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c h a p t e r

What Is BTM?

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Over the past few years, a standard forthe management of business technology hasemerged—a repeatable set of processes,defined in terms of 17 business capabili-ties, that lead to intelligent and consistentbusiness technology management. Thischapter sets forth the particulars of thisBusiness Technology Management (BTM)Standard and argues that it is not only asolution for the problems that plague tech-nology deployment, but also a competi-tive advantage for firms that adopt it.

In today’s world, to manage thebusiness well is to manage tech-nology well. And vice versa. By now, we certainly know what

happens when business and technol-ogy are managed on two differenttracks. Companies spend 10 percent to40 percent of their revenues on tech-nology and often just can’t shake thatsinking feeling that something is wrong.

In Brief

The BTM Standard provides aset of guiding principles thatcreate a seamless managementapproach that begins withboard- and CEO-level issuesand connects all the way throughtechnology investment andimplementation.

The Standard identifies 17essential capabilities groupedinto four functional areas:Governance & Organization,Managing TechnologyInvestments, Strategy &Planning, and StrategicEnterprise Architecture.

The BTM Maturity Model iden-tifies areas most in need ofimprovement, fixes the startingpoint for the enterprise, andspecifies the path for change.

The right way to approach BTMimplementation is iteratively. Anenterprise must determine whereit is in order to focus on specificpriorities, design and implementspecific capabilities againstthose priorities, and then exe-cute and continuously improve.

"Convergence has been the Holy Grail of leaders for a

long time. The key is to recognize that it is a journey

and not an event."

—Professor John Henderson, Boston University

P A R T I

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Hundreds of millions spent by big-name companies on enter-prise resource and customer relationship systems have beenwasted; nobody thought to redesign underlying work processes orto make sure employees understood what was happening and why.Huge business technology expenditures to lubricate the supplychain of a global apparel maker managed only to wrap that chainaround the axle, leaving the company worse off than if it haddone nothing at all. As one CEO said in exasperation, “Is thiswhat we get for our $400 million?”

Such expensive failures have led many observers to questionwhether information technology can ever produce a defensiblelong-term competitive advantage.

Unquestionably, there have been enough successes to whetthe appetite for the rewards of getting it right. In the late 1990s,for example, Herman Miller began offering small businesses no-frills, quality furnishings delivered quickly at a reasonable price. Itestablished a new operating unit, Herman Miller SQA (“Simple,Quick and Affordable”). By applying business technologyexceptionally well, it reduced an industry order cycle of about14 weeks to about 2 weeks. Sears Home Services consolidatedall of its information systems to manage its 12,000 service peo-ple. Everything is automated and wirelessly connected. Theresult is huge savings in parts management, huge increases inproductivity of their service people, and significant increasesin customer satisfaction.

But on the flip side of exceptional success lies precipitous (orperhaps worse, incremental and undetected) failure. The resultshave been manifest in productivity shortfalls, imposed work-force reductions, damaged corporate reputations and downwardmarket valuations.

These outcomes threaten to marginalize technology’s role invalue creation at the very time that it should be brought closer tothe business than ever before. Instead, we are seeing chief infor-mation officers reporting to the CFO rather than the strategyoffice or CEO. More symptoms: a headlong rush to outsource busi-ness technology, and choke-holds on technology spending, with-out any truly strategic understanding of either move. With thatoften comes a pattern of serial CIO—and maybe CEO—replace-ment, which virtually guarantees that short-term thinking will

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rule. What appears at first blush to be the fault of the technologist(“Can’t you make this stuff work?”) is really a failure to unify busi-ness and technology decision making.

5What Is BTM?

Key Terminology

This book develops a new model for managing business and technology. Ituses terms that may be new to some, and it uses familiar terms in specificways that reflect this new model. Here are the most important:

IT, IT assets, and information technology are equivalent terms. They all refer totangible items ranging from hardware to software to telecommunications topersonnel. IT can be thought of as being composed of technology-relatedgoods and services that are typically purchased in discrete quantities. Byitself, IT offers only potential value. IT investments and IT capital are invest-ments directly tied to the purchase of IT.

Business technology is the application of IT to deliver a business capability orautomate a business operation. Business technology can be thought of as theresult of configuring, implementing, applying, and using IT to produce a busi-ness result. Business technology investments and business technology capi-tal are investments related to the creation, use, and maintenance of businesstechnology.

Business Technology Management (BTM) is a management science applied tobusiness technology that unifies and improves decision making. BTM pro-vides a structured approach that lets enterprises align, synchronize, and evenconverge business technology and business management, thus ensuring bet-ter execution, risk control, and profitability. BTM investments are investmentsrelated to the creation and realization of BTM capabilities.

A Business Technology Management (BTM) capability is a specific compe-tency defined by four critical dimensions: Each capability is ordered by repeat-able processes, executed through appropriate organizational structures, andenabled by the right information and technology. There are 17 capabilitiesgrouped into four functional areas: Governance & Organization, ManagingTechnology Investments, Strategy & Planning, and Strategic EnterpriseArchitecture.


