Understanding organizational maturity levels

The extent to which a business enterprise is able to exploit IT capabilities to achieve its business objectives is determined by the maturity of its IT organization. ITILv3 provides a set of good practices in order to build IT capabilities so that it is able to deliver what IT organization’s businesses and / or customers are looking for. IT organizational maturity ranges from just being a technology shop i.e., Level 1 to become a value-chain value-add partner i.e., Level 5. In this blog, we will try to gain better insights into what these levels actually represent. This discussion will help us with future topics as well.

Here is my perspective on different levels of organizational maturity.

Level 1 – Technology

IT organizations at “Maturity Level 1 – Technology” demonstrate the following characteristics:

• Technology focused and technology aligned
• Lack of appreciation on which technology components enable which business services.
• IT investments are primarily made based on technological aspirations rather than business enablement and return on investments.
• Technology domains are managed in technology silos. For example, problems are prioritized and resolved based on technology focus not because of the potential impact of these problems on business / customer priorities.
• IT organizations plan and deliver their services largely in a vacuum without a comprehensive appreciation of the business needs.
• IT organizations largely find themselves in ‘reactive’ mode of operating.

Level 2 – Products / Services

IT organizations at maturity level 2 exhibit the following characteristics:

• IT organizations understand the products / services that are created / delivered by their technology components.
• There is a better understanding of which technology components deliver what services.
• Organizations are still largely technology-driven because of lack of business and customer needs.

 

Level 3 – Customers

At maturity level 3, IT organizations are able to clearly understand their customers and what they actually need. At this level of maturity, IT organizations are able to identify the gaps between the products and / or services that they produce and the products and / or services that customers actually need. Based on this, IT organizations are able to improve / define services such that the actual customer / business needs are met.

Level 4 – Business

With the concrete understanding of 1) technology capabilities, 2) products and / or services produced, and 3) needs of the customers and / or businesses, IT organizations are able to run IT as a business at maturity level 4. Some of the characteristics are as follows:

• IT organizations clearly understand the market (customers and / or businesses) that they are trying to service.

• IT organizations understand its distinctive capabilities and in what services they are able to provide differentiating services at competitive prices.

• Customers / businesses have control over the IT-related costs and what they want from IT and appreciate the value delivered by IT.

• IT organization is no longer a ‘cost-center’.

Level 5 – Value Chain

IT organizations at maturity level 5 clearly understand the value chain i.e., how do IT services enable business processes and ultimately create value for the end-customers (customers of your customers and / or businesses). These IT organizations are able to clearly relate their IT services to business processes and business products / services. At this level, IT organizations actually become value-add partners.