Portfolio Management (Program & Project) by Rahmat Mulyana at OMM 43 PMI Indonesia Chapter

12/18/2013

1

Portfolio Management:

Standard, Best Practice & Case Study

in Business-IT Context

By: Rahmat Mulyana,

MT,MBA,PMP,CISA,CISM,CGEIT,CRISC,ITIL-F

OMM 43rd – December 18th, 2013 Portfolio Management: Standard, Best Practice & Case Study in Business-IT Context, Dec 18 2013

Agenda

• Introduction

• Portfolio Management: Related Standard & Best Practice

• Project & Portfolio Management Application Review: Gartner & Forrester

• Process Maturity/ Capability Assessment: CMM, ISO 15504 & OPM3

• Case Study: Strategic Planning & Architecting

• Case Study: Value, Risk & Resource Optimization

• Case Study: Process Maturity/ Capability Assessment

Portfolio Management: Standard, Best Practice & Case Study in Business-IT Context, Dec 18 2013

12/18/2013

2

Brief Profile: Rahmat Mulyana,

MT,MBA,PMP,CISA,CISM,CGEIT,CRISC,ITIL-F

• Interest: “Business & Technology Alignment”

• Education: MBA, Information Systems, Computer Engineering (ITB)

• Association: PMI, ISACA, IIA, IASA, AIS

• Specialties: Strategic & IT Master Planning, Business & IT Architecting, Enterprise Governance &

Management of IT, Information Security & IT Auditing & Assurance

• Clients: Banking, Telco, Insurance, Airport, Seaport, Hospital, Pawnshop, Plantation, Forestry,

Energy, Ministry, University

• Experience:

– Co-founding & managing ComLabs ITB (2000-2007)

– Co-founding & managing Transforma (2008-now)

– Facilitator @ ComLabs Training (2000-now), Transforma Institute (2008-now)

– Professional lecturer @ Tel-U & Public lecture @ universities (2010-now)

– Working group @ SNI development related to Business-IT (2013-now)

• Mobile: +62-812-246-8446

• Email: [email protected]

• Profile: http://www.linkedin.com/in/rahmatmulyana


Events Documentation


ISACA Conference feat Erik Guldentops, 2013

Strategic Planning @ Unsri, 2013

OJK Chief Audit Executive Forum, 2013

PMI Branch Launching, 2013

Public Lecture @ UIN SGD, 2012

IT Master Planning

@ Transforma Institute, 2013

http://www.comlabs.itb.ac.id/

http://www.transforma.co.id/

mailto:[email protected]

http://www.linkedin.com/in/rahmatmulyana

12/18/2013

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Agenda

• Introduction








Business & IT Relationship Paradox!

• IT Investment will never stop grow!

– 1995: US$ 527.9 billion (OECD), estimated growth 9.7%

pa

– 2011: US$ 3.6 trillion (Gartner), actual growth 13,5% pa

Unfortunately the facts showed….

• IT Productivity Paradox:

– “You can see the computer age everywhere but NOT in

the productivity statistics”

• IT Investment Paradox:

– “large sums are invested in IT and seem to be swallowed

by a large black hole without rendering many returns”


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Many research show that most organizations

were failed to deliver value from their IT

investments

BUT……

IT Contribution Failed!

Include: Portfolio, Programmes & Projects Management


What is Portfolio Management?

• A portfolio is a

collection of

projects and

programmes and

other work that are

grouped together to

facilitate the effective

management of that

work to meet

strategic goals.


• Portfolio management is the centralised management of one or more project

portfolio, which includes identifying, prioritising, authorising, directing and

controlling projects, programmes and other work to achieve specific strategic goals.

Source: ISO 21500:2012

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Portofolio, Program & Project: Comparison

• Portfolio

management is

about “to do the

right things”

• Programs and

projects

management are

about “to do

things right”


Source: The Standard for

Portfolio Management,

PMI, 2013

Portofolio, Program & Project Relationship


Source: Organization Project Management

Maturity Model (OPM3), PMI, 2013

• Cascaded from Strategy

into Operations

• It’s all about Optimizing

Value, Risk &

Resources

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Value Analysis Tools


Payback Period

Discounted Cash Flow

Net Present Value

Internal Rate of Return

Profitability Index

Real Options

Cost Benefit Analysis

Do business measure IT value often enough?