Companies can move beyond alignmentFor many enterprises or operations, alignment of business technol-ogy with the business has been considered the Holy Grail.Alignment can be defined as a state where technology supports,enables, and does not constrain the company’s current and evolvingbusiness strategies. It means that the IT function is in tune withthe business thinking about competition, emerging threats and

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Figure 1.1 Alignment, Synchronization, Convergence The three states of alignment, synchronization, and convergence demonstrate different relationships between business and technology.

Technology supports, enables, and does not constrain the company'scurrent and evolving business strategies.

Technology not only enables execution of current business strategy but also anticipates and helps shape future business models and strategy.

Business and technology activities intertwine and the leadership teams operate almost interchangeably.

BusinessTechnology

BusinessTechnology

Business Technology

Business and Technology

CONVERGENCESYNCHRONIZATIONALIGNMENT

Technology Business

Technology Business


opportunities, and the business technology implications of each.Technology priorities, investments, and capabilities are internallyconsistent with business priorities, investments, and capabilities.

When that’s the case, the company has reached a level of BTMthat relatively few have achieved to date. Alignment is a good thing,and sometimes sufficient to serve a particular business situation.

But there are higher states to consider (see Figure 1.1), and forsome enterprises, synchronization of technology with the busi-ness is the right goal. At this level, business technology not onlyenables execution of current business strategy but also anticipatesand helps shape future business models and strategy. Business tech-nology leadership, thinking, and investments may actually stepout ahead of the business (that is, beyond what is “aligned” withtoday’s business). The purpose of this is toseed new opportunities and encourage far-sighted executive vision about technology’sleverage on future business opportunities.Yet the business and technology are syn-chronized in that the requisite capabilitieswill be in place when it is time to “strike”the strategic option.

Finally, there is the state of convergence,which assumes both alignment and syn-chronization, with technology and businessleadership able to operate simultaneouslyin both spaces. Essentially, the businessand technology spaces have merged inboth strategic and tactical senses. A singleleadership team operates across both spaces with individual lead-ers directly involved with orchestrating actions in either space.Some activities may remain pure business and some pure tech-nology, but most activities intertwine business and technologysuch that the two become indistinguishable.

Is this actually possible? Quite so. Examples are abundant foralignment, less so for synchronization, and still fairly rare for con-vergence. More important, however, how does an enterprisedecide what state it should be pursuing, and how does it get there?

7What Is BTM?

Business Technology

Management (BTM) is

an emerging

management science,

grounded in research

and practice, that aims

to unify decision mak-

ing from the boardroom

to the project team.


The role of BTMBusiness Technology Management (BTM) is an emerging man-agement science, grounded in research and practice, that aims tounify decision making from the boardroom to the IT project team.The standard described in this book and put forth by the BTMInstitute provides a structured approach to such decisions thatlets enterprises align, synchronize, and even converge technol-ogy and business management, thus ensuring better execution,risk control, and profitability.

Companies have employed a number of methodologies andtechniques to improve business and technology alignment.Although many of these methods have acknowledged strengths,they represent piecemeal solutions.

Disparate islands of practice exist within the technology man-agement domain (see Figure 1.2), particularly in the areas of oper-ations and infrastructure. These range from the SoftwareEngineering Institute’s Capability Maturity Model (CMM) toPMI’s Project Management Body of Knowledge (PMBOK) andthe IT Infrastructure Library (ITIL) for services management.However, none of these approaches focuses on integrating andenabling the capabilities necessary to achieve strategic businesstechnology management and the sustainable value that follows.But the danger of relying solely on downstream technology man-agement methodologies is that by the time misalignment becomesapparent, it may be irreversible.

The BTM Standard provides a set of guiding principles aroundwhich a company’s practices can be organized and improved. Itbuilds bridges between previously isolated tools and standards forbusiness technology management. Essentially, BTM sits strategi-cally above operational and infrastructure levels of technologymanagement. The standard aims to create a seamless manage-ment approach that begins with board and CEO-level issuesand connects all the way through technology investment andimplementation.

The BTM Framework identifies 17 essential capabilitiesgrouped into functional areas: Governance & Organization,Managing Technology Investments, Strategy & Planning, andStrategic Enterprise Architecture. These capabilities are defined

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9What Is BTM?

and created by four critical dimensions: processes, organization,information and technology (see Figure 1.3).

BTM has four critical dimensionsAs illustrated in Figure 1.4, the first dimension for institutionaliz-ing BTM principles is a set of robust, flexible, and repeatableprocesses. Simply defining these processes is insufficient, how-ever. To effectively implement BTM requires that processes beevaluated to ensure the following:

Figure 1.2 Other Management Frameworks BTM integrates and enables the capabilities necessary to achieve strategic business technology management.

