The Value Delivery Maturity Model
Value Delivery Maturity Model
Transformation to the agile enterprise is a major, long-term undertaking. It is not just a reorganization but has a pervasive effect on the structure and management of the enterprise. More books will be written about planning and managing transformation as well as the technology to support the transformation and implement the capabilities. Here, we provide insight into the phases of transformation and the dimensions of change.
Enterprise agility is a moving target. There have been significant changes just in the past 8 years since the previous edition of this book, and there will be more changes in the future, building on the advances described here.
The Value Delivery Maturity Model, discussed here, is based on the SOA Maturity Model that was developed by EDS and Oracle in 2007 based on the Capability Maturity Model Integration (CMMI) model for software development from the Software Engineering Institute and Carnegie Mellon University. An overview of the SOA Maturity Model was presented in the first edition of this book.
Since then, there have been considerable advances in business modeling and design that have a significant impact on both expectations for the maturity levels and the agile enterprise objective. Consequently, we discuss here a revised maturity model where SOA is no longer the primary objective. The Value Delivery Maturity Model is depicted in Fig. A.1.
The general framework of the model is much the same with dimensions of both business and IT perspectives, but it leads to a more advanced degree of agility. As with other maturity models, it provides criteria for assessment of (1) the readiness of an organization to accept and manage the associated disciplines and (2) the degree to which the necessary business architecture, organizational structure, and supporting technology are in place.
The model defines a progression of criteria to assess the degree to which an enterprise has realized the potential optimum of agility and value delivery. There are many paths to the future that are well beyond the scope of this book. The Value Delivery Maturity Model provides guidance for planning the enterprise transformation and a basis for objective evaluation of progress. Each enterprise must develop more detail appropriate to their current capabilities, nature of their business, and their readiness for change. The changes driven by the Maturity Model must be reconciled with business changes driven by strategic planning and transformation plans.
The Value Delivery Maturity Model aligns progress on both business transformation and IT support. It is the business perspective that sets this maturity model apart and provides a foundation for consideration of transformation in this book. A maturity assessment based on this model identifies the maturity level of an enterprise and the issues that should be addressed to progress to the next level. Each level builds on the capabilities of the levels beneath it. Just as the construction of a building must start with the foundation, progression to value delivery maturity and enterprise optimization must progress up the levels of the maturity model. An enterprise should first evaluate which level fits their current business and then should focus on the changes that are needed to get to the next level.
Investments in enterprise capabilities will be needed to support the primary objectives of each level. These investments increase some costs in the near term. At the same time, the transformation plan should achieve incremental improvements through projects that each realizes business value along the way.
Each of these levels is assessed from two perspectives: business with five dimensions and technology with six dimensions.
Maturity Levels
An enterprise achieves a maturity level when it has substantially met the criteria identified for that level. Though some of the criteria of higher levels may also be achieved when maturity is assessed, the overall capability of the enterprise is still limited by those criteria that have not yet been met for the higher level of maturity. Return on investment is lower for transformations undertaken at lower levels of maturity, but the risks are higher if an undertaking is too ambitious for the next level of maturity. Each of the maturity levels is outlined here.
Explored
• This is the current “status quo” level typical of many enterprises.
• The business organizations have participated in some form of capability mapping for identification of critical capabilities for improvements.
• There may have been consideration of consolidation of duplicated capabilities.
• The business side of the enterprise has focused on BPM and process improvement.
• Many business processes are embedded in application programs.
• The IT organization has implemented some applications or application components as shared services and has implemented some web services for customers or suppliers.
• The IT organization is aware of BPM and has installed and applied one or more BPMS (Business Process Management System) to support BPM.
• Top management may support implementation of a proof-of-concept, capability consolidation.
• Information technology projects are owned and funded by each line of business and/or functional area.
Applied
• Top management is committed to CBA, BCM, and VDM, as evidenced by funding centers of expertise.
• Top management is participating in modeling and analysis of value streams of product lines or lines of business and business model canvases (Osterwalder) or business model cubes (Lindgren) supported by VDML.
• A limited-scope VDM capability team has been established and has successfully modeled a product line value stream or larger portion of the business from an executive business model perspective and a detailed, value stream perspective.
• A BCM team has been established for alignment of business processes with VDM collaborations and application of adaptive case management for knowledge workers.
• IT infrastructure has been established to support integration of shared capability services and to support adaptive case management (eg, CMMN).
