid and proven appraisal methodologies, which are repeatable, reliable and useful for benchmarking
A good mechanism to proceed, if desired, step by step towards the complete certification in accordance with the best available standards and models

19. Benefits
Improve business performance (Technical, Security, Management)
Gain market recognition for IT Capability
Foster a culture of Continuous Improvement
Enhanced awareness of one’s own IT development capability, identification of strengths and weaknesses, as well as improvement opportunities
An improvement roadmap through the successive grades of Maturity and its compatibility and complement to other existing models

20. Challenges for SMEs excellence
I.T. SMEs feel that
SMEs use the existing models, but only if required by their customers
An SME-sized model should help them
Improve their software processes
Improve also very important business processes and marketing
Get into the Quality movement
Recognition of excellence
Models for corporate excellence are too “heavy”
Only big corporations can afford the huge investments …

21. ITMark Structure Security SPI Business Financial P-tive
Typical customer
Large-E
2-3 weeks, 2 assessors
Level 3 Class B
SME
102
Doc. Review
7-8 days, 2 assessors (L2)
Level 2 Class B
Level 2
Class C (SAL3)
Micro & Small
3 days, 1 assessor
InfoSec Snapshot
102
Interview
Security
SPI
Business
Financial P-tive
Customer P-tive
Internal P-tive
Learning P-tive

22. ITMark Composition 5 steps to go Awareness session
Business processes appraisal – 10square model
Information Security Management appraisal – ISO 17799
Software & Systems Processes appraisal – CMMI (Class C & B) assessment
Presentation of results and opportunities
for improvement
Prerequisites
In-company course (6 hours)
Recommended: Qualified people

23. What is innovative?
Aimed at Micro and SMEs, yet scalable to large enterprises
Integrated assessment for
Business Management,
Information Security Management
Software and System Processes
Cost-effective, quick and affordable, still based on well-known and recognized standard models
Tangible milestone on the roadmap to maturity
Adopted by donor and business-support programs (GTZ, USAID, EBRD/BAS)
Objectively measures SMEs IT/SW industry maturity – basis for industry competitiveness support programs
Market recognition – pilot implementations in:
West Europe - Spain, France
Bulgaria, Romania, Macedonia
ESI Alliance – Brazil, Mexico, Australia

24. COMPANY XXX Acknowledgement of Successful Achievement
This is to acknowledge that
COMPANY XXX
for the software development and services
Was appraised in full accordance with the requirements of the I.T. Mark Appraisal Method
The organisation has achieved I.T. Mark
The SAM PA was deemed as Not applicable and thus not included in the scope of the assessment
Assessment ID: ITM06006 Appraisal Date:
Inigo Garo I.T. Mark Appraiser No LA01
I.T. Mark is a Trademark of the European Software Institute.
®CMMI is registered in the U.S. Patent and Trademark Office of the Carnegie Mellon University.
Appraisal based on the CMMI® model, 10-Squared® model and ISO/IEC standard.
List of Certified Organisations at

25. RCI/USAID on IT Project concepts
Development of the base for ICT cooperation through quality
Goal 1
Creation of CMMI implementation capacity in the region
Goal 3
Building awareness and initial training on CMMI
Goal 2
project infrastructure initial analysis
CMMI/ITMArk implementation in the region
Goal 4
implementation capacity
leadership and decision-makers’ commitment
leadership and decision-makers’ commitment
INCREASED REGIONAL COMPETITIVENESS

26. Direct results
G1 Development of the base for ICT cooperation through quality
Field visits in 6 countries: Armenia, Bosnia and Herzegovina, Macedonia, Serbia and Montenegro, Ukraine and Romania catalyzed the software process improvement thinking among the local ICT companies.
G2 Building awareness and initial training on CMMI
4 one-day “CMMI for Senior Managers” workshops were organized In the courses participated 78 high-level decision-makers. 83% of participants declared that they will apply the CMMI methodology in their work. In addition, company managers expressed deep interest in the ITMark methodology, which is oriented towards the specifics of CMMI implementation in small enterprises.