Asset Management

Resource Management

Project Management (PMBOK)

Supplier Management

ManagementVendor/Contract

WorkforceManagement

Performance Management (BSC)

Service Management (ITIL)

Business Process Management (BPM)

OPERATIONAL MANAGEMENT

BUSINESS TECHNOLOGY MANAGEMENT (BTM)

Governance & Organization Managing Technology InvestementTe s

Strategic Enterprise ArchitectureStrategy & Planning

BM

AP

AB

ESB

TM

TUITTT

Y

Network/SystemManagement

Application Management

Data/StorageManagement Security Software

Development (CMM)


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Figure 1.3 The BTM FrameworkThe 17 BTM capabilities are defined across four functional areas.

B T M F U N C T I O N A L A R E A S

CA

PA

BIL

ITIE

S

GOVERNANCE &ORGANIZATION

I N T E G R AT E D P R O C E S S E S , O R G A N I Z AT I O N , I N F O R M AT I O N & T E C H N O L O G Y

MANAGINGTECHNOLOGYINVESTMENTS

Approval and Prioritization

Portfolio and Program Management

Project Analysis and Design Standards

Resource and Demand Management

Communication Strategy and Management

Compliance and RiskManagement

Organization Design and Change Management

Strategic and TacticalGovernance

STRATEGIC ENTERPRISE

ARCHITECTURE SEA

Application PortfolioManagement

Asset Rationalization

Business Architecture

Enterprise Architecture (EA) Standards

Technology Architecture

STRATEGY &PLANNING

Business-Driven IT Strategy

Consolidation and Standardization

Strategic Planning and Budgeting Strategic Sourcing and Vendor Management

• General quality of business practice—Doing the right things

• Efficiency—Doing things quickly with little redundancy

• Effectiveness—Doing things well

Management processes are more likely to succeed when they aresupported by appropriate organizational structures based on clearunderstanding of roles, responsibilities, and decision rights. Suchorganizational structures generally include the following:

• Participative bodies, which involve senior-level business andtechnology participants on a part-time but routine basis

• Centralized bodies, which require specialized, dedicated tech-nology staff

• Needs-based bodies, which involve rotational assignments, cre-ated to deal with particular efforts


11What Is BTM?

Figure 1.4 Critical Dimensions of BTMThe four critical dimensions of BTM are processes, organization, information, and technology.

I N F O R M AT I O N

O R G A N I Z AT I O N

CxO FUNCTIONAL UNIT

STEERING COMMITTEE

T E C H N O L O G Y

P R O C E S S

START

STOP

The right set of structures will vary according to an enterprise’svalue discipline, its primary organizational structure, and its rela-tive BTM maturity. Centralized bodies, such as an EnterpriseProgram Management Office (EPMO), tend to require specialized,dedicated staff. Participative bodies, such as a BusinessTechnology Investment Board, are ongoing, part-time assignmentsfor their participants—the key stakeholders. Needs-based bod-ies—functionally specialized groups such as project teams—tendto be rotational assignments created in response to particularneeds. These bodies set direction, guide specific business tech-nology activities, and systemically execute against approved plans.

Valid, timely information is a prerequisite for effective decisionmaking. This information must be delivered in a way that is com-prehensible to non specialists and, at the same time, actionable interms of informing choices that matter. Useful information doesnot just happen. It depends on the interaction of two related ele-ments: data and metrics.

Data must be available, relevant, accurate, and reliable.Metrics distill raw data into useful information. Thus, metrics


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need to be appropriate and valid for strategic and operationalobjectives. Internally, they should be comparable across the enter-prise and across time; and externally across industries, functions,and extended-enterprise partners.

Management processes based on flawed information will failwhen confronted with conditions that exploit the flaws. As anillustration, consider a major retailer of auto parts that spendsmillions acquiring and analyzing customer data to determinewhere their customers live. The retailer then sites new stores instrip malls near these neighborhoods only to be disappointed todiscover the new stores’ sales lag the older stores. As it turns out,“where the cars live” is a poor predictor of success compared to“where the cars work.” Locating stores along major routes to andfrom primary employers would produce much better results. Asthis example illustrates, flawed information need not be incor-rect—just inappropriate for the intended use.

Effective technology (that is, management automation tools) canhelp connect all the other dimensions. Appropriate technologyhelps make processes easier to execute, facilitates timely informationsharing, and enables consistent coordination between elementsand layers of the organization. It does this through the following:

• Automation of manual tasks

• Reporting

• Analytics for decision making

• Integration between management systems

The simple addition of technology to automate existing processesleaves most of its potential value untapped. The largest gains resultfrom the optimization of processes, organizational structures, andinformation flows. The complexity of managing the business tech-nology function and increasing demands of an ever-evolving busi-ness climate require more information transparency andoperational synchronization than basic computing tasks can pro-vide. The appropriate use of technology should not only ease thedevelopment and reporting of information needed to fuel man-agement processes across the organization, but also to achieve con-sistent horizontal and vertical management integration.


13What Is BTM?

Leadership Insight

P.A.M Berdowski on Synchronization

P.A.M. Berdowski is the COO and CIO of Royal Boskalis Westminster, a dualrole that gives him a unique perspective on managing business and tech-nology together. In an interview, he explained his company’s strategic viewof business technology.