Source: CIO Magazine, July 2006

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What COBIT 5 says about Portfolio, Program & Project?


BAI-01 Manage Programmes & Project

APO-05 Manage Portofolio

Governance

Management

Source: COBIT 5, ISACA, 2012 & ISO 38500:2008

• Accountability:

– Governance: Board

– Management: Business & IT Management

APO-05: Manage Portfolio


Source: COBIT 5, ISACA, 2012

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BAI-06: Manage Program & Project



BAI-06: Manage Program & Project



12/18/2013

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Agenda

• Introduction








Latest PPM

Application

Capability


While PPM has historically

been seen as a tool for

either:

• top-down forecasting &

planning

• project management

organizations rarely use a

single tool for both

purposes

Source: Forrester, Q4 2012

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Forrester Wave: Strategic Planning



Strategic Planning Capabilities



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Forrester Wave: Work Execution



Work Execution Capabilities



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Gartner Magic Quadrant: IT Project & Portfolio Applications


Source: Gartner, June 2010

Gartner Magic Quadrant: IT Portfolio Analysis Applications (IIPA)

CIO magazine:

The market for project management

software and services totals about $1.2

billion annually, according to Forrester

Research.

The market for project portfolio management

(PPM) software stood at $2.9 billion in

2008, according to IDC, which expects the

PPM software and services market to reach

$4.2 billion by 2013.


"The IIPA software market helps IT leaders

link, monitor, analyze and communicate

their activities on a single portfolio-level

software platform, providing CIOs and other

executives with holistic views of the IT

portfolio while IT plans and executes in

response to business and IT strategies."

12/18/2013

13

Agenda

• Introduction








Process Assessment Framework


Source: Process Assessment Model, ISACA, 2013

12/18/2013

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Measurement Framework: CMM & ISO 15504

CMM

• Began from Process Maturity Framework 1989, 1993,

1995 by Watts Humphrey in “Managing the Software

Process”

• Initiator = Software Enginerring Institute (Carnegie

Mellon University)

• Sponsor = US. Department of Defense

• Maturity = “degree of formality & optimization of

processess”

• Early goal = improve software dev process


ISO 15504

• Began from SPICE (Software Process

Improvement and Capability Determination) as

result from working group since 1993

• Early reference from ISO/IEC 12207 (Software

Lifecycle Processes) including many maturiy

model such as Bootstrap, Trilium dan CMM

• Developed into 6 business area: organizational,

management, engineering, acquisition supply,

support, operations

The Organizational Project

Management Maturity Model (OPM3)


Source: OPM3, PMI, 2013

12/18/2013

15

Not only Process but Seven Enabler!



1. Principles, policies and frameworks—Are the

vehicles to translate the desired behaviour into

practical guidance for day-to-day management

2. Processes—Describe an organised set of practices

and activities to achieve certain objectives and

produce a set of outputs in support of achieving overall

IT-related goals

3. Organisational structures—Are the key decision-

making entities in an organisation

4. Culture, ethics and behaviour—Of individuals and of

the organisation; very often underestimated as a

success factor in governance and management

activities

5. Information—Is pervasive throughout any organisation, i.e., deals with all information produced and used by the

enterprise. Information is required for keeping the organisation running and well governed, but at the operational level,

information is very often the key product of the enterprise itself.

6. Services, infrastructure and applications—Include the infrastructure, technology and applications that provide the

enterprise with information technology processing and services

7. People, skills and competencies—Are linked to people and are required for successful completion of all activities

and for making correct decisions and taking corrective actions

Agenda

• Introduction








12/18/2013

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Strategic Planning in Business-IT Context: Where Portfolio

Created


Review dan AssessmentStrategis Pada Organisasi

Visi, Misi dan Nilai

Strategi, Obyektif dan Indikator

Regulasi, Pasar dan Pesaing

Produk dan Jasa

Information Governance

Analisa KebutuhanSistem Informasi Organisasi

Arsitektur Bisnis

Informasi dan Pengetahuan

Jaringan Organisasi

SDM, Struktur, dan Kultur

Kebijakan, Standar & Prosedur

Penyusunan IT Blueprint

Arsitektur Data

Arsitektur Aplikasi

Arsitektur Infrasruktur danPerangkat Keras

Stakeholder dan Pengguna

Manajemen PortofolioProgram dan Proyek

Portofolio Program dan Proyek

Rencana Anggaran dan Investasi

Tata Pamong (IT Governance)