27. Direct results G4 CMMI/ITMArk implementation in the region
10 companies, in cooperation with the ICT Associations and ESI Center Bulgaria, have launched simultaneous ITMark implementation programs in order to be able to cooperate during the implementation and certification phases and to position the regional ICT sectors as a mature industry. They have already gain benefits from this program, both on company and on national/regional level.
6 companies have launched ambitious programs aimed at official CMMI certification key message is to position the SEE as a region with mature IT industry.

28. General statistics – Implementation Phase G4
More than 116 people from 16 companies took part in practical workshops and appraisals

29. Results conclusion
CMMI encourages organizations to address the full product development life cycle, independent of whether the product is a software system, an automatic teller, a mobile phone etc.
CMMI-based process improvement can provide three primary quantitative classes of benefits for IT SME:
Cost: the cost to find and fix a defect is reduced, average costs for software development is improved;
Schedule: the percentage of milestones met and predictability in meeting schedules are increased;.
Return on Investment: positive returns on investment from CMMI-based process improvement.
Awareness training and implementation processes have created a large regional ICT Community of Practice and a widespread regional cooperation of many ICT stakeholders.

30. Performance Improvements over Time by Category
Performance Category
Median Improvement
Cost
34%
Schedule
50%
Productivity
61%
Quality
48%
Customer Satisfaction
14%
Return on Investment
4.0 : 1
Source: SEI, Performance Results of CMMI®-Based Process Improvement, 2006

31. Cost performance improvements
Costs dropped 52 percent from a baseline prior to SW-CMM maturity level 2 as the organization moved toward CMMI maturity level 3
Cost Savings at DB Systems GmbH
Source: SEI, Performance Results of CMMI®-Based Process Improvement, 2006

32. Customer Satisfaction
Customer Satisfaction at Siemens
Source: SEI, Performance Results of CMMI®-Based Process Improvement, 2006

33. Product Quality Quality Improvement at Siemens
Source: SEI, Performance Results of CMMI®-Based Process Improvement, 2006

34. Account Productivity (FP/FTE)
Productivity Improvement at IBM Australia
Source: SEI, Performance Results of CMMI®-Based Process Improvement, 2006

35. Schedule Improvement Productivity Improvement at IBM Australia
Source: SEI, Performance Results of CMMI®-Based Process Improvement, 2006

36. Results Macro Level
Results oriented towards building of organizational capacity
Results oriented towards increased competitiveness of the ICT sector
ORGANIZATIONAL EXCELLENCE AND SUSTAINABILITY
ICT
LEADERSHIP
ORGANIZATIONAL CAPACITY BUILT
INCREASED COMPETITIVENESS
PROCESS IMPROVEMENT CAPACITY IN PLACE
ORGANIZATIONAL INFRASTRU- CTURE IN PLACE

37. Regional brand:
Recognizing the value to the Balkans and Eastern European region in developing a global brand for leadership in ICT, the parties to this MOU hereby agree to work together to advance their shared interest in promoting ICT-enabled excellence, innovation, and jobs and investment growth.
MoU in preparation since March 2006

38. Balkans & Eastern Europe Modern Software and IT Hub
Capability Capacity >50,000 developers
Companies/references
Market presence
FDIs in ICT
Maturity Quality (ISO, CMMI, ITMark)
Innovations
Collaboration
Techno parks
Business COOPETITION !!!
BALKAN-WARE
But…
“B-WARE” !!!

39. Who-does-What: Identifying champions for each pillar/country
Initiated by ICT associations – Romania, Bulgaria, FYROM, Greece, Turkey, Serbia …
Engaging International support – USAID, GTZ, EBRD, UNDP …
Forming the Workgroup (ESI) to establish priorities & plan; identify the brand?
Promoting Exemplary Projects for
Linking cities, techno and business centers - ???
Involving Universities - ???
Challenging Governments & States to improve business climates and accelerate eGov - ???
Promoting Opportunities to Investors???
Management and business culture and practices???
Synchronize governmental programs? EU accession?

40. Q&A Sample roadmap to success George Sharkov gesha@esicenter.bg