Saturday, March 26, 2011

What is the value of a CMMI ML3 Rating?

Dear Appraiser,

I just found you from a web search.  Can you provide some information?

At a high level I am trying to discuss the opportunities that will open up to a company that has a CMMI Level 3 rating. Can you give me any basic numbers?  i.e., a company that has a CMMI L3 can bid on $1B worth of contracts that are only open to ML3 rated companies.

Great question!  But if you're looking for a dollar value, I'm afraid the answer is "it depends."  There are billions in contracts in play where CMMI plays a role - all over the world.

In terms of value, there are so many factors that it's impossible to say "your productivity will increase 50%" or "you'll make 30% more profit."  Although you will see substantial gains, if done right, your company's individual situation is the driving factor in "how much" productivity gain you would see.  Also, the reason WHY you do it will have a major impact.  More on that later.

There have been many attempts over the years to quantify the value of CMMI and most of the efforts have come up short in terms of data quality (IMHO).  I was just in an SEI meeting the other day on this very subject!

If I asked 3 clients to tell me the difference between a "defect," a "fault," and a "flaw" I would get nine different answers.  If they collected "defect" data, it would all mean  different things.  You can imagine the affect aggregating it would have - it would be misleading (that hasn't stopped some from publishing some very authoritative metrics over the years….but that's another story!).  Worse yet, someone might ACTUALLY do something based on the data!  Yikes!

I can tell you that there is a LARGE amount of business in both the federal/state government sector AND the commercial sector that request that you have a CMMI rating to bid and maintain a contract.  And many more that consider a CMMI rating positively in their scoring system for contract award.  This opportunity is many times the annual revenue of even the largest service company – so can best be described as "huge."  For instance, many of the automotive companies require CMMI ML3 to bid on electronics, software, and engineering business.  Many states are starting to get on board as well.

But there are better reasons to adopt the CMMI.

The reason these organizations want you to be CMMI ML3 is because, if you do it correctly, you will experience much better quality, increased productivity, less project delays, you'll be on-time and on-budget more often, and your workforce will be happier and more productive.  This goes for agile, waterfall, V-Model, RUP, or any other types of methods or life-cycle you use.  

You may note that I've stressed "if done right," or "do it correctly" a couple of times.  CMMI can put your company on the path to greatness, but there are many (too many!) examples of companies that did it just to 'get the certificate" and missed the point entirely.  They may get the paper, but they don't get the value.

Your choice!

Your best bet would be to engage with someone who really knows the facts (an SEI Certified SCAMPI Lead Appraiser) and to spend the day with them so you can fully understand what you're getting in to.

oh, I happen to be one of those!  haha.

Good luck!

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