Assessment Kondisi Eksisting

Arsitektur Data

Arsitektur Aplikasi

Arsitektur Infrasruktur danPerangkat Keras

Stakeholder dan Pengguna

Tata Pamong (IT Governance)

Manajemen Implementasi danReview Portofolio

Monitoring Kinerja Portofolio

PeranStrategis TI

TI Eksisting

TI MasaDepan

Kebutuhan SistemInformasi

Baseline

ProfilStrategis

Organisasi

1 2

6

43

Strategi Implementasi

Strategi dan panduanimplementasi

Analisa Kesenjangan TI

5

Manajemen Perubahan

Yearly Strategic Themes


Tahun 2013 2014 2015 2016 2017

Tema Basic Capabilities

Yaitu kemampuan

untuk mendukung

layanan medis dasar

dan transaksi

keuangan

Managed Capabilities

Yaitu kemampuan

untuk mendukung

seluruh layanan

medis termasuk

pendukung medis

yang terintegrasi dan

jejaring medis yang

utama

Extended Capabilities

Yaitu kemampuan

untuk mendukung

seluruh proses di XYZ

dan seluruh

jejaringnya

Optimised Value

Yaitu mengoptimalkan

investasi TI menjadi

benefit bagi institusi

Strategic partnership

Yaitu TI memjadi

strategic partner

bisnis untuk membuat

inovasi dalam layanan

medis maupun

manajemen rumah

sakit

Kriteria Keterpenuhan

fungsionalitas

dasar kebutuhan

utama bisnis

Rekam medis

yang terintegrasi

(satu pasien satu

rekam medis)

Koneksi dengan

jejaring utama

dalam transaksi

keuangan

Sentralisasi

Pengelolaan IT

Penunjang medis

yang terintegrasi

Kolaborasi dalam

pelayanan medis

Implementasi

integrated clinical

pathway

Koneksi jejaring

utama layanan

medis (rujukan)

Integrasi TI

Keterpenuhan

Fungsionalitas

semua kebutuhan

bisnis

Koneksi dengan

semua jejaring

XYZ

IT Sebagai

Revenue Center

Keterpenuhan

kebutuhan

informasi pada

dukungan strategis

Integrated clinical

pathway yang

efektif

Knowledge sharing

antar unit

Inovasi layanan

rumah sakit

menggunakan TI

Optimalisasi

clinical analytics

pada layanan

medis

Investigasi medis

menggunakan TI

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Portfolio (Program & Project): IS Initiatives


KATEGORI PROYEK TIPE DESKRIPSI

Sistem Informasi

A. Perbaikan

aspek

keuangan

1 Pembangunan sistem

akuntansi

Sistem Baru Pembangunan aplikasi baru dengan fitur standard akuntansi,

setidaknya meliputi buku besar, AR/AP, Laba Rugi, Billing umum

(non pasien), akuntansi biaya, manajemen klaim

2 Integrasi semua modul

eksisting ke sistem jurnal

akuntansi

Sistem Baru memastikan semua modul aplikasi eksisting terintegrasi dengan

mekanisme jurnal ke akuntansi. Seperti pelayanan IRD, IRI, IRJ,

gudang medik, farmasi, IPSRS, Pengadaan, Gizi, pengadaan,

gudang non medik, fixed asset management

3 Penyempurnaan Billing

Management

Upgrade pengisian komponen billing pada unit pelayanan harus tersambung

dengan jurnal akuntansi (opsi: langsung maupun batch).

Terintegrasi dengan cash management dan modul AR akuntansi.

