CIOs and the IT departments they lead are hard-pressed to cope with the ever-increasing volume of technical projects their supported business units are clamoring for. While dealing with this heavy workload, IT is also required to be cost conscious, efficient and, as the saying goes — do more with less. Modern enterprises have turned to IT Portfolio Management to help manage their critical IT projects, resources and personnel, all of whom are under some pretty intense pressure and conditions.
With the increased focus on IT project management, there are some significant best practices that can be put in place to ease the burden and challenge of implementation:
- Reviewing divisional or business projects before the portfolio prioritization phase to better understand the IT impact of each project as you work to balance operational, business enabling and innovative technology projects within the portfolio.
- Using a balanced scorecard to assist in overall read-out and expectations-setting with your management team
- Building a strong financial model that will help you manage the metrics and KPIs output by your portfolio management tool
The challenges (and solutions) to implementing portfolio management are significant and may include:
- Gaining buy-in across the board for programs or projects that management does not feel are a priority. You’ll need the proper criteria in place and a solid business case to support your position.
- Leading with the tool instead of the process. This will create more challenges than it’s worth. You first have to lay the groundwork for the portfolio process, and then address what tool will meet your needs.
- Communicating what the process is and how to comply with it. Enhanced communication will help you avoid projects that pop up in shadow IT areas.
Defining Portfolio Management and IT’s evolution in today’s business environment
Portfolio Management is really the overall strategic planning process that aligns programs with business-enabled capabilities, fundamental IT operational enhancements and technology innovation. The intent is to drive differentiation and overall value to the business. IT Portfolio Management enables executive leaders to see a bird’s eye view of where they’re investing in their project resources.
This is not a new concept, but it is much more diversified today than it has been in decades past as demands on executives have evolved. They are challenged with balancing business demand, IT service enhancements and staying current with business innovation. CIOs and IT executives alike have an exorbitant amount of pressure on them — managing ongoing operational costs in global service levels, considerations of Big Data, Cloud and security concerns, all while integrating consumer driven technologies into the enterprise. The combination of these factors have dramatically diversified IT Portfolio Management and its related demands.
So why do it?
There are multiple benefits to analyzing how your IT resources are allocated across the board and ensuring balance between IT projects and business projects. There are also efficiencies and cost savings to be realized when there is a structure in place to allocate budget to each of the project candidates that comply with the IT portfolio criteria. By the same token, projects that are running under the radar can also be scrutinized to ensure alignment with the overall portfolio. Ultimately, the IT group benefits from having resources appropriately positioned to support the operational IT needs and the business benefits by having strategic business projects implemented that allow the business to excel. Having a balanced IT portfolio is critical to achieving both of these objectives.
Eliminating IT Project Failures
The Project Management Institute looked into the issue in a report titled, Pulse of the Profession, Capturing the Value of Project Management. Here’s what the PMI researchers documented and presented in this annual global survey of project, program and portfolio managers.
According to PMI the top contributors to large IT project failures are:
- First, “Unclear objectives or lack of business focus”
- Second, “Unrealistic schedule and reactive planning”
- Third, “Shifting requirements and technical complexity”
- Fourth, “Unaligned teams and missing skills”
- And fifth, “Unexplained causes”
So, how do you address these challenges and eliminate failures? IT Portfolio Management enables organizations to maximize the value of their IT investment while significantly reducing the risks. It encourages better communication and helps maintain strong alignment between IT and the business, promoting a team-like approach to projects among the stakeholders. It aids project planning and the scheduling of resources. And finally, IT Portfolio Management helps identify and shrink the number of similar or redundant technology projects that often plague larger IT operations.
What are the 5 key steps in creating and managing an IT portfolio?
- Strategy and planning– Take into account both the business and the IT strategy goals as you identify what upcoming business will require IT resources. The key is ensuring balance between the two.
- Prioritization – Apply the critical criteria for each project. Your group will identify standardized criteria such as financials, degree of difficulty, degree of risk in the project, and resource allocation analysis. Once these are identified, candidate projects can be appropriately prioritized.
- Communication – Build consensus and alignment within IT and the business at large by adequately sharing what projects are on the horizon.
- Realization – Integrate the IT portfolio into your financial systems. Work with the program management organization on execution and implementation of proper metrics for realization.
- Review process – Institute project status reports and progress reports. Conduct a spend analysis and address potential future demands of projects.
What if you’re already implementing portfolio management but want to make it more effective?
- Looking at the type of metrics you’re using to measure success is also key. Some metrics are looking at your complete portfolio mix, the percentage of portfolio spent in running the business, growing the business, and innovating the business.
- Another metric is demand and capacity. This metric is for the prioritization and sequencing of capacity, the percentage of increase in project intake, the percentage of growth and initiatives, IT resource utilization, business resource utilization, and your recruiting pipeline.
- The third metric is the overall value of your IT portfolio. What’s the percentage on time? What’s the percentage on budget? What are the amounts that you’re saving for consolidation of various projects that look alike?
- The fourth area to review is financial management. How effectively are we managing projects? What is the percentage of variance to plan? How much budget is committed but not spent?
- Finally, review the process twice a year. It’s tied with the overall business planning process with finance. So, finance is a key stakeholder in this entire Portfolio Management process.
There are significant challenges to implementing IT Portfolio Management process and systems, but the benefits far outweigh the challenges. With a structured approach in place, you can execute an annual planning process or a bi-annual planning process and gain a critical understanding of what balance (or imbalance) exists in your portfolio. As the relationship between the IT and Executive teams grow, you will gain valuable perspective on how to better enable strategic business objectives that also meets IT’s needs. With improved trust and communication, there is a much stronger chance of being ‘brought to the table’ earlier as enterprise projects are being considered. IT is well positioned to progress from a simple business commodity and to a more strategic corporate partner. With the proper metrics in place and a structured portfolio planning process set, you will be well-positioned to more successful enablement of your business.
Joan Walker | Principal | TayganPoint Consulting Group | email@example.com