1
Why is Enterprise Portfolio Management Important?
• The Commonwealth must find ways to meet increasing demands through cost savings and increased productivity.
• Investment management can contribute to lower operating costs and the generation of internal capital.
• Portfolio management provides the ability to analyze on-going operational investments to re-evaluate viability and contribution to strategic direction.
• Cheaper alternatives may be found and redundant investments can be retired.
2
How are Business Cases Evaluated?
• The Investment Business Case, as required for project planning and development approval, provides information necessary to evaluate a potential IT investment’s value and risk.
• In the Commonwealth, Investment Business Cases are evaluated for:
Strategic Alignment
Technical Feasibility
Benefits to the Commonwealth
Risk
Funding Requirements
Agency Past Performance
3
A Balanced Scorecard Approach• In order to determine
a potential investment’s overall value, a number of perspectives are analyzed.
• The balanced scorecard determines whether an effective business case has been made to go forward with development.
4
Financial Perspective - Cost-Benefit Analysis• The Cost-Benefit analysis
assists agencies in thinking through how solution options might avoid costs in the future or generate cost savings
• Internally generated revenue is key in increasing return on investment
• A mechanism to measure productivity gains should be explored in the future (not currently in place today)
5
Commonwealth Return on Investment (ROI)• ROI for the Active project portfolio (by Secretariat and by Project Category) is measured quarterly
Discussion Points
• Why do smaller projects tend to have larger ROI and better chance at success?
• How can Agencies/Secretariats balance their individuals portfolios between high ROI projects and projects necessary due to mandates or other business requirements?
Major Project Portfolio ROI
Nov-07
Jan-08
Apr-08
Jul-08-4.00%
-3.00%
-2.00%
-1.00%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
Quarters
RO
I P
erc
en
tag
e
Non-Major Project Portfolio ROI
Nov-07Jan-08 Apr-08
Jul-08
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
Quarters
RO
I Per
cen
tag
e