“We’re In It Together”

When P.A.M. Berdowski joinedRoyal Boskalis Westminster, thebig international dredging com-pany in Holland, in 1997, heencountered a sprawling and strug-gling operation. The company hadharbor and waterway projectsunderway in 50 countries, but itwas trying to coordinate every-thing from human resources to ves-sel maintenance with antiquated

systems. The company’s businesstechnology assets were home built,were not standardized, and couldnot talk to each other. And theywere 10 years old.

In recognition of the strategicvalue of business technology,Berdowski was named COO andCIO, a novel blending of roles.“This was essential to the changeswe needed to make,” Berdowskisaid in an interview. “You willencounter resistance to new ideas.People will say, if you do this you

A BTM capability is therefore defined as a competencyachieved by applying well-defined processes, appropriate organi-zational structures, information, and supporting technologies inone or more functional areas. Successfully implementing any ofthese capabilities will move an organization closer to the goal ofbusiness and technology unification. This progress accelerates aseach additional capability is realized and continuously improved.

The 17 capabilities are interrelated and interdependent or“networked.” All of them should be implemented to maximizethe business value of technology investments. But doing sorequires a carefully orchestrated approach with top-down and bottom-up support. It also involves business and technologygroups in equal measure—plus hard work and time, of course.


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will destroy the business, and it isalmost impossible for IT people toovercome that resistance. In myposition, I could balance the com-peting ideas. I’m not saying youshould ignore problems. But Icould say to my business col-leagues, listen guys, at the end ofthe day, we’re in it together. I’mresponsible for running the busi-ness. Trust me, this is the best solu-tion. It’s not them, it’s not us.We’re all together.”

This was a deliberate decisionto move Boskalis beyond align-ment, where the IT departmentsupports the business, and evenbeyond synchronization, wherebusiness and technology executivesshare in leading the company for-ward. This was convergence,where business and business tech-nology become one and the same.

Technology becomes strategicBerdowski and other executivesrealized that their ambitiousgrowth goals would require signifi-cant change. “We came to theconclusion that we had to com-pletely reengineer our model,”Berdowski says. “We had to com-pletely reengineer from a businesspoint of view, but as a consequenceof that, we had to also reengineerfrom an IT point of view. Webelieved that by optimizing ouroperational strength in this way wewould also by definition strengthenour competitive edge.

“Information and communica-tion technology (ICT) was animportant cornerstone in improv-

ing our competitive edge. So Ilifted the whole issue from thelevel of technical operational peo-ple to the strategic. This is one ofthe key elements in the strategy.This is one of the key factors forsuccess. If you really want toachieve 20 percent growth in thenext five years, technology becomesa strategic issue.”

Strategic to Berdowski meansthat the board plays an active role.“If you’re really convinced that ITis critical for the future of yourbusiness, you have to understandwhy that is. You hope the boardhas a view on their business, a viewon what they want to reach in thenext five years. I’m not talkingabout financial goals. At the endof the day, it’s an outcome in spe-cific business goals. What is hap-pening in the market, what areyour competitors doing, how canyou beat your competitors? Whatis the essence of your business asfar as people and equipment areconcerned, but also systems? Howcan IT help you really improveyour competitive edge? For us, thatwas a very important startingpoint. In some industries, IT ispurely cost. Boards have changed.They no longer have a view ofoperations. They look at financialmarkets. A lot of board membersdon’t run their businesses anymore. I see situations in which IThas become a budget issue but nota business issue.”

“We did it, guys.”The company first looked at its


These 17 capabilities are grouped into the functional areasdescribed in more detail next: Governance & Organization,Managing Technology Investments, Strategy & Planning, andStrategic Enterprise Architecture (see Figure 1.3).

Governance & OrganizationThis functional area is focused on enterprise CIOs and businessexecutives concerned with enterprise-wide governance of busi-ness technology. The capabilities that must be developed to sup-port this functional area ensure that required decisions areidentified, assigned, and executed effectively. Necessary capabili-ties also include the ability to design an organization that meetsthe needs of the business, manages risk appropriately, and givesproper consideration to government, regulatory, and industryrequirements. Four capabilities constitute the Governance &Organization functional area:

1. The Strategic and Tactical Governance capability establishes whatdecisions must be made, the people responsible for making

15What Is BTM?

business architecture, then itstechnology architecture. “Westarted by defining the essence ofour business model,” Berdowskisays. “Then we translated that intothe essence of the kernel weneeded in four layers to make sure20 critical processes were congru-ent. It didn’t mean they wereexactly the same. But we madesure that where you needed thesame type of information it waswell defined. How do we define asupplier, an invoice, what countrycodes do we use? Simple things,but you can spend lots of time get-ting everyone lined up.”

Berdowski wanted a more inte-grated system. “We can use differ-ent types of systems as long as theyall fit into the same model from a

business point of view and from anIT point of view.” When he started,30 of the 40 people in ICT werebuilding homemade systems. Thathas been turned completely around.

