© 2007 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates. 1 IT Portfolio Management

© 2007 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.

1

IT Portfolio Management

This presentation, including any supporting materials, is owned by Gartner, Inc. and/or its affiliates and is for the sole use of the intended Gartner audience or other authorized recipients. This presentation may contain information that is confidential, proprietary or otherwise legally protected, and it may not be further copied, distributed or publicly displayed without the express written permission of Gartner, Inc. or its affiliates.© 2007 Gartner, Inc. and/or its affiliates. All rights reserved.

IT Portfolio Management in GovernmentGetting it to work for you

Dave McClureResearch Vice President

Montana Digital Government SummitSeptember 9-11, 2007Helena, Montana


3

So, What’s the Problem?

No consistent process flow

No fact-based analysis for decision making

Lack a common business case framework

Manual and paper-based process that are too late in identifying problems and issues

Little or no formal review, little transparency

Large variability of project performance

No long term solution for aging applications and IT infrastructure

Store Systems

Daily ReportsSystem

ReplenishmentSystem

DC Order MgtSystem

DC Billing

Corp Stk File

DistributionSystem

RSU Central

A10 - Order Routing

A11 - RS Inventory &Sales Month End

Reporting

POS Sales Rpt

Perp Inventory

WarehouseBilling

RS Merch(RSMS)

Acct/Bookkeep

Stock Mnt

A12 - Model Quantity

Store File

A1 -Credit Card Apps

DealerSettlement

Sears PymtSystem

DB2 Mkt Info

Credit CardSystem

A2 - Credit Plan Mnt

A3 - Return CheckApps

Equifax, Martel,Checkfast or

Input of Texas(3rd Party)

Retail Store

Rebuy Dept

Telecom Dept

A5 - Prepaid Cellular

Customer

TPS History

A6 - BANCTEC

A9 - RS StorePerpetual Inventory

Promo Order

Multi-Mkt Price

JournalingSystem

National Parts

A13 - Srvc Cntr PhyInv & On-line Recaps

A14 - POSSales Processing

A15 - RadioShackReplenishment

Order Routing

Service CenterPOS

DATAAPPLICATIONS

A16 - Service CenterReporting

Srvc Cntr Tbls

A17 - Stock Mnt

Fran Store

Comm System

Intern’l Stores

A18 - Merch Pricing

A19 - Merch PromoPln

VSAM Stock,Store or

Control Files

A20 - RS Buyer SalesPlanning /Proj Sys

A&A Import/Export

A22 - Web StoreLocator

A23 - Service CenterWeb Locator

A26 - Answers Online

A29 - Corp Elec Msg

A30 - RS One-Each

A31, A45 - ServicePlan Price Cntrl &

Tranmt

Service Center

A33 - RS Srv PlnSrv Cntr Cust Mnt

A34- Srv PlnsAmercican Bankers

AmericanBanker Assoc

A37 - Srvc PlnDisplay

Contract Srvc

Printer

A38 - Srvc Pln CnfrmLetter

A39 - Srvc Pln Rnwl

A40 - RS Validationand DB2 Load

RSTS DSATbls

A42 - Online InquirySys

RSTS System

A46 - Srvc Pln SalesEntry

A47 EBIS ODS

A48 - Flyer Selection

Ad Circulation

Experion

Advertise/Ad Support

A50 - Customer Load

A51 - GeostoreAnalysis

A52 - Profiler Report

A53 - Name & AddrHygiene

Group 1

A57 - Cust Trk Load

A58 - Customer Mnt

A59 - LOOK!

NAILSWinLook

DB2 Load

Invent Merch

CensusBureau

A60 - EconomicCensus

A61 - Sales Reporting

A62 - Flash Sales

Python

A64 - Fran DR Entry

A4 - Store File Sys

Financial Sys

Payroll/HRMS

Real Estate

Cellular Act

A8 - Comm System

Retail Str POS

Email Server

POS Support

RMAC DR

Promo Dist

POS Invt Tran

Model/Qty

POS Rcv Invc

Merch Adj

RS Invt Sumry

Corp User

A25 Price Lookup

A27 -Srv Pln Rpt/Mnt

A28 - Store Msgs

Email Systems

A32 - New Bus SVPMail

A44 - Mkt IncremtalRpts

A49 - Hitlist

Stock File EffPricing

A24 RS.COM

InvestorRelations

CNN/fn site

Web Dev

Cust Support

Intrnet Cust

A43 - TRACE

Intrnl Audit

Loss Prev

STORE

SALES

PRODUCT

CUSTOMER

Legend

Facility Party

Product Activity

State-wide or Agency IT Status


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Theory, Concept or Reality?