Memungkinkan ditarik ke financial management sebagai bagian

untuk financial forecasting

4 Penyempurnaan Cash

Management

Upgrade cash management ditingkatkan fungsionalitasnya dengan

menambahkan fitur pemasukan (cash-in) dan pengeluaran (cash-

out) untuk semua sumber data yang memungkinkan

5 pembangunan sistem

Remunerasi

Sistem Baru pembangunan aplikasi baru untuk pengelolaan remunerasi dengan

fungsional: monitoring komponen kinerja, kalkulasi remunerasi,

integrasi akuntantansi

For every identified initiatives we performed risk & impact analysis to setup priorities

Criterias example:

– Risk rated in H, M, L by considering investment value, impacted business processes,

impacted architecture and projects duration

– Impact rated in H, M, L by considering potential financial benefit and impact to customer


Risk & Impact Criterias

12/18/2013

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Implementation Roadmap


PROGRAM 2013 2014 2015 2016 2017 2018

Sistem Informasi

A Perbaikan aspek keuangan

B Perbaikan mutu dan efisiensi pelayanan

C Perbaikan layanan penunjang medis

D Perbaikan penunjang non-medis

E Perbaikan administrasi dan proses manajemen

operasional

F Penyajian informasi untuk keperluan strategis

G Pengembangan Data Mining

H Pengembangan knowledge management

I Perbaikan Portal Web

J Pengembangan sistem informasi pendidikan dan

penelitian

Infrastruktur

K Peremajaan Data Center eksisting

L Penambahan Segmen Baru

M Peningkatan Perangkat Jaringan

N Implementasi Disaster Recovery Center

Tata Kelola TI

O Penguatan Struktur Tata Kelola TI

P Penetapan Proses Tatakelola TI

Q Peningkatan SDM

R Teknologi Pendukung

Investment Plan Estimation


PROGRAM INISIATIF TIPE 2014 2015 2016 2017 2018

Sistem Informasi

A.

Perbaikan

aspek

keuangan

1.

Pembangunan sistem akuntansi Sistem Baru 500

800

500

600

2.

Integrasi semua modul eksisting

ke sistem jurnal akuntansi

Sistem Baru 100 100

3.

Penyempurnaan Billing

Management

Upgrade 50

4.

Penyempurnaan Cash

Management

Upgrade 50

5.

pembangunan sistem Remunerasi Sistem Baru 100

B.

Perbaikan

mutu dan

efisiensi

pelayanan

6.

pembangunan Modul Integrated

Clinical Pathway

Sistem Baru 500

800

500

500

7.

Pembangunan Sistem Rujukan Sistem Baru 300

12/18/2013

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Agenda

• Introduction








Feasibility Framework


ANALYSIS FRAMEWORK

2. Conventional Investment Analysis

3. Risk Analysis4. Enhanced Investment

Analysis1. Strategic Alignment

Analysis

V.1.0

START

INPUT:· Environment Condition· Industry Condition· Internal and External Condition· As Is IT Condition· IT Internal Study

2

END

INPUT:· IT Investment Risk Data

PROCESS:· Risk Identification· Risk Analysis· Risk Evaluation

METHOD:· Interview

OUTPUT:· IT Investment Risk Profile

INPUT:· IT Investment Analysis Result· IT Investment Risk Profile

PROCESS:· Risk-Based Options

Identification· IT Investment Configuration

Analysis· Real-Options Valuation· Sensitivity Analysis

METHOD:· FGD

OUTPUT:· Decision Recommendation

Approved?

Approved?3

Approved?

START

4

2

2

PROCESS:· Cost Analysis· Benefit Analysis· Investment Analysis (NPV, IRR,

ROI, Payback Period)

METHOD:· Interview

OUTPUT:· IT Investment Analysis Result

PROCESS:· Trend Analysis (PEST)· Industry Analysis (Enhanced

Five Forces)· External and Internal Analysis

(SWOT)· Corporate Strategy Analysis

(TOWS)· IT Strategy Analysis (BSC)· IT Project Analysis (EA & GEIT)

METHOD:· Interview

OUTPUT:· To Be IT Condition

1

INPUT:· As Is IT Condition· To Be IT Condition

Approved? 3

1

Yes

No

No

Yes

No

Yes

3

No

Yes

12/18/2013

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Strategic Alignment Analysis