He worked from a blueprint,but wasn’t a slave to it. “It’s good toknow where you’re going but to beflexible in getting there. We take alot of time to decide what we want.We never start an IT project if wedon’t know what we want. Nobodygets a green light to step into anyIT project if it’s not well defined.”

This year Berdowski invited hisfour top people to a dinner to cele-brate what they had accomplished,starting back in 1997. “Eight yearslater,” he said to them, “and we didit, guys.”


them, and the process used to decide. This relates to a full rangeof business technology governance issues, investment decisions,standards and principles, as well as target business and technol-ogy architectures.

2. The Organization Design and Change Management capabilityestablishes the makeup of work groups, defining and populatinglevels, roles, and reporting relationships to enable technology-based business initiatives. This capability also supports struc-turing and administering organizational and individualincentives as well as designing programs to foster quick andeffective adoption of change.

3. The Communication Strategy and Management capability estab-lishes overall strategy and tactics for creating broad-basedunderstanding and getting actionable information throughoutthe organization. In particular, this capability facilitates themanagement of communications associated with large-scalechange programs and business-technology synchronization.

4. The Compliance and Risk Management capability ensures thatgovernment and regulatory requirements are understood andmet with regard to business technology initiatives and thatappropriate risk mitigation strategies are in place.

Managing Technology InvestmentsThis functional area focuses on the Enterprise ProgramManagement Office (EPMO) and other technology and businessexecutives who are concerned with ensuring selection and execu-tion of the right business technology initiatives. The capabilitiesthat must be developed to support this functional area ensure thatthe organization understands what it owns from an IT standpoint,what it is working on, and who is available. The organizationmust make certain that business technology investment decisionsare closely aligned with the needs of the business and that tech-nology initiatives are executed using proven methodologies andavailable technology and IP assets. Four capabilities constitutethe Managing Technology Investments functional area:

1. The Portfolio and Program Management capability identifies,organizes, and manages existing IT assets and projects. This

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capability is focused on effective program monitoring and exe-cution. This includes the development of enterprise projectand asset portfolios along with appropriate reporting.

2. The Approval and Prioritization capability determines the crite-ria used for evaluating alternatives, specifying the evaluationprocess, and prioritizing technology investments. The creationof enterprise business cases and the definition of appropriateselection criteria and mechanisms are thereby enhanced.

3. The Project Analysis and Design capability drives technology-enabled business improvements and leverages re-usable ITassets. This allows the integration of Enterprise Architecture (EA)and governance with a system development life cycle (SDLC).

17What Is BTM?

Research Insight

Professor John F. Rockart on Leadership

John F. Rockart, Senior Lecturer Emeritus of Information Technology at theSloan School of Management at MIT, has been a student of technologymanagement for nearly half a century. In these excerpts from an interview,he relates how business technology’s role in the organization has evolved.

“We’ve Come a Long Way”

History of business technology“I’ve been observing IT since 1957.In the early days, the late 1950sand early 1960s, the field was not afield. It was a simple back-officefunctional area often run by some-body who came out of theaccounting department and whowas working either with punchcards or the first rudimentary com-puters. At that point, this personreported two or three levels downfrom the CFO.

“As the technology got betterand better and better, slowly butsurely, IT took over just abouteverything in the accountingdepartment. Then came orderentry procedures and basic trans-action processing. At this point,the CFO became much moreinvolved. It was not really untilperhaps the past 20 to 25 yearsthat line management has startedto get somewhat involved. It wasin the early 1980s that I, andsome others, started to call on linemanagement to take a strongerrole.


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“Starting about that time, itbecame important for the successof the business for IT to be involvedheavily in major transactionprocesses. However, these couldnot be designed or implementedwell without a full understandingof what the business was all aboutand how the business operated.And that understanding really hadto come from business executives.

“In the mid 1980s, we startedto talk to business leaders aboutthis need and found some recep-tive, but not many. For about thenext 15 years, we talked aboutstarting a course called “IT for theNon-IT Executive,” because werecognized the importance of lineleadership. But we didn’t get muchof a reception. It’s really been inthe last five, six, seven years thatnon-IT execs have started to say,‘I really have to understand IT.’ Asa result, one of the most popularexecutive courses at MIT rightnow is ‘IT for the Non-ITExecutive.’ We offer it three timesa year for 75 to 100 people eachtime.

“Many management teams, butfar from all, have now caught onto the fact that IT is just one of thetools in the business. Twenty yearsago, as a line manager thoughtabout his strategy, he focused onthree major assets—people, money,and machinery. Today, since IT isnow in many companies morethan 50 percent of the machinery,the focus is now four-fold—people,money, machinery, and IT.

“No executive today wouldturn to the CFO and say, ‘I don’t

understand this money stuff. Takecare of it and keep me out of theloop.’ Or turn to the head of HRand say the same thing about peo-ple. But some managers today arestill effectively saying this sort ofthing about IT. There are far fewerof them. This doesn’t happen inmost major companies any more,but you still find it in small andeven some midcap companies.However, this attitude has signifi-cantly changed over the last 20 years.