Approved Portfolios

BenefitsBenefits

SkillsSkills

NeedsNeeds

CostsCosts

Business case review & approval

Business case review & approval

RisksRisks

Projects, ideas & alternatives:

Enterprise-wide and specific

agencies, departmentsor programs

Projects, ideas & alternatives:

Enterprise-wide and specific

agencies, departmentsor programs

InitialtriageInitialtriage

In-Progress Reviews

In-Progress Reviews

Enterprise Strategy & Objectives

Enterprise Strategy & Objectives

Risk/Value Tradeoffs

Risk/Value Tradeoffs

Alignment with Drivers

Alignment with Drivers

ConstraintsConstraints

DependenciesDependencies

Project to project

Project to project

Cross-boundaries

Cross-boundaries

TimeTime

StaffingStaffingBudgetsBudgets

Benefits Realization

Benefits Realization

Operational

Client

Program & policy outcomes

Operational

Client

Program & policy outcomes

U.S. Government OMB Directives and Guidance / LawsU.S. States OH, TX, WA, MI, NC, VA (15+)


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Key Issues

1. How is IT portfolio management delivering better value in government decision making?

2. What are the key practices that distinguish different maturity levels of government organizations?

3. What are the key lessons learned to date from implementations in different government settings?


6

Portfolio Management Foundations

Does having well trained project managers with disciplined project management processes produce better IT project results?

Time

Co

st V

aria

nce Idaho

Does having a well designed governance process ensure more successful results?

Michigan

MiCSES Project Control Office and Governance Model


7

Clear Investment Approval Criteria and Processes Bring Order to Certain Chaos

25%25%

30%

25%

20%20%

Project Business Cases

Optimized ROIOptimized ROI

Optimized RiskOptimized Risk

Optimized Enterprise

Strategy Impact

Optimized Enterprise

Strategy Impact

Technology, business, project, resource, customer

Reference models, interoperability, sequencing, data sharing

Economy, efficiency, effectiveness, empowerment

Risk-adjusted ROI, PVIT

Strategic Alignment,Mix and Prioritization

Financial/Benefit Cost Analysis

Mission, Program, Business Process Priorities/Needs

Risk Factors/Probabilities Affecting Outcomes

Enterprise Architecture and Standards Fit

Example Government FrameworksDemand & Value Assessment (AU)

Value Measurement Methodology (U.S.)MI, VA, NC Models (U.S.)

EMF/Value for Money Framework (CAN)Example ESP Value ToolsIBM Public Value Scorecard

Accenture Public ValueDeloitte Performance Value Map

SAP Public ROIExample PPM Applications

Primavera/Prosight, CA/Clarity, Microsoft/UMT, Metier, Pacific Edge,

Planview/Business Engine, HP/Mercury, Oracle, IBM RPM

Business ApplicationM&E

New Projects

IT Portfolio

Utility Applications

$$ linkedto program and policy needs and

results

Infrastructureand Ongoing

O&M

RelativeImportance

1. Addresses Governor’s Cabinet Action Plan2. Alignment with IT Department goals3. Level of cross agency collaboration4. Project visibility or political sensitivity5. Amount of process change required6. Level of coordination7. Project size in staff and budget8. Level of technology customization.


8

Better Views Provided by Portfolio Analyses

IT Portfolio Assessments Provide Government CIOs Valuable Input into Evolving Strategic Planning and Enterprise Architecture Development.

New Development

12% Major ApplicationEnhancements 9%

App. Support/Maintenance

11%Infrastructure,

Telecom, End-User Support

Admin. Systems, Planning, Other

22%

Where are the potential cost savings and the ways we can reallocate dollars to fund transformation or critical process improvement priorities?

46%

Agencies/DepartmentsA D

HR

Finance

Infrastructure

$$ $$ $$ $$

$$

$$

$$

Are there cost-saving opportunities we are missing that leverage common application needs?

B C

How can we get a better proactive understanding of "life-cycle" strategies for existing application

and system investments?

ELIMINATE

REPOSITION

MIGRATE/RE-ENGINEER

ELIMINATEMIGRATE/RE-

ENGINEER

MAINTAIN/ENHANCEREPOSITION

ELIMINATE

Te

chn

ical

So

un

dn

es

s

Business Value

Excellent

PoorLow High

2007

2008

2009


Analysis of IT Investments

9


10

Source: “Assessing Risks and Returns: A Guide for Evaluating Federal Agencies’ IT Investment Decision-making,” United States General Accounting Office, February 1997.


11


12


13

Tradeoffs: 'Balancing' the Portfolio

Balance the Portfolio to Optimize Overall Returnfor an Acceptable Risk Level.

The True Test Is the Ability to Stop, Cancel or Delay Low-valueand Problem-plagued In-progress Investments. And then to have fewer of these.