• The initial value stream models include at least cost and duration value measurements supporting a customer value proposition.
• Top management is involved in review of the capability taxonomy and performance measurements along with identification and funding of selected shared capability services.
• At least one shared service unit has been implemented with a well-defined interface and level of service agreement. It is engaged in two or more contexts (eg, lines of business).
Modeled
• There is an executive-level roadmap for the agile enterprise.
• The customer value propositions and value streams of all lines of business have been modeled for value delivery, and multiple shared capability services are implemented and managed by a matrix organization.
• There is a service integration and performance measurement infrastructure in place.
• There is a system of governance to manage the value delivery model and to plan and manage strategic transformation of the organization.
• Priorities and funding for IT budgets and transformation initiatives are managed at an enterprise-level.
• Service costs are captured, and a charge-back mechanism has been defined to support billing of the full cost of services to service consumers.
• Data exchange for shared services is consistent with an enterprise logical data model and a master data management plan.
• Capability units have been established and funded as implementation of CBA, BCM, and VDM.
• Capability units have been implemented as service units.
Measured
• Capability units and value streams are monitored and measured for cost, timeliness, and quality as well as key values of customer interest.
• The cost, quality, timeliness, and other relevant values of each value stream are used to identify and assign priorities to improvements needed in specific capabilities.
• The value contributions of shared services to value streams can be reported and analyzed.
• Information technology services are aligned with CBA.
• The organization structure reflects alignment of goals, incentives, and economies of scale in the management of capability units.
• Value measurements are captured for statistical representation of performance for specific products or product mixes to support VDM analysis.
• Service performance is continuously monitored and evaluated against formal service level agreements.
• Disruptive events, both internal and external, are captured and directed to appropriate capability organizations for resolution.
• VDM is used for operational risk analysis and mitigation.
• An analytics capability unit captures big data from relevant sources and supports analysis for correlations, trends, and significant events.
Optimized
• The governance structure ensures that the enterprise is doing the right thing and doing it well.
• Rules are defined and implemented for regulation and policy compliance, and application of the rules is measured and reported.
• The organization has a continuous change culture that strives for excellence and welcomes the opportunity to innovate.
• VDM is used to validate strategies and to plan and measure business transformation.
• Governance is supported by risk assessment, tracking of key objectives, monitoring of performance measurements and reporting of compliance with policies.
• Value propositions are the basis for investment in capability development and improvement.
• Internal interest group collaborations are formed, funded, and supported with social networking technology.
• Formal processes are defined for identification, evaluation, and funding of innovations.
• There is rapid response to disruptive events through business processes based on comprehensive risk management and an understanding of the enterprise ecosystem.
• VDM is linked to current operating measurements and is the context for executive dashboard measurements.
• New business opportunities are analyzed by reconfiguring relationships between existing capabilities and identification of required capability services or new capabilities.
• Capability service managers work to continuously improve their services based on needs of service users and enterprise values.
Business Dimensions
Each of the maturity levels is evaluated, from a business perspective in five dimensions and the technology perspective in six dimensions. The following points briefly describe the achievements of the business dimensions at the Optimized maturity level.
Processes
• Business processes are modeled and measured.
• Case management (CMMN) is applied to recurring, adaptive collaborations.
• Processes and applications are aligned with capability methods of the value delivery model and have well-defined service interfaces and level of service specifications.
• Sense and respond processes respond to threats, opportunities, and innovations to drive change.
• A BCM center of expertise clarifies and improves collaborations based on VDM modeling and value contribution priorities.
Organization
• The business organization is a matrix of line of business organizations and shared capability providers.
• Shared capability providers are organized for management of shared resources, methods, and incentives.
• Collaborations that involve significant effort or are essential to business operation are reflected in the VDM and are supported with appropriate funding and technology.
Governance
• Governance involves enterprise-level planning, priority setting, accountability, and control.
• Top management and the board of directors have visibility of performance and value contributions of capability services along with the impact of policies on operations.
• Transformations are driven and measured by phases defined with versions of the value delivery model.
• Regulations are analyzed and translated into operating policies.
• Effects of policy compliance are traced to affected activities and measured.
• Strategic planning is a continuing collaboration that drives evolving, enterprise-level transformation planning, and assessment.
Capability Portfolio Management
• A portfolio of sharable capabilities is managed to support multiple value streams, optimized from an enterprise perspective.