The need for convergence“One thing that is very clear to meis that the BTM approach, not justalignment, but synchronization, iscorrect. I would hope for conver-gence some day. Given the needfor convergence, there is a signifi-cant need for more IT educationof line managers. It’s also a reasonthat, at MIT, a number of thecourses in the master’s program Itaught were aimed at line man-agers or potential line managers.Students now want to understandenough about IT to get heavilyinvolved, although they only knowthe basics about technology itself.

“If this is to be successful—andI refer to the entire IT revolutionwe’re undergoing that will makecompanies much more competi-tive—the degree of understandingof the business by IT and thedegree of understanding of IT bybusiness has clearly got to be betterthan it is today. I think we’re a lotbetter today on the understandingof business by IT, certainly inmajor companies. I watch time andtime again where the fundamentalchoice of who is to be the CIO is


based on how good a business per-son the candidate is. We’re stillprobably far less from there on theother side.

“We’ve come a long way fromthe day in which a data processingmanager ran IT to a day in whichthere is a shared understanding atthe senior executive levels thatthere needs to be a very close con-vergence between the businessleaders and the IT leaders, thatthey each need to be, to some

extent, the other guy. The IT guyhas got to be a business leader andthe business leader has to under-stand IT. We’re not at the pointwhere each can do the other’s job.We’re still a long way away, and wewill never close that gap becausethere’s a need for expertise on eachside. In some companies, we’re comingvery close to what I would call theideal roles, dual roles to make ITwork effectively in the organization.”

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4. The Resource and Demand Management capability is used toquantify, qualify, and manage business technology demand andresource requirements. It supports and promulgates the processfor categorizing and prioritizing business technology requeststo ensure that they are consistent with required business capa-bilities, priorities, budgets, and capacity. This capability alsoguides the allocation of high-value scarce resources.

Strategy & PlanningThis functional area focuses on enterprise CIOs, divisional CIOs,and business executives who are responsible for the efforts to syn-chronize business technology with the business. The capabilitiesthat must be developed to support this functional area ensure thata target set of applications will meet the needs of the businessand reduce overall complexity. In addition, annual planning andbudgeting must incorporate elements of business technology strat-egy and other evolving needs of the business. Four capabilitiesconstitute the Strategy & Planning functional area:

1. The Business-Driven IT Strategy capability articulates requiredbusiness capabilities and the technology plans to enable them.This allows an organization to translate business strategy intospecific required business capabilities. It defines principles to


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guide decisions on applications and infrastructure and supportsplans for moving from as-is to target architectures.

2. The Strategic Planning and Budgeting capability is necessary todefine and link plans and budgets to strategy and enterprisearchitecture. Goals, milestones, and contingencies are identifiedand highlighted, as are planning assumptions and prerequisites.

3. The Strategic Sourcing and Vendor Management capability deals with creating and managing relationships with thosevendors best suited to an organization’s strategy. This includesidentifying areas of strategic opportunity for outsourcing, co-development, and vendor selection.

4. The Consolidation and Standardization capability integratesaccumulated or acquired IT units and assets to ensure consis-tency with an organization’s strategy. This delivers improvedperformance by rationalizing the number of projects, assets,sites, and processes. It also extends to identifying which assetsto eliminate, consolidate, or enhance, and which to standardize on.

Strategic Enterprise Architecture This functional area focuses on the Office of the Chief TechnologyOfficer and business and technology executives who are con-cerned with the overall architecture and standards for the enter-prise. The capabilities that must be developed to support thisfunctional area ensure that appropriate information and docu-mentation exists to describe the current and future-state envi-ronments. Also, it is necessary to verify that business andtechnology people can implement strategies and plans and makerecommendations simplifying the existing business technologyenvironment. Five capabilities comprise the Strategic EnterpriseArchitecture functional area:

1. The Business Architecture capability is used to describe thebusiness strategies, operating models, capabilities, and process-es in terms actionable for business technology.

2. The Technology Architecture capability defines the applicationsand technical infrastructure required to meet enterprise goals


21What Is BTM?

and objectives. This includes the creation of application mod-els, data models, as well as associated technical infrastructuremodels for the enterprise.

3. The Enterprise Architecture (EA) Standards capability is neces-sary to define standard business technology applications, tools,and vendors. This capability centers on the delivery of EAguiding principles, plus assessing and defining other gover-nance requirements. Also included are standards for IT ven-dors and reusable assets, including design patterns and services.

4. The Application Portfolio Management capability is employed toestablish and manage portfolios of applications, consistentwith IT strategy, and to achieve target architectures and main-tain standards.

5. The Asset Rationalization capability applies enterprise architec-ture and standards to simplify the infrastructure. This reducescomplexity and cost by controlling the number of applicationsand systems.

The BTM Maturity Model measures a firm’s progressGiven the interconnectedness of the 17 capabilities and theimportance of approaching them on a clear priority basis, it iscritical that an organization understand its maturity relating tothem. The BTM Maturity Model (see Figure 1.5) defines five lev-els of maturity, scored across the four critical dimensions describedpreviously: process, organization, information, and technology.