High-risk, low reward projects

transformation projects

Low-risk/low-rewardprojects

High

Categorize by Categorize by Risk & RewardRisk & Reward

Eliminate

Long-duration, limited

Eliminate

Consider Consider Some of TheseSome of These

High-risk/high-reward;

Reward

Risk HighLow

EliminateEliminate

EliminateEliminate

Low-risk/high-reward;

transformation projectsshort-duration/significant

Increasing Risk

Incr

ea

sin

g V

alu

e

B

G

CD

FE

Target Portfolio

A

HI

Quick WinsMajor Support


14

IT Governance Strategy

What Should ITWork On?

Demand Governance

Business Management Primary Responsibility

SupplyGovernance

How Should IT DoWhat It Does?

IT Management Primary Responsibility

Portfolio Management Works in Tandem With IT Governance

IT Governance Operations

IT Governance Goals Domains Principles and Policies Decision Rights Styles


15

Create a Culture of Discipline

Are the specific domains requiring decision rights and inputs established?

Is the structure of each group making, approving, and overseeing decisions clearly established?

Is decision-making guidance and authority within each group and across groups clear?

Have adequate steps been taken to ensure that information and analyses used for decisions is reliable and constructed using agreed upon approaches?

Is a regular meeting schedule adhered to and out-of-cycle meeting criteria established for pressing problems or exceptions?

ExecutiveCommittee

Investment Review Board

InformationTechnology

ReviewBoards

Membership Roles

Agency Head (Chair)Deputy Sec. COS,CIO,CFO, CPO,CAO,CHCO,Dept Heads

-- Approve IT Portfolio-- IT impact on Strat. Directions-- Alignment of IT Investments-- Review all major IT decisions-- Decide direction of IT

Membership Roles

CIO (Chair), Senior Business Directors (CoChair), CFO/FinanceUnit CIOs

-- Monitor IT programs/policies-- Propose policies & standards-- Coordinate IT issues-- Recommend project approval, disapproval, termination

IRB recommends portfolio changes; EC accepts / rejects

Membership Roles

Deputy CIO (Chair), Dept CIOs,CA,CISO,Business Line Directors

-- Specialized Review Boards-- Review project milestones-- Technical issue assistance-- Make recommendations to ITC and Agency CIO about project status

ITRB reviews portfolio/projects; ITAPC reviews EA issues

Bus

ines

s U

nits

Ente

rpris

e-w

ide

ALIGNMENT

VALUE

RESOURCES

RISK

PERFORMANCE


16

But Be Practical

Does NOT Mean

• More process

• A project with no one accountable for its outcomes

• A project where expectations and outcomes are not reconciled

• Unilateral decision-making by the CIO


17

Key Issues





18

Portfolio Scope Definition Overall Investment, Benefit, Risk Optimization Active Portfolio Performance Monitoring Business Environment Change Adaptation

Comprehensive Program Planning Change and Risk Management Coordination of Project Delivery Measurement of Results Business/IS Collaboration

Expanding From the Project to the Portfolio

Source: Adapted From New York City Housing Authority and Cisco Systems

Strategic

Tactical

Scope of

Work

ProgramManagement

Scope of Initiatives

IT-Centric Business/IT Enterprise

Portfolio Management

ProjectManagement

Initiation Budget Schedule Resources

Deliverables

Scope Risks Metrics


19

Process Maturity Is Fundamentalto Successful Implementation

Source: "IT Portfolio Management Step-By-Step," Bryan Maizlish and Robert Handler, 2005

Source: "Information Technology Investment Management Framework, 2004," U.S. Government Accountability Office

Admitting

Communicating

Governing

There must be a better way!

Enterprise and unit IT views

More-refined portfolio decisions

Mechanisms and metrics

Sense and respond

Building Investment Foundation

Repeatable investment controls in place and key foundational capabilities in place.

Improving Investment

Process

Process evaluation techniques focus on improvement of portfolio performance and management.

Leveragingfor Strategic Outcomes

Investment benchmarking and change management techniques are deployed for strategic mission/business outcomes.

Little awareness of investment management techniques. Processes are ad hoc and project-centric-focused, and outcomes vary widely.

Creating Investment Awareness

Managing

Optimizing

Comprehensive selection and control processes with benefit and risk criteria linked to mission.