Conventional Investment Analysis


0 1 2 3 4 5 6 7

2012 2013 2014 2015 2016 2017 2018 2019

Inflation Factor 1.000 1.050 1.103 1.158 1.216 1.276 1.340 1.407

Growth Factor 1.000 1.162 1.350 1.568 1.821 2.116

Total Cost Reduction & Avoidance Rp0 Rp0 Rp0 Rp0 Rp0 Rp0 Rp0 Rp0

Total Losses Reduction Rp0 Rp0 Rp998,073,771 Rp998,073,771 Rp998,073,771 Rp998,073,771 Rp998,073,771 Rp998,073,771

Total Increase Revenue (Forecast) 16.17% Rp0 Rp0 Rp0 Rp0 Rp0 Rp0 Rp0 Rp0

Total Benefit Rp0 Rp0 Rp998,073,771 Rp998,073,771 Rp998,073,771 Rp998,073,771 Rp998,073,771 Rp998,073,771

Total Benefit including Inflation 5.00% Rp0 Rp0 Rp1,100,376,332 Rp1,155,395,149 Rp1,213,164,906 Rp1,273,823,152 Rp1,337,514,309 Rp1,404,390,025

IT Infrastructure Cost (DC and 2 Regional

Offices Setup, Installation & Configuration)Rp0 Rp0 Rp0 Rp0 Rp0 Rp0 Rp0 Rp0

Total Change Management Cost (2 Regional

Offices)Rp0 Rp0 Rp299,711,800 Rp0 Rp0 Rp0 Rp0 Rp0

IT Infrastructure Cost (DC and 2 Regional

Offices Network Operations, without DRC)Rp0 Rp0 Rp0 Rp0 Rp0 Rp0 Rp0 Rp0

Total Expenses Rp0 Rp0 Rp299,711,800 Rp0 Rp0 Rp0 Rp0 Rp0

Total Expenses including Inflation 5.00% Rp0 Rp0 Rp330,432,260 Rp0 Rp0 Rp0 Rp0 Rp0

EBITDA Rp0 Rp0 Rp769,944,073 Rp1,155,395,149 Rp1,213,164,906 Rp1,273,823,152 Rp1,337,514,309 Rp1,404,390,025

Capital Used (Weighted Average) Rp0 Rp0 Rp1,875,432,260 Rp1,875,432,260 Rp1,607,513,365 Rp1,339,594,471 Rp1,071,675,577 Rp803,756,683

Capital Repayment Rp0 Rp0 Rp0 Rp267,918,894 Rp267,918,894 Rp267,918,894 Rp267,918,894 Rp267,918,894

Capital Used Balance Rp0 Rp0 Rp1,875,432,260 Rp1,607,513,365 Rp1,339,594,471 Rp1,071,675,577 Rp803,756,683 Rp535,837,788

Interest (WACC) 14.75% Rp0 Rp0 Rp0 Rp276,640,550 Rp276,640,550 Rp237,120,471 Rp197,600,393 Rp158,080,314

CAPEX Application Value Rp0 Rp0 Rp1,545,000,000 Rp1,236,000,000 Rp927,000,000 Rp618,000,000 Rp309,000,000 Rp0

Amortization 20.00% Rp0 Rp0 Rp0 Rp309,000,000 Rp309,000,000 Rp309,000,000 Rp309,000,000 Rp309,000,000

CAPEX IT Infrastructure Value Rp0 Rp0 Rp0 Rp0 Rp0 Rp0 Rp0 Rp0

Depreciation 20.00% Rp0 Rp0 Rp0 Rp0 Rp0 Rp0 Rp0 Rp0

PBT Rp0 Rp0 Rp769,944,073 Rp569,754,599 Rp627,524,357 Rp727,702,680 Rp830,913,916 Rp937,309,710

Income Tax 25.00% Rp0 Rp0 Rp192,486,018 Rp142,438,650 Rp156,881,089 Rp181,925,670 Rp207,728,479 Rp234,327,428

Net Cash Flow Rp0 Rp0 (Rp967,541,945) Rp468,397,055 Rp511,724,373 Rp586,858,116 Rp664,266,543 Rp208,225,600

IRR 43.30%

NPV Rp705,413,912

ROI 37.61%

Cumulative Net Cash Flow Rp0 Rp0 (Rp967,541,945) (Rp499,144,890) Rp12,579,483 Rp599,437,599 Rp1,263,704,142 Rp1,471,929,742

Payback Period 3 years 25 months

Year

Parameter Rate

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21

Risk Analysis


Minor (L) Moderate (M) Mayor (H)

