Buzzword: IT Capability

What is IT Capability? If you want to understand why some IT organizations create more value than others, it is imperative to understand this buzzword.

Information Technology (IT) Capability is an organization’s ability, by virtue of its IT assets and know-how, to create business value.

This capability can be, and is usually, attributed to the IT function within an organization. More appropriately it should be attributed to the organization as a whole because no function within an organization is an island. Each gains from the other and in turn enriches them.

This value “bleed” from one function to another cannot be quantified in a meaningful way, however, it exists. It can be positive or negative.

When the organization plays as a team i.e. the functions collaborate, positive value passes between functions. In this case, the organization’s capability is greater than the sum of its parts. The functions are better off together.

Conversely, when the organization does not play as a team i.e. is dysfunctional, then the value bleed is negative. In this case, the organization’s capability is less than the sum of its parts. It follows then that the functions are better off not being with each other!

The net of this phenomenon is that no function within an organization would create the same value within another organization. For example, if an IT organization is moved from one company to another, it will deliver more or less but never the same value as it was creating in the original company.

This is true of any team. You may have noticed that a player is successful or more successful on one team versus the other.

IT Capability is comprised of four sub components or elements. IT’s overall capability is not the sum total but the synthesis of capabilities of its underlying elements.

IT Capability comprises of the following components:

  • IT Strategy
  • IT Processes and Metrics
  • IT Organization
    • Skills
    • Structure
    • Knowledge/ “know-how”
  • Assets/Infrastructure
    • Hardware
    • Software
    • Applications
    • Network
    • Database
    • Tools

An organization creates value by utilizing a unique combination and configuration of these components

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Posted on 05/19/2009 by

Buzzword: IT Capability author sourabhhajela



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