Thursday, August 15, 2013

How much is CMMI Certification worth?

Dear CMMI Appraiser,

I’ve recently transitioned to a new organization.  Based on my most recent experience with the CMMI, I am trying to educate my new bosses about the contracting opportunities that are available to a company that has a CMMI Certification. These are strictly numbers guys. Can you give me some figures in terms of hard dollars? ~ Tom F.

Tom, good to hear that you have experience with the value that a proper adoption of the CMMI can bring. But if you're looking to nail numeric value in dollars and cents for your use of CMMI, I'm afraid the answer is “it depends.”

In fact, there are several contributing factors. You might want to sit back with a cup of coffee while I take you through them.

First off, there are billions of dollars in contracts in play where CMMI has a role, all over the world.  Some of these contracts "require" you to have a "level" of CMMI, but many more give preference in the form of "points" during their evaluation process if you have a CMMI Rating (for good reason).  You are right to alert your new bosses to the opportunities available to companies that successfully complete a SCAMPI A appraisal and achieve a CMMI rating. It can be a true game-changer. Maybe you saw that at your last company.

Secondly, strictly speaking, there is no such thing as “CMMI certification.” It’s true that the phrase “CMMI certification” is commonly used in the industry, thanks to some large-scale early adopters who created an environment where a CMMI mandate feels and looks like a certification. But you can't become great by focusing on so-called CMMI certification - it drives the wrong behavior.  So when you speak to your bosses, the correct phrase to use is, “Achieving a CMMI rating.”

Now let’s talk numbers. Every CMMI Lead Appraiser would love to be able to say, “With a proper adoption of the CMMI, your productivity will increase 80%.”

Or, “Follow the guidelines of the CMMI and reduce defects and rework by 60%.”

Or, here's one that would make the decision easy on everyone: “Learn to spell CMMI, and you'll make 70% more profit.”

But the truth is, there are so many factors that these kinds of statistics are merely hypothetical. It really does depend on your company's individual situation. Also, the reason WHY you adopt the CMMI will have a major impact on your results.

I find it fascinating that there have been many attempts over the years to quantify the value of CMMI. Most of the efforts, in my humble opinion, have come up short in terms of data quality. That's why, at the process improvement and performance innovation company I head up, Broadsword, we commissioned our own aggregation of CMMI Users Stories (the CMMI Users Stories report is available here) and found the following numbers:

  • 80% of users experienced an increase in performance and improvement in the quality of products and services
  • 54% noted that defects had decreased, sometimes dramatically 
  •  69% said they had seen an ROI, with one respondent who was leading the CMMI effort for a division reporting: “It was one of our most profitable divisions.”

These figures suggest that you will probably see substantial gains in productivity. How much?  It depends.  On you, on your boss, on you company, and on who you work with to help you get started.

Adopting the CMMI can also help open the door to bid and win government and corporate contracts. How much? Again … it depends.

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. For instance, some automotive companies require CMMI Level 3 to bid on electronics, software, and engineering business. These opportunities can be many times the annual revenue of even the largest service company.

But there are better reasons to adopt the CMMI. I will go so far as to say that 99% of your success depends on WHY you choose to adopt the CMMI.  Getting a certificate is useful for marketing (sometimes), but it's an incomplete reason to go through such a complex project.   As I said above, you can't become a great company simply by focusing on certification.

See, the real value of the CMMI comes from the transformation of the culture of your company. When properly adopted, the CMMI helps change the way you behave, so that you build products that are better than other companies that are building similar products. If you pursue so-called CMMI certification, you may get a piece of paper that says you have a CMMI rating.  But you won’t get the value.

Which would you rather have, the paper or the value?

And don’t say, “It depends!” That’s MY line!

Need to know EVERYTHING about the CMMI. Broadsword is hosting another FREE, LIVE Webinar on Friday, August 16, 2013 at 1PM ET. Click here to join us for “CMMI - Everything You Need to Know!”

Jeff Dalton is a Certified SCAMPI Lead Appraiser, Certified CMMI Instructor, ScrumMaster, author, and consultant with years of real-world experience with the CMMI in all types of organizations. Jeff pioneered agileCMMI, the leading methodology for incremental and iterative process improvement. He has taught thousands of students in CMMI trainings and has received an aggregate satisfaction score of 4.97 out of 5 from his students.

Visit for more information about engineering strategy, performance innovation , software process improvement and running a successful CMMI program.

To download eBooks about CMMI, visit Jeff’s Author Page on Amazon.

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