• Value delivery models are developed and maintained to support customer value propositions with some application to administrative support value streams (eg, accounting, human resource management, purchasing, and information technology).
• Capabilities are defined in a taxonomy and associated with the organizations that define (own) them and provide them.
• Performance of capability services is measured against service level agreements.
• The value contributions of each capability can be traced to their impact on customer and overall business value propositions.
• Value delivery models are used to evaluate strategies and to plan phased business transformations.
Finance
• Significant investments in development or improvement of capabilities are based on the value delivery model and value-based priorities.
• The cost of each capability service is measured and recovered by a billing mechanism for assessment of the full cost of each service rendered, including the cost of capability services used indirectly.
• Market share, profitability, and market segment value propositions are analyzed using VDM for potential improvements.
Technology Dimensions
The following sections outline the achievements of the six technology dimensions at the Optimized level of maturity. It is important that improvements in technology keep pace with the improvements in the business to ensure appropriate support.
Infrastructure
• Infrastructure provides a reliable messaging and integration infrastructure with single sign-on and role-based access control.
• Networking and security mechanisms are integrated with the public cloud(s).
• Applications with workloads that are seasonal or affected by growth or decline in business are deployed to cloud computing assuming relevant security, and regulatory compliance concerns are resolved.
• Access authorization is role based.
• Business process automation, adaptive case management, internal alarms, event notification, and complex event processing are supported by the infrastructure.
• Support is provided for capture of “big data” and analytics.
• Infrastructure includes a Data Directory, a Sense and Respond Directory, a Risk Management Catalog, a Regulation and Policy Directory, interest group supports, knowledge management services, and dashboard support.
Architecture
• The technology architecture supports composition of business solutions based on CBA.
• Capability methods with defined roles and activities are supported by model-based, repeatable business processes, or adaptive case management.
• Consistent mechanisms are defined for security controls and administration that put appropriate business leaders in charge.
• Technical facilities are defined for big data capture, monitoring, analysis, and detection of disruptive events.
• Technical standards and compliant product selections support interoperability and economies of scale in IT development and operations.
• Consistent mechanisms, audits, and controls are implemented for security and disaster recovery.
Data
• Capability interfaces and master data interfaces are compliant with an enterprise logical data model.
• Master data owner organizations are responsible and in control of the accessibility, security, and integrity of master data records.
• Business meta-data describes the provenance and quality of master data, event notices, and business intelligence data.
• Data networking supports reliable messaging, message transformation, and event publish and subscribe.
• Value measurements are captured from operating activities and communicated to the measurements service for monitoring performance.
• A data directory defines the sources and users of master data.
• Big data is captured, monitored for trends and critical events, and processed for analytics.
• Complex event processing reconciles redundant, related, and consequential events.
Governance
• A value delivery model reflects the current state of the business.
• Management dashboards provide manager control of individualized reporting on selected performance measurements and objectives in the context of the VDM model.
• Technology strategy and investments are driven by technology advances and enterprise-level analysis of business impact based on the value delivery model.
• Industry standards compliance is a key business factor in systems design and product selections. Industry standards are formally adopted and periodically reviewed for relevance.
• Security policies and measures are well defined and implemented along with procedures for timely response to threats or violations.
• A sense and respond directory captures and tracks resolution of events with business-changing implications.
• Business rules are integrated into business processes for policy enforcement and decision support.
Organization
• The IT organization is aligned with IT capabilities and provides services through well-defined interfaces with level of service agreements.
• An IT architecture capability is responsible for defining and applying architectural patterns and technical standards.
• Initiatives for IT development or maintenance are engaged and coordinated through collaborations for each initiative with representatives from relevant IT and business activities.
• IT application development and maintenance services are provided by members from technical specialty capability organization units.
Operations
• IT operations processes are organized as value streams that engage services developed by BCM.
• Performance of IT services and business applications is measured and reported against formal service level agreements.
• Big data capture, processing, and analytics support is a distinct capability with associated services.
• Coordination and management of cloud computing services is a distinct IT capability with associated services.
• There is a distinct capability with associated services for management of the network for exchange of data including exchanges with customers and business partners.
• IT security policy compliance, monitoring, configuration management, threat analysis, and breach response are managed by a distinct group of IT capabilities.
• Potential effects of service outages on value streams drives preparedness and appropriate response priority.