Using the Business-IT Maturity Model (part two)

This is the second of a three-part series of papers on a Business-IT Maturity Model (BIMM).

Figure 1 below is reproduced from Part 1 and depicts the basic three-level BIMM.

Characteristics of Level 1 Business-IT Maturity

At Level 1, business demand is focused on efficiency.  Level 1 demand typically originates independently in various business units and functions, operating as ‘silos’. Demand at this level is primarily about transaction automation (eg, replacing clerical activity with information systems) in pursuit of cost savings. The information appetite is for operational data – What did we produce or accomplish? How does that stack up against goals and past performance? Given that Level 1 demand tends to originate within business silos, the orientation and focus is generally limited to those silos (eg, sales, service, production, finance, human resources) and often bounded by specific geographies (eg, sales within a given country or region).

IT supply at Level 1 focuses on basic transaction processing (eg, order fulfilment, claims processing, payroll) and basic IT services (eg, desktop computing and helpdesk) plus any custom solutions or modifications to packaged software demanded by the business. The communications networks are typically ‘closed’ – limited to the corporation and specific connections with suppliers and customers. Because information systems are built and managed for functional silos, a lot of work goes into application and database interfaces that help connect ‘islands of automation’ and make useful operational information available. Most IT work is performed in-house, with the help of a few key hardware, software and services vendors. The IT goal is to provide stable, reliable computing operations and business support – sometimes unglamorously referred to as ‘keeping the lights on’.

Characteristics of Level 2 Business-IT Maturity

At Level 2, business demand evolves from a focus on business efficiency to effectiveness. It typically becomes more cross-functional than the siloed demand common to Level 1, since achieving business effectiveness often requires functional silos to work together with end-to-end processes (eg, order to cash). So Level 2 demand has more to do with business integration than simple functional performance. And integration extends beyond corporate boundaries, relying on information exchange and closer operating coordination with selected customers and suppliers. As such, the information appetite at Level 2 shifts from simply transactional data to management information – Who are our most profitable customers? Who are our most critical suppliers?

IT supply at Level 2 focuses on enterprise systems, such as ERP and CRM. At this level, services to enable and support the effective use of enterprise systems become important – capabilities such as Data Warehousing and Business Analytics. Communications networks tend to open up, with specific gateways to the Internet and more general inter-enterprise connections for electronic commerce. A key activity at Level 2 is building common infrastructure (hardware, software, databases and data warehouses, information management tools) thereby reducing redundancy, reliance on custom interfaces, and lowering IT cost. IT sourcing shifts to a more flexible and integrated approach, with a limited set of ‘strategic’ partners. Often, Level 2 sees ‘commodity’ IT services being outsourced. IT’s automation goals shift from basic transaction processes to business process improvement and reengineering. That means IT competencies shift in balance from technical to business process orientation, with business analysis and relationship management as important disciplines.

Characteristics of Level 3 Business-IT Maturity

At Level 3, business demand shifts in focus from effectiveness to innovation and growth. The appetite for information expands to include business and market intelligence, based on more extensive data and sophisticated analytics – What ‘share of wallet’ do we command among our most profitable customers? What customer segments offer the greatest potential for greater share? The business appetite for IT (though rarely articulated in these terms) is to enable agility. In order to connect with a fast-changing ecosystem, to innovate quickly and seize opportunities, a business must have all of its critical assets (talent, processes, technology and trading relationships) structured and managed as an easily reconfigurable portfolio of capabilities. That’s the architecture of business agility – one that IT has a crucial role in enabling.

At Level 3, IT supply is focused on strategic and technology-driven business capabilities – putting information and technology to use at the heart of the company’s value proposition and leveraging technology as the catalyst for marketplace differentiation. Communications networks are largely ‘open’ in order to flexibly connect with the larger ecosystem. The corporate infrastructure evolves to be a more agile platform, with standard interfaces and capabilities opened to business partners. IT services and capabilities are sourced wherever the best price/performance may be, sometimes halfway around the globe. Again, the emphasis is on flexibility (eg, Software as a Service, Platform as a Service, Infrastructure as a Service) to facilitate rapid creation, scaling and dissolution of services. IT’s goals expand to maximise value realisation of information, technology and technology-based initiatives for the business.

The model and its application are further described in part 1 and part 3.

I welcome your thoughts.

Vaughan Merlyn

Formicio Insight Article: Using the Business-IT Maturity Model (part two)

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