A maturity model describes how well an enterprise performs aparticular set of activities in comparison to a prescribed standard.This instrument assists in levying a grade based on objective, bestpractice characteristics. A maturity model also makes it possiblefor an enterprise to identify anomalies in performance and bench-mark itself against other companies or across industries. The meas-urement of BTM capabilities through the BTM Maturity Modelidentifies areas most in need of improvement, fixes the startingpoint for the enterprise, and specifies the path for change.


22 Chapter 1

Figure 1.5 The BTM Maturity ModelThe BTM Maturity Model identifies areas most in need of improvement,fixes the starting point for the enterprise, and specifies the path for change.

LEVE

L 2

LEVE

L 3

LEVE

L 4

LEVE

L 5

LEVE

L 1

Maximum BTM Benefit

Lear

ning

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efin

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Repeatable,predictable, and consistent processexecution; fully integratedacross thebusiness

Some coreprocesses aredefined anddocumented

Core processesare definedand documented with some integration between key process areas

Process Organization Technology

Continuous process optimization,experimentation,and innovation

Information

Unstructuredand ill-definedprocesses with no processintegration

Full automationand coordinated use withpartial, related integration

Partial or sporadicautomation of appropriatetasks/functions

Automation ofappropriatetasks/functionswith some coordinated use

Consistent,coordinated use withcomplete, relatedintegration

Lack ofrequiredautomation forappropriatetasks/functions

Data and metricsintegrated across thebusiness; use of both internaland externalbenchmarking

Defined andconsistent informationpolicies andmeasurementcriteria

data sharingand use;integrated operatingmetrics and use of internalbenchmarking

“Intelligent” decision-making/informationroutines;experimental benchmarking

Data andmetrics arein isolated pockets andare ill-defined

Fullyimplementedstructures with all roles executing to definedresponsibilities;fully functioningCOE

Structures andrelated roles/ responsibilities are identified and defined

Some structuresexist, with relatedroles executingper defined responsibilities and decision rights; sequentialcollaboration;

Evolving organizationstructures, roles, anddecision rights;synchronouscollaboration

Missingstructures andunidentified orunclear roles/ responsibilities/decision rights;ad-hoccollaboration

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23What Is BTM?

A growing body of BTM Institute and Enamics research showsthat at level 1, enterprises typically execute some strategic busi-ness technology management processes in a disaggregated, task-like manner. A level 2 organization exhibits limited BTMcapabilities, attempts to assemble information for major decisions,and consults IT on decisions with obvious business technologyimplications. Enterprises at level 3 are “functional” with respect toBTM, and those at level 4 have BTM fully implemented.Organizations achieving level 5 maturity are good enough to knowwhen to change the rules to maintain strategic advantages overcompetitors who themselves may be getting the hang of BTM.

The evidence shows that enterprises at lower levels of maturitywill score lower for business technology productivity, responsive-ness, and project success than enterprises at higher levels. AsBTM maturity extends past level 3, the resulting synchrony ofbusiness strategy and technology delivery makes the enterprisemore agile and adaptable. For such companies, changes in thebusiness landscape impel appropriate adjustments to strategy andcorresponding action without major disruptions or anguish.

Leadership Insight

Hideo Ito on CEOs

In these excerpts from an interview, Hideo Ito, Chairman and CEO of ToshibaAmerica, Inc., explains how a CEO must think about business technology.

The CEO’s New Imperative

“For a long time, Toshiba—andmany companies in Japan, Europe,and the United States—didn’tthink of IT strategy when wethought of business strategy. IT wasalways just information processing,something done in a back room.

Today, IT strategy should be partof the business strategy, a majorelement of strategy and planning.

“To lead a company, the CEOneeds to understand how IT affectsbusiness decisions. For example, it’snecessary in collecting all the datathe CEO needs for reviews. But,more than this, the CEO needs toknow how IT plays a role in all ofthe organization’s processes, from


24 Chapter 1

the customer through productionand logistics.

“Today, however, the maturityof IT management is at the infantlevel. All too often we have an ITexpert in the company who noticessomething new and thinks it willbe beneficial and asks for money toproduce it. But these decisionsshould be much more systematic. Idon’t like to confess that manycompanies, as we, are still depend-ent on the technology person’s

capability—for good or bad, wedon’t know.

“We used to view logistics sepa-rately; it was just trucks and cus-toms. But now, it’s integrated; it’s avery important part of our business.If managed well, it can save timeand money. Now IT has to beviewed the same way, as an inte-gral part of the business.

“But, unfortunately, managingIT is still an art, not a science.”

Emerging opportunities are sensed and addressed more quickly.Project execution to deliver new capabilities is more sure-footed.As joint management of business and technology improves, thematurity of the enterprise is reassessed to focus the next set ofpriorities. As gains result from BTM, remaining weaknessesbecome more obvious and the business case for addressing thembecomes more compelling.

