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© 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
© 2007 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.
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
© 2007 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.
4
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+)
© 2007 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.
5
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?
© 2007 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.
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
© 2007 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.
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
$$ linkedto program and policy needs and
results
Infrastructureand Ongoing
O&M
RelativeImportance
1. Addresses Governor’s Cabinet Action Plan2. Alignment with IT Department goals3. Level of cross agency collaboration4. Project visibility or political sensitivity5. Amount of process change required6. Level of coordination7. Project size in staff and budget8. Level of technology customization.
© 2007 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.
8
Better Views Provided by Portfolio Analyses
IT Portfolio Assessments Provide Government CIOs Valuable Input into Evolving Strategic Planning and Enterprise Architecture Development.
New Development
12% Major ApplicationEnhancements 9%
App. Support/Maintenance
11%Infrastructure,
Telecom, End-User Support
Admin. Systems, Planning, Other
22%
Where are the potential cost savings and the ways we can reallocate dollars to fund transformation or critical process improvement priorities?
46%
Agencies/DepartmentsA D
HR
Finance
Infrastructure
$$ $$ $$ $$
$$
$$
$$
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
© 2007 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.
Analysis of IT Investments
9
© 2007 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.
10
Source: “Assessing Risks and Returns: A Guide for Evaluating Federal Agencies’ IT Investment Decision-making,” United States General Accounting Office, February 1997.
© 2007 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.
11
© 2007 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.
12
© 2007 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.
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
© 2007 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.
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
© 2007 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.
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
© 2007 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.
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
© 2007 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.
17
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?
© 2007 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.
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
© 2007 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.
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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
© 2007 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.
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
© 2007 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.
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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
© 2007 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.
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
© 2007 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.
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
© 2007 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.
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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%
© 2007 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.
25
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?
© 2007 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.
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
© 2007 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.
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.