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

2. 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.

3. 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.

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

5. 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

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

7. Framework for Developing Key IT Capabilities
Figure 17.1

8. 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.

9. 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.

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

11. 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.

12. 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

13. IT Capability Wheel
Figure 17.2

14. Competencies and Processes
Table 17.1

15. 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.

16. 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.

17. 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.

18. IT Capability Progress and Performance Chart
Table 17.2

19. 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.

20. 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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