Why IT organizations need portfolio management? Because change happens and adjusting priorities and assessing the impact of changes is critical to the business and cannot be done on a spreadsheet. The question is: how hard is it to put portfolio management in place?
Actually, it is fairly simple if you do not over-engineer it.Three steps build what you need to get started with portfolio management.
Project inventory
Step 1 is to get an inventory of the projects in flight. At least the bigger ones. By project here I mean an initiative that is building something new or adding something discretionary to existing systems. Nothing too fancy, just the basic info about business objectives, budget, type and amount of resources allocated, and status. Risk and other details can be added later. Without exception, companies discover that they have a lot more work in progress than they had expected. Good portfolio management software lets you create portfolios that roll-up project information by whatever criteria you want - business unit, geography, business objective...
Application inventory
But wait! Projects are only 20% of IT spend, the rest is maintaining existing applications and systems. So we better take an inventory of what major applications we are supporting and roughly how many resources and cost are allocated to each. Usually a big surprise here is how much of this maintenance spend is in fact not keep-the-lights-on type of work, but discretionary spend that should be treated as a project.
Remember the 80-20 rule here: 20% of the apps typically consume 80% of the resources, so do not worry about capturing every single application. Being able to roll-up all maintenance efforts into a cohesive picture for each major application and the departments they support is powerful by itself.
Project initiation / demand management
The third and final step is capturing demand into IT, standardizing the project initiation process and establishing common stage gates for reviews and approvals. How much is IT being asked to do? How much do we have resources and budget for? Don't worry about what happened in the past, start with the new project requests.
Portfolio prioritization
Now you are ready to put it all together in order to compare current project and application load against new demand. This allows you to make intelligent decisions on which initiatives are more important, what can be de-prioritized and what would be impacted. This is a powerful business conversation that you could not have with a spreadsheet that is obsolete the moment you push the save button...
What steps have you followed when implementing IT portfolio management? What has worked and not worked?
--Alex Lobba
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