High (H) Medium High High

Medium (M) Low Medium High

Low (L) Low Low Medium

Probability

Impact

Real Options Valuation


Parameter Description

q Option success probability

Vmax NPV maximum from the option

Vmin NPV minimum from the option

Ve Expected value from the option (derived from NPV minimum & maximum of an option and its success probability)

rf Risk-free rate (derived from applicable BI rate)

p Risk-free probability (derived from expected, minimum and maximum NPV, plus risk-free rate)

t Project lifetime for the option (in term of year)

K Cost of the option (derived from its total capital expenditure)

S Salvage value (calculated residual value derived from capital expenditures and its depreciation/ amortization rate)

x% Contribution Value (adjustable between 0 to 100% in order to maximize the value, either from the salvage value or remaining

project value)

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22

Enhanced Investment Analysis


4

3

2

5

2'

3'

5'

P/S

1 A

E

A

Pilot

S1

Follow-up

S5

S3

Expand

Stage 1

Stage 2

3

3'

E

S6

S4

Expand

S2

MONTHS

Development ES 1 (12m)

Abandon

Abandon

No Expand

No ExpandDevelopment ES 2 (12m)

Change Mgmt ES 2 (8m)



Operation DC & DRC Pilot Option

Operation DC & DRC Stage Option

P

S

A

E

S1

Legend:

Pilot Option

Stage Option

Abandon Option

Expand Option

Scenario Pilot-Abandon

S2 Scenario Stage-1-Abandon

S3 Scenario Pilot-Follow-up

S4 Scenario Stage-1-Stage-2

S5 Scenario Pilot-Follow-up-Expand

S6 Scenario Stage-1-Stage-Expand

0 5 6 12 16 17 24 28 29

Change Mgmt ES 1 (1m)

Change Mgmt ES 2 (7m)Dev IA (4m)

Change Mgmt IA (1m)

Rp802,210,689,033 Rp148,759,319,500

(Rp33,482,137,624)

Rp654,187,752,968

Rp9,605,594,360

Rp1,162,511,849

Rp43,895,090,126

Rp192,654,409,626

(Rp23,876,543,264)

Rp621,868,127,193

Rp620,705,615,344

Rp950,970,008,533

Rp952,132,520,382 Rp1,162,511,849

Example

Agenda

• Introduction








12/18/2013

23

Process Maturity Assessment (CMM)


PO5 Manage the IT Investment PO5

LINK Level Compliance Contribution Value

0 0,33 0,00 0,00

1 0,13 1,00 0,13

2 0,53 1,00 0,53

3 0,78 1,00 0,78

4 0,66 1,00 0,66

5 0,42 1,00 0,42

0 Non-existent

2,53

Nr Weight

1 1 x 0,00

2 1 x 0,66

Total Weight 2

1 Initial/Ad Hoc

Nr Weight

1 1 x 0,33

2 1 x 0,00

3 1 x 0,00

4 1 x 0,00

5 1 x 0,33

Total Weight 5

2 Repeatable but Intuitive

IT investments are justified on an ad hoc basis.

Reactive and operationally focused budgeting decisions occur.

Maturity Level

Maturity Level

Statement Do you agree…

The organisation recognises the need for managing the IT

investment, but this need is communicated inconsistently.

Allocation of responsibility for IT investment selection and budget

development is done on an ad hoc basis.

Isolated implementations of IT investment selection and

budgeting occur, with informal documentation.

Re

lativ

e

Im

po

rta

nce

Maturity Level

Maturity Level =

Statement Do you agree…

There is no awareness of the importance of IT investment

selection and budgeting.

Instructions: A relative Weight between 0 and 10

should be allocated for each statement, and then an

'x' is used to indicate which statement is applicable.There is no tracking or monitoring of IT investments and

expenditures.

Process Assessment Status Open Manage the IT Investment

Management of the process of Manage the IT investment that

satisfies the business requirement for IT of continuously and

demonstrably improving IT’s cost-efficiency and its contribution

to business profitability with integrated and standardised services

that satisfy end-user expectations is:

Back to Assessment Overview

Not

at

all

A little

To s

om

e d

egree

Com

ple

tely

Process Capability Assessment (ISO 15504)


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