IT shops score chaos rating on maturity scale

IT managers' greatest impediment is that they fail to express the importance of the IT shops to the CFO, according to project management consultants.

IT has had a lot to prove in the boardroom since the well-documented blasting of the IT industry by Commonwealth Bank of Australia's managing director David Murray at the 2002 World Congress on IT in Adelaide earlier in the year, when he said IT had failed to deliver on promises.

IT must benchmark assets and projects to show quantifiable business outcomes to the CFO, businesses must conversely start to appreciate IT as a tool for profit and growth, rather than as another cost, in order to be recognised as a mature organisation, according to industry consultants and analysts.

When it comes to software management, for instance, most IT managers and CIOs have no formal plans for renovation or specific upgrading, no concept of replacement cost and no idea of the useful life of any of their software according to Paul Radford, managing director of software measurement tools supplier Charismatek Software Metrics.

Radford estimates 80 per cent of Australian IT groups are at the bottom end of IT maturity - that is they're in "chaos".

"This means no repeatable process, no knowledge of IT performance capability, and no means of applying software engineering principles," he said.

IT managers commonly subscribe to certain models recognised by the industry to measure the maturity of the IT shop - such as the Capability Maturity Model (CMM) proposed by the Software Engineering Institute and the Software Process Improvement Capability dEtermination model (SPICE) proposed by the International Standards Organisation.

Most Australian organisations are rated CMM Level one, according to Radford.

Janice Fitzpatrick, a business consultant with Brisbane-based IT project management consulting group Insytegroup, said it is not a question of IT proving its maturity to the boardroom, but of general business maturity.

"There's no point in the IT [shop] reaching a higher level in the CMM if the object of their being - the business - can't make rational business decisions on their IT investments," Fitzpatrick said.

Micheal D'Aprix, management consultant and founder of Zelva group consultancy, said: "[IT managers are] struggling to get on the same wavelength as the company. They are struggling to express to the CFO or the financial controller where the business deliverables really are.

"The problem a lot of CEOs have is what I call 'IT strategy by magazine', where they read something in the various business magazines and say 'that's what we want' without any rhyme or reason or business case. It just sounds good and looks exciting and that opens a whole Pandora's box of troubles," D'Aprix told Computerworld.

"You often find that budgets get eroded, projects are starved of money and IT is asked to do things where they've got no clear business objectives for it. When it doesn't deliver, IT catches it in the neck."

D'Aprix said one of the biggest causes of project failure is IT fails to communicate the WITFM (What's in it for me?) factor to boardrooms.

"If you spend money, you want to know where and when that investment will deliver a return. Most IT projects get killed because no one [in IT] ever worked that out," he said.

"The other thing we forget in IT is that IT expenditure is about 2 to 3 per cent of the total company budget; 2 per cent of the overall equation is not going to get an awful lot of time on radar."

It is only when the IT manager can show the boardroom how it's going to affect the broader part of organisation and the bottom line will IT overcome resistance from the CFO, he added.

For James Robertson, managing director at knowledge management consultancy Step Two Designs, a 'buy in' and 'user-centric' approach can curb project failure, thereby supporting the view of a mature IT organisation in the eyes of the business.

"From what I've seen, most IT projects over-run, in both time and money, because they attempted to deliver a solution in isolation of the actual users. These projects are typically not aligned with business goals or strategies, leading to further scope creep," Robertson said.

"If all the stakeholders have 'buy in' when developing IT systems, there is unlikely to be a nasty surprise at the end of the project," he said.

However, while acknowledging scope creep as a problem, Robertson questions the value of "slavishly sticking" to the original project scope if it becomes apparent that this is not what the business requires.

"What is more important: IT project success or overall business success? A successfully delivered $50 million project is worth nothing if it doesn't provide concrete business benefits, regardless of whether it was delivered on time, and on budget."

Standardise IT

In response to the estimated billions of dollars being wasted in IT investments each year, Standards Australia is developing a new national guideline for IT governance and project management, which are expected to be released for public comment in 2003.

The body is also planning to develop guidelines for IT contract conditions, project management, and case studies on project underperformance.

Other standards to measure IT maturity include the Capability Maturity Model (CMM), developed at Carnegie Mellon University's Software Engineering Institute by Watts Humphrey. CMM is both a way of gauging how good an organisation's software development process is and an approach to making it better. It rates organisations on a scale from one to five.

Similarly, the Software Process Improvement Capability dEtermination model (SPICE) is a standard for process assessment that aims to ensure that participating organisations are at the forefront of new technology.

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