Control over the IT process of Manage the IT Investment that satisfies the business requirement for IT of
- continuously and demonstrably improving IT’s cost-efficiency and its contribution to business profitability with integrated and standardized services that satisfy end-user expectations
- effective and efficient IT investment and portfolio decisions, and by setting and tracking
- IT budgets in line with IT strategy and investment decisions
- Forecasting and allocating budgets
- Defining formal investment criteria (ROI, payback period, net present value [NPV])
- Measuring and assessing business value against forecast
- Percent of reduction of the unit cost of the delivered IT services
- Percent of budget deviation value compared to the total budget
- Percent of IT expenditure expressed in business value drivers (e.g., sales/services increase due to increased connectivity)
1 Non-existent
2 Initial/Ad Hoc
3 Repeatable but Intuitive
4 Defined
5 Managed and Measurable
6 Optimized
Benchmarks/Guidelines for Scoring
1 Non-existent when
There is no awareness of the importance of IT investment selection and budgeting. There is no tracking or monitoring of IT investments and expenditures.
2 Initial/Ad Hoc when
The organization recognizes the need for managing the IT investment, but this need is communicated inconsistently. Allocation of responsibility for IT investment selection and budget development is done on an ad hoc basis. Isolated implementations of IT investment selection and budgeting occur, with informal documentation. IT investments are justified on an ad hoc basis. Reactive and operationally focused budgeting decisions occur.
3 Repeatable but Intuitive when
There is an implicit understanding of the need for IT investment selection and budgeting. The need for a selection and budgeting process is communicated. Compliance is dependent on the initiative of individuals in the organization. There is an emergence of common techniques to develop components of the IT budget. Reactive and tactical budgeting decisions occur.
4 Defined when
Policies and processes for investment and budgeting are defined, documented and communicated, and cover key business and technology issues. The IT budget is aligned with the strategic IT and business plans. The budgeting and IT investment selection processes are formalized, documented and communicated. Formal training is emerging but is still based primarily on individual initiatives. Formal approval of IT investment selections and budgets is taking place. IT staff members have the expertise and skills necessary to develop the IT budget and recommend appropriate IT investments.
5 Managed and Measurable when
Responsibility and accountability for investment selection and budgeting are assigned to a specific individual. Budget variances are identified and resolved. Formal costing analysis is performed, covering direct and indirect costs of existing operations, as well as proposed investments, considering all costs over a total life cycle. A proactive and standardized process for budgeting is used. The impact of shifting in development and operating costs from hardware and software to systems integration and IT human resources is recognized in the investment plans. Benefits and returns are calculated in financial and non-financial terms.
6 Optimized when
Industry good practices are used to benchmark costs and identify approaches to increase the effectiveness of investments. Analysis of technological developments is used in the investment selection and budgeting process. The investment management process is continuously improved based on lessons learned from the analysis of actual investment performance. Investment decisions incorporate price/performance improvement trends. Funding alternatives are formally investigated and evaluated within the context of the organization existing capital structure, using formal evaluation methods. There is proactive identification of variances. An analysis of the long-term cost and benefits of the total life cycle is incorporated in the investment decisions.