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Federal IT Investment Guidance Strengthens the Enterprise View Richard Manley Information Technology (IT) investments in the federal government continue to demand an increasing share of the budget and are growing at a rate much faster than the overall budget. Federal spending on IT exceeded $50 billion in fiscal year (FY) 2003, representing one of the greatest category increases in the federal budget this year, an increase of 11 percent over FY01 and close to 25 percent over 2000. In just three years, the U.S. Treasury's investment in IT modernization has increased by more than 400 percent. Meanwhile, many new initiatives, such as the heightened focus on homeland security, are placing additional demands on federal IT spending. For more than two decades, the goal of achieving strong IT stewardship has fueled the emergence of new rules, guidance, and oversight requirements that shape the federal government's Information Technology Investment Management (ITIM) practices. Since the mid-1990s, many of the new rules have proven especially challenging to senior leaders, IT managers, and stakeholders—all trained and experienced in traditional "stove-piped" system development and acquisition processes. A major milestone in agency IT investment management took place when Congress passed the Clinger-Cohen Act (CCA) (formerly known as the Information Technology Management Reform Act) into law. This act and the Federal Acquisition Reform Act, both passed in 1996, require the heads of federal agencies to link IT investments to agency accomplishments and establish a process to "select, control, and evaluate" (S/C/E) their IT investments. It would be a difficult task for any IT stakeholder to understand (and comply with) all the rules governing ITIM. These rules are often particular to specific functional areas and are derived from a diverse set of legislative acts, General Accounting Office (GAO) findings and reports, Office of Management & Budget (OMB) Circulars, Federal Acquisition Regulations, Defense Acquisition Regulations, and policy letters. Further complicating the issue is the lack of a single definitive source document for all the IT compliance rules and requirements. The GAO has maintained an ongoing effort to assist agencies in improving compliance with the myriad requirements intended to strengthen stewardship of agency funding through good IT capital planning. As part of this effort, GAO established an ITIM framework that enables enterprises to systematically improve investment processes to meet requirements specified in those diverse sources of guidance. The GAO ITIM Assessment Framework GAO's Information Technology Investment Management, A Framework for Assessing and Improving Process Maturity (GAO/AIMD-10.1.23) comprises a structured set of key practices that, when performed collectively, contribute to the attainment of a maturity stage (see Figure 1). MITRE helped define maturity stages 4 and 5 of this model, which is analogous to the Software Engineering Institute's (SEI's) well-known capability maturity models. Each maturity stage is reflective of an organization's ability to successfully perform a set of "critical processes" related to that stage. ITIM enhances previous federal IT investment management guidance by enabling the S/C/E approach to be conducted within a framework that describes the organizational processes required to carry out good IT investment management. Supporting elements, such as organizational prerequisites and commitments, must be in place for the investment management process to deliver results to the enterprise. The processes advocated in the ITIM assessment framework are based on underlying government "rules," which provide both motivation and direction for a robust enterprise ITIM program, but they are also informed by best management practices to ground them in practical, successful ITIM experience. Specific activities associated with each process provide an executable roadmap for enterprises to follow to mature their investment capability. Leveraging MITRE Research MITRE's ITIM research benefited from capital planning analyses performed throughout the company, enabling MITRE teams to effectively collaborate with the Federal CIO Council to capture lessons learned in portfolio management in the First Practices in Portfolio Management document. In particular, our research findings helped form the basis of conclusions presented in the document. A MITRE team surveyed and interviewed private sector companies and government organizations to assess the quality and maturity of their IT investment management capabilities and capture their advice and lessons they learned on their way to excellent practices. We found that while almost all the federal agencies had created some type of IT investment management process, none had implemented stable processes that address all three phases of the S/C/E approach. One barrier has been the lack of specific guidance regarding processes required to build a stable, reliable IT investment management organization capable of repeatable processes. Lessons Learned Summary The First Practices in Portfolio Management document includes several important lessons learned, which are summarized below. Align IT Investments with Strategic Goals. Whether participants worked at an enterprise in the public or private sector, strategic alignment is the criterion most often cited as the basis for the decision to fund a major IT project. In today's environment, more and more enterprises demand that IT investments demonstrate their contribution to the organization's strategic agenda (mission, vision, priorities, goals, and objectives). This criterion enables senior leaders to conceptualize the relative value that an investment will contribute to the enterprise and identify investments with the greatest enterprise-wide potential payoff. A majority of our interviewees identified two key activities that organizations have undertaken to address this issue:
Align the IT Portfolio to the Strategic Agenda. Answering the question, "Does each individual investment support the strategic goals of the enterprise?" is no longer sufficient. When strategic alignment is examined from a portfolio view, the question becomes: "Is this the best group of projects, with the best timing and correct priority, to support the enterprise's strategic agenda?" Ensure Strategic Alignment through Enterprise Architecture. Senior executives, business users, IT professionals, and other stakeholders have increasingly turned to enterprise architecture as a means to ensure strategic alignment by informing, guiding, and constraining decisions regarding an enterprise's IT investments. Characteristics of Highly Mature Organizations. Beyond the First Practices document, MITRE's research supported conclusions regarding highly mature organizations as captured in the ITIM assessment framework. Specifically, the framework articulates processes that refine and integrate business and IT forecasting, planning, and investing techniques and processes to optimize the overall performance of its IT portfolio. A highly mature organization focuses on:
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| For more information, please contact Richard Manley using the employee directory. Page last updated: November 12, 2003 | Top of page |
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