BTM can be implemented in five stepsBut where to start? The job of implementing 17 BTM capabilitiesand measuring progress using the BTM Maturity Model can seemoverwhelming. After all, every enterprise starts from a differentplace, with existing investments in systems and business processesthat make starting over virtually impossible.

So don’t start over. Start anywhere.

The right way to approach BTM implementation is iteratively.Fundamentally, an enterprise must determine where it is in orderto get focused on specific priorities, design and implement specificcapabilities against those priorities, and then execute and contin-uously improve.

You not only can, but you actually must begin by recognizingwhere the enterprise stands with regard to BTM maturity. Only byrespecting what is can you make real progress toward what is to be.


25What Is BTM?

Then you cycle again, using five steps to continuous BTMimprovement (see Figure 1.6):

1. Establish a Baseline (assess BTM maturity levels, confirmopportunity areas, identify high-priority functional areas andkey stakeholders).

2. Educate and Align (educate key stakeholders on BTM capabil-ities, review baselines, and develop consensus on roadmap).

3. Diagnose and Design (analyze and define the scope of the prob-lem, identify relevant components of the BTM Framework,design processes, organization, information, and automation).

4. Realize and Mobilize (implement the design with best practicetemplates, operationalize repeatable decision-making processes).

5. Optimize and Maintain (fine-tune management processes,update information, and ensure decision quality).

The flexibility of this approach provides multiple points of entryinto a BTM roadmap, with or without previous BTM experience.This eliminates any need to completely recast the existing approachesin an organization. BTM maturity initiatives are easily blendedwith and serve as a supporting framework that can organize andimprove existing practices. Incumbent tools and standards for tech-nology management are integrated into the holistic BTM Framework.

The flexible nature of BTM and its implementation cycle eas-ily interfaces with external sources such as compliance studies,management consulting engagement outputs, and audits.Regardless of the source, virtually any baseline or starting pointwill support the identification of target activities appropriate to anorganization’s current environment and its state of business andtechnology synchronization.

As a company approaches the successful conclusion of a BTMimprovement cycle, it will be simultaneously planning the evolu-tion of its BTM maturity. This is accomplished by observingresults and preparing to establish the next performance baseline.Ultimately, a company operating in the “execution and improve-ment” zone will seek to revisit their baseline and to determineareas of focus for the next cycle of BTM progress.


26 Chapter 1

Figure 1.6 A Step-by-Step Approach to BTMThere are five steps to continuous BTM improvement.

MANAGING TECHNOLOGY INVESTMENTS- Approval and Prioritization

- Portfolio and Program Mgt.

- Project Analysis and Design Standards

- Resource and Demand Mgt.

- Communication Strategy and Mgt.

- Compliance and Risk Mgt.

- Organization Design and Change Mgt.

- Strategic and Tactical Governance

GOVERNANCE & ORGANIZATION

- Application Portfolio Mgt.

- Asset Rationalization

- Business Architecture

- Enterprise Architecture (EA) Standards

- Technology Architecture

STRATEGIC ENTERPRISE ARCHITECTURE (SEA)

- Business-Driven IT Strategy

- Consolidation and Standardization

- Strategic Planning and Budgeting

- Strategic Sourcing and Vendor Mgt.

STRATEGY & PLANNING

IMPLEMENTING BTM CAPABILITITES

2

34

5

Realize andMobilize

Optimizeand

Maintain

1

Establisha Baseline

Educate and Align

ContinuousBTM Improvement

Diagnose and Design


Smart enterprises today are rightfully pursuing alignment oftechnology with the business, and that in itself is no smallachievement. But for some, the right level is really synchroniza-tion, where technology shapes (not just enables) strategic choices.And at the highest level of achievement, business and technologyleadership actually converges, reflecting an executive and man-agement team that has achieved an extraordinary level of cross-understanding and vision for the future.

The BTM Standard supports enterprises at all three levels.Assembling the components of Business Technology Managementas described previously yields unprecedented capacity and oppor-tunity for success in a marketplace where competitive advantage isincreasingly defined through technology.

Business technology budgets are so big today that they obvi-ously cannot be ignored by any senior management team. Thereare those companies with executives who will wring their hands,clamp down with arbitrary spending caps, demand a quick fixsuch as outsourcing, and call for the head of the CIO. Within ashort while, they will cycle through those steps again, since noth-ing there addresses the core issue: You cannot spend (or slash)your way to business technology excellence and congruence withthe business. That demands intelligent application of technology,with spending determined by strategic business needs, not by arbi-trary benchmarks.

In fact, there are companies whose executives are beginning tosee that business technology investment must be accompanied byappropriate BTM investment. This new kind of capital includesthe processes, organizational structures, information and technol-ogy required for unified business and technology decision making.This new kind of company will move beyond alignment, wheretechnology supports but never goes beyond immediate businessneeds, to synchronization and convergence, where technologyhelps shape new opportunities and in fact cannot be separatedfrom the business.

You had better hope that company is your own, and not yourcompetitor.

27What Is BTM?


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