Mastering

Project

Portfolio

Management

®

an

Project Management eBook

Contents…

Mastering Project Portfolio Management This content was adapted from Internet.com’s Project Manager Planet and CIO

Update Web sites. Contributors: Jeff Monteforte and Lisa Erickson-Harris 2

2 How to Sell PPM to Your Company 5 Using PPM to Manage Risk

5

7

7 Making the IT Project Business Case 9 Rationalizing Software with PPM

9

11

11 Using PPM to Align IT

Mastering Project Portfolio Management How to Sell PPM to

Your Company By Jeff Monteforte

ave you ever heard your CEO or CFO complain provides the forum for improving communications with the about the high cost of IT in your company? Are CEO and other business unit heads.

you frustrated by the fact that your company Hexecutives make every project a No.1 priority? Fish On So, you’ve already done your homework and you are Wel , you’re not alone. In a survey of more than 250 CIOs, convinced that PPM is the way to go, but your CEO and nearly half (48 percent) said that the most frustrating aspects business executives are skeptical and you just can’t seem to of their job can be attributed to three items: get the buy-in that you need to move this initiative forward.

What do you do?

1. Planning IT’s direction

without a clear business

First, you need to keep in mind

strategy

that every person, including

your CEO, CFO, or business

2. Attempting to set priorities

unit executive, has some form

(again related to the lack of

of buyer’s resistance. The good

a clear business strategy)

news is that this resistance can

be overcome and converted

3. Overcoming imposed

into passionate support if you

budget constraints (with-

fol ow this proven method.

out—you got it—a clear

business strategy).

When introducing the idea of

PPM your objective needs to

Being a CIO and trying to

be two-fold: to overcome their

manage a company’s infor-

resistance while persuading

mation technology without

them to take action.

knowing where the company

wants to go is like walking

To do this you’ll need a results-

through a maze while wear-

oriented approach that ad-

ing a blindfold. You never quite know if you’re on the right dresses the biggest objections to be effective.

route and you turn down several pathways that end up taking you in the wrong direction.

The fol owing five-step “sales” approach is designed to over-

come each of the major objections in a careful and methodical Turning It Around

manner while guiding your executive to the conclusion that Fixing the rift between IT and the rest of the company cannot PPM is the right solution, right now. The five steps are: be accomplished without the participation of your executives and business unit heads. The discipline of IT Project Portfo-1. Identify the problem (both spoken and unspoken) lio Management (PPM) is the best IT governance practice to begin building the necessary bridges that enable business/IT

2. Provide the solution

alignment.

3. Show the benefits

Portfolio management includes the critical ingredients necessary to overcome the perceptions that plague IT organiza-4. Make a call to action

tions. It does this by getting business units more involved in the IT investment planning and decision-making process and 5. Close with a warning

2 Table of Contents

Mastering Project Portfolio Management, an Internet.com Project Management eBook. © 2009, WebMediaBrands Inc.

Mastering Project Portfolio Management Step 1: Identify the Problem

Your first step is to gain the executives’ interest by spel ing out Keep in mind that you should always look for ways to per-the problem from their point of view. Your CEO should say to sonalize this message, such as “This will get Charlie off your himself, “That’s exactly how I feel” when he hears your idea.

back every month when he complains that he’s not getting his financial planning software.”

The more you can elaborate on the problem the better. You want to present the problem with so much insight that your Whether it’s your CEO or the boy in the mailroom, people CEO real y feels the pain.

are not interested in you or your solution as much as they are interested in what it will do for them. The benefits are many, My experience has shown me that business executives con-so here are a few that consistently get the attention of execu-sistently have similar concerns. Use the fol owing list as a tives.

starting point for identifying the concerns of an executive.

Project portfolio management:

In general, executives perceive that the company…

• al ows you to repurpose 10 to 30 percent of your

• Demand for IT projects greatly exceeds IT capacity discretionary IT funds

• Has strained relationships between business unit heads

• ensures that the highest priority projects get IT resources first and IT due to a lack of clarity, common expectations and

• provides visibility and accountability to the project accountability

approval process

• Struggles with prioritizing and justifying IT projects

• gets business executive management and IT management

• Has duplicate projects going on in different parts of the to speak the same language, share risk, and col aborate in the organization causing overlap and waste investment decision-making process

• Is frequently redeploying IT resources

• builds much-needed trust and respect between business units (which causes further delays)

and the IT department

• Feels that IT projects need to be better aligned with the

• encourages business leaders to think like a team.

company’s business objectives.

