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Using Investment Life-Cycle to Using Investment Life-Cycle to Manage IT Cost, Risk, and Manage IT Cost, Risk, and
Benefit Benefit
Joseph D.K. WheelerMTG Management Consultants, LLC
May 1, 2006
AGENDAAGENDA
• IT as an Enterprise Asset• Portfolio-Based IT Management• Risk Management Mechanisms • Questions
IT AS AN ENTERPRISE ASSETIT AS AN ENTERPRISE ASSET
• Common Enterprise Assets• IT Assets • IT Asset Lifecycle
Common Enterprise AssetsCommon Enterprise Assets
• What are your agency’s most valuable assets? Why?
• Asset value declines over time.• Costs change over time.• Your agency maintains a
fleet/inventory/portfolio for each type of asset.
• Each investment has risk.• Your Chief Executive “owns” them.
IT AssetsIT Assets
• Clear and tangible value.• Value declines over time.• Costs change over time.• You maintain a portfolio of technologies.• Each asset has a set of risks to manage.• Your Chief Executive “owns” these assets.
IT Asset LifecycleIT Asset LifecycleC
ost
/ C
ost
/ Ben
efit
Ben
efit
TimeTime
PlanPlan AcquireAcquire ImplementImplement Operate / MaintainOperate / Maintain
CostsCosts
BenefitsBenefits
PORTFOLIO-BASED IT PORTFOLIO-BASED IT MANAGEMENTMANAGEMENT
• Content of Portfolios• Principles• Management Cycles
– Investment Management– Project Management
• Integration into Agency IT portfolios
Content of PortfoliosContent of Portfolios• Mission, strategies, programs• Installed infrastructure• Technical management and staff
capabilities• Applications• Partnerships or interfaces • Current and planned projects• Cost and benefits of each investment• Problems and opportunities involving IT
PrinciplesPrinciples
• Sound business justification.• Part of overall portfolio.• Senior executive sponsorship.• Active oversight.• Short cycle implementation.• Continuing investment based on results.
Any significant investment requires careful stewardship to maximize its value and insulate it from threats to its integrity
Any significant investment requires careful stewardship to maximize its value and insulate it from threats to its integrity
Management CyclesManagement CyclesInvestment ManagementInvestment Management
ASSESSASSESSASSESSASSESS
PLANPLANPLANPLAN
FUNDFUNDFUNDFUND
IMPLEMENTIMPLEMENTIMPLEMENTIMPLEMENT
OPERATE/OPERATE/MAINTAINMAINTAIN
OPERATE/OPERATE/MAINTAINMAINTAIN
Project Project
The Management CyclesThe Management CyclesProject ManagementProject Management
InitiationInitiation Creation /Creation /PlanningPlanning ImplementationImplementation ControlControl CloseClose
ScopeScopeSupportSupportFundingFunding
Project Project ManagementManagementAcquisitionAcquisition
CapabilitiesCapabilitiesTechnologyTechnology
ImplementationImplementation
OversightOversight ScopeScopeSupportSupportFundingFunding
Integration into Agency IT Integration into Agency IT PortfoliosPortfolios
• Introduce new assets into the portfolio.• Reassess:
– Business impact.– Cost structures.– Available tools.– Available solutions.
• Reset lifecycle strategies across portfolio.• Re-invest as needed.
RISK MANAGEMENT RISK MANAGEMENT MECHANISMS MECHANISMS
• Investment Risk• Mitigating Investment Risk• Project Risk Management• Mitigating Project Risk
Investment RiskInvestment Risk
• Scope• Cost/Benefit• Organizational Commitment• Technology
Mitigating Investment RiskMitigating Investment Risk• Clear business case.• Incremental:
– Development and deployment.– Technology change.– Organizational change.
• 2 year investment cycle.• Each investment stands alone:
– Delivers value or positive cost-benefit. – Without reliance on subsequent phases.
• Informed executive sponsorship.
Project Risk ManagementProject Risk ManagementProject RisksProject Risks
• Project Management• Organization Capabilities• User Involvement• Technology Change• Scope• Oversight• Business Impact• Cost-Benefit• Implementation
Project Risk ManagementProject Risk ManagementMitigation StrategiesMitigation Strategies
• Assess and address• Employ structured project management• Structure your procurement process• Actively manage scope• Employ independent oversight• Measure progress, errors, budget, and schedule• Maintain focus on business impact
SUMMARYSUMMARY
• Manage IT assets in the context of the an agency’s overall operations.
• Develop and deploy IT to meet clearly defined business needs.
• Bring executive focus to IT investments. • Employ a formal, objective investment process.• Comprehensively analyze and address risk. • Break large projects into smaller, more
manageable projects.• Add value with each phase.
IT Investment Portfolios provide a framework IT Investment Portfolios provide a framework
THE BUSINESS CASETHE BUSINESS CASEFor IT Portfolio ManagementFor IT Portfolio Management
• IT assets are enterprise assets.• The investment is significant.• Risks have proved to be high.• Organizational support is commonly low.• Investing in this management effort:
– Increases funding and support.– Reduces implementation and operating costs.– Reduces investment and project risk.– Captures benefits to your agency.
QUESTIONSQUESTIONS