Developing Complete Portfolio


20

Crawling: Application Triage

Government Entity ABCMajor Application Portfolio Strategy Identified 2,300+ applications

153 major apps; approx 40% with significant risks

Incremental change 2007/08; more aggressive in 2008/09(goal of reducing applications ½ or more)

1. Application remediationplans

2. Simplify the IT environment

3. Formalize APM; move toward PPM maturity

4. Formalize technology adoption process

5. Address culture change

Strategy

Inventory

Technical View Filter

Business View Filter

Prioritization based on business criticality

Prioritization based on technical supportability

Short-list sequencing

Input from Business Clusters Vetting

Refine

Spreadsheet Tool Used

Risk Assessment Scorecard

Short and mid-term tactical and long-term strategic recommendations

High-Level Risk AssessmentProcess Methodology for Measurement and Prioritization


21

Walking: From Projects to Investments

Source: Toolkit Case Study: Arlington County Moves From Project to Investment Management, March 2007

Reserve for Emergencies

New Capabilities

Refresh Infrastructure

Leverage CurrentInvestments

Mandate/Contract

Investment Category

Contingency fund to cover unforeseen needs

Projects to bring automation to a previously non-automated function

Investments that refresh or replace infrastructure components

Continued investments to extend capabilities of existing systems

Projects necessitated by legal or policy requirement or binding contract is in place (as necessary)

DefinitionPercent

of Spending

As Necessary

33%

33%

23%

10%(Previously for New Technologies)

(Previously for Refreshof Existing Capabilities)

(Previously for Investments That Furthered Strategic Goals)

County Commissioners

Executive Steering

Committee

PMO

Department Projects and

Initiatives

Arlington County, Virginia


22

Arlington County

13 Project Scoring Criteria Improves Internal Program Services

Improves Service to the Public

Linkage to County Master Plans

Department Business Model

Level of Interest

Inter-departmental Impact/ Cross-

Functional Business Process Redesign

Schedule Risk

Cost Sensitivity

Technical Risk

Organizational Risk

Risk of Not Doing It

Benefit to Cost Impact


23

Source: Managing the Portfolio, Realizing the Benefits, UK CJIT, Office for Criminal Justice Reform

Running: Integrated, Active, Repeatable

PortfolioManagement

• Selection Criteria

• Investment Appraisal

• Portfolio Prioritization

Evidence-basedDecisions

• Project attractiveness, achievability, affordability

• Alignment with business priorities

• Portfolio adjustments as necessary

PerformanceManagement

• Delivery Plan

• Portfolio Dashboard

• Performance Review

• Monthly and Six-month Progress

Managing Project Delivery:

• Transparent, line-of-sight reporting

• Funding continuation linked to realization of forecasted benefits

Active Benefits Management

• Benefits Realization Planning

• Data Validation

• Transparent Reporting

Ensure Investment Success By:

• Validating scale and quality of benefits

• Project and business line owner involved

• Capture of cross-system benefits and wider public value

U.K. Criminal Justice IT


24

Investment Lifecycle

Concept &Feasibility

Planning Implementation Operation

Investment Logic Map

Investment Concept Brief

Business Case

Benefit Mgmt Plan

Project Management

Benefit Reports

Investment Reviews

Running: Investment Logic Maps

Victoria Province, Australia

Facilitated Workshop

Costs down 10%; Benefit realization up 20%


25

Key Issues





26

Calibrating Expectations of Stakeholders

Process simplification

More transparencyin your IT spending

Best practice sharing and reuse

Stronger arguments for funding needs

EA/ITAM input:"as-is" architecture

Consolidation opportunities and cost savings (apps., licensing, contracts)

Process simplification

More transparencyin your IT spending

Best practice sharing and reuse

Stronger arguments for funding needs

EA/ITAM input:"as-is" architecture

Consolidation opportunities and cost savings (apps., licensing, contracts)

Fewer and more-manageable projects

Tangible savingsand benefits capture

Better business/IT alignment

Stronger controlsfor large, complex projects

More-agile IT planning

Better understanding of IT staffing needs

Fewer and more-manageable projects

Tangible savingsand benefits capture

Better business/IT alignment

Stronger controlsfor large, complex projects

More-agile IT planning

Better understanding of IT staffing needs

Investment optimization

Life-cycle planningto support "to be" EA

Agility in dealingwith changing budgets and demands

More-consistent, positive ROI and benefits realization

Continuity in approach rather than constant reinvention

Investment optimization

Life-cycle planningto support "to be" EA

Agility in dealingwith changing budgets and demands

More-consistent, positive ROI and benefits realization

Continuity in approach rather than constant reinvention

Short Term Midterm Long Term


27

Our Advice Avoid false starts. Balance implementation urgency and pace

with organizational readiness and maturity. Success requires heavy doses of change management. Crawl – walk – run!

Don't turn it into a "finding the right tool" decision.

Recognize the interaction of governance, processes and toolsthat enables an organization to optimize its IT investment portfolio.

Focus on value, risks and prioritization with active engagementof key stakeholders. Ensure a healthy dose of usefulrisk impacts.

Avoid using it solely for one-time annual budgetdecisions. It is about continuous alignment, tracking and benefits realization of existingapplications and new projects.

Clarify governance and put a process in place thatuses portfolio management data to consider, makeand enforce decisions.

Documents

© 2007 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates. 1 IT Portfolio Management