Step 4: Make a Call to Action

Step 2: Provide the Solution

Your cal -to-action must be action-oriented and explicit. Use Now that you’ve built interest by making them feel pain, it’s phrases such as, “I need you to introduce this process at your time to provide the solution. This is the part of the conversa-next staff meeting” or “To ensure this works, I’m going to need tion where you boldly stake the claim that PPM can solve the a senior resource from your department. I think Carol would problem.

be perfect, but who do you think is right that you can dedicate to this effort?”

In each discussion, highlight the powerful impact that PPM

can make and use your company’s business language when The first group that needs to be established is an IT Invest-describing this.

ment Board comprised of the CEO, CFO, and business unit heads. You’ll need your CEO’s approval and support for this, Without going into too much detail, share the basic inter-work-so make this your first call to action.

ings of a portfolio management evaluation process. Stress that this discipline ensures incremental investment using a Step 5: Close with a Warning

stage-gate project evaluation process.

A good “sales pitch” continues to build emotion right up to the end. The best way to do this is to remind your CEO that “noth-A stage-gate process has a great deal of appeal to manageing changes, if nothing changes.” Paint the picture of what ment, because it ensures progressive commitment of funds happens if he or she doesn’t take advantage of your solution.

and resources by restricting investment in the next stage Remind them just how unpleasant the current state is and that until management is comfortable with the outcome of the it doesn’t have to remain that way.

current stage.

Again, try to personalize your statements so that the picture Step 3: Show the Benefits

you paint appears very graphic in the head of your executive, In this step you tell your CEO how the company will benefit because you’re stirring his emotions and causing his subcon-from PPM.

scious to say, “I want to change that.”

3 Table of Contents

Mastering Project Portfolio Management, an Internet.com Project Management eBook. © 2009, WebMediaBrands Inc.

Mastering Project Portfolio Management Getting PPM accepted by your executives isn’t an impossible Once you address each person’s issues you can expect their task, but is does require a wel -thought, wel -executed pro-support and influence when you present the idea to the entire cess. Take this five-step approach and make it your own. Cus-executive group.

tomize and personalize the problems and benefits to match your company’s specific situation, as well as the audience that Not only will this make the “big” meeting anti-climatic, but you’re talking to.

you’ll be pleasantly surprised by the positive dialogue that occurs between the executives.

Start the “sales” process by having individual, one-on-one conversations with the key influencers of your organization.

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Mastering Project Portfolio Management, an Internet.com Project Management eBook. © 2009, WebMediaBrands Inc.

Mastering Project Portfolio Management Using PPM to Manage Risk

By Lisa Erickson-Harris

t is undeniable that the economy is struggling, Tools and Solutions

and as IT professionals -- key players in the overall Mature PPM solutions include decision support capabili-I business team -- it is important to contribute to ties, financial tracking and linkages to other IT planning and the larger picture of the business where sacrifices management tools. Many slices of information are available are being made. Scrutinizing IT investments is one for the CIO. For instance, with evolved solutions, he or she very smart way to operate IT as a business within a business.

can get a look at how the IT organization is performing fi-Project and portfolio management (PPM) solutions and sup-nancial y, by division, by strategic objective, and by schedule, porting processes are definitely a part of this picture.

along with many other criteria. PPM can specifical y help with the fol ow decision categories that are so commonplace for IT

When the economy and busi-

executives:

ness climate is tumultuous,

businesses need to stay fo-

Resource Utilization: Pro-

cused. PPM can help to bring

vide a view of how any given

that focus to IT and provide

resource or group of resourc-

the visibility and insight need-

es are being used in the envi-

ed to keep important proj-

ronment. This information can

ects and initiatives on track.

be compared with changes in

Without effective project

company direction to deter-

management, many efforts

mine whether or not those re-

start out in good stead, but

sources are being used to the

fall inevitably to the wayside

best “value” in the organiza-

when a more pressing priori-

tion in a given timeframe. You

ties come along. But a project

can paint what-if scenarios to

management program pretty

view the trade-offs of varying

much eliminates excuses as

project and resource deci-

long as the people running

sions.

the program bring on board

all the key stakeholders. Proj-

Executive Analytics: Visual-ects get done, efficiencies are

ization tools within PPM solu-

created, and innovation plans

tions make them particularly

put into place. In short, PPM helps IT sharpen its priorities useful for sharing status and project intersection points with and get the job done.

business executives. You can capture timelines, resource shortages, and trade-offs in making one decision versus In its simplest of forms, PPM provides visibility for tracking and another when it comes to IT investments. PPM offers a managing new and existing projects within an organization. It visual tool for executive staff to review resource needs, proj-mitigates heavy demands on staff resources with projects and ect health and status.

initiatives that compete for the same budget dol ars. It’s an easy topic to grasp if you merely look at the basic functional-

Risk Mitigation: Mature PPM solutions enable decisionity required to manage projects. This “basic” functionality in-makers to assess risk factors and determine whether or not cludes projects, schedules, resources al ocated, status, and a project can succeed in its own right and what, if any, are actual versus project budget al ocations. PPM tools provide the implications of its failure or success on other important all of these capabilities, but they can do much more. If used projects in the enterprise.

wel , they can be a CIO’s best friend for keeping IT on track with business objectives.

5 Table of Contents

Mastering Project Portfolio Management, an Internet.com Project Management eBook. © 2009, WebMediaBrands Inc.

Mastering Project Portfolio Management Quantifiable Metrics for Performance: These metrics are In the future, PPM will need to integrate with a host of en-only useful when they are tracked and monitored by a PPM

terprise-class management products. For instance, “service system. Ideal y, these metrics will be presented in an automat-portfolios” represent some or all of the active services availed fashion and demonstrate obvious successes and shortable to internal and/or external consumers. But there needs to comings.

be a way of representing services in development, and those

transitioning into full production environments, to support pro-

Staffing Evaluations: Staffing evaluations demonstrate which visioning, and a host of other operational activities.

IT professionals are able to meet their objectives on time and within budget. Needless to say, this information is not only Similarly, the properties of resources needed for projects are helpful in ensuring the success of a given project, but can be increasingly being stored in configuration management data-very valuable when it comes time to do staff reviews.

bases (CMDBs) and the configuration management system (CMS) as defined by the IT Infrastructure Library (ITIL). Herein Vendor Landscape

lies the connection for PPM and more advanced capacity and Enterprise Management Associates has identified more financial planning, as well as a dotted line to best practices than 30 vendors with PPM offerings. Some of the more initiatives such as ITIL. Many other management domains will active vendors include CA, BMC Software, Compuware, fol ow a similar logical thread.

Daptiv, HP, IBM, Innotas, PlanView, Serena, Oracle, and SAP.

Products can be purchased using a full license distribution model or, from a handful of the vendors, via software as a service (SaaS).

continued on page 6

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Mastering Project Portfolio Management, an Internet.com Project Management eBook. © 2009, WebMediaBrands Inc.

Mastering Project Portfolio Management Making the IT Project

Business Case By Jeff Monteforte

aybe the most essential component an IT

Making the Case

Project Portfolio Management (PPM) practice All experts agree that a successful business case must be is the project business case. It is with a correct, unbiased, clear, and efficient. That being said, here M business case that the various project ideas are some proven, pragmatic techniques to building a suc-can be compared in an apples-to-apples cessful business case:

fashion.

Correctness: Include all meaningful costs (including non-IT

Business cases should also be leveraged to support deci-business personnel expense) and all meaningful benefits, sions of whether to build or buy a system or product and such as increased revenue, new hire avoidance, or increased when to implement it. The first step for most companies is to throughput.

develop an enterprise-standard business case template that can be used to compare proj-Be sure to validate all numbers

ect ideas across all business

against the best available data

units and regions.

sources and any uncertainty

and variances in estimated

While a business case

values should be consistently

provides financial justifica-

captured and reported. Pro-

tion for an IT investment deci-

vide a dedicated section to

sion, it must also evaluate the

intangible factors and present

project idea on other per-

and analyze these benefits

spectives important to your

consistently.

company. For instance, how

does the requested IT proj-

Unbiased: All meaningful

ect align with your corporate

alternatives (such as build

goals or how does the

vs. buy options) should be

proposed project comply

analyzed and presented in a

with your company’s defined

constant fashion.

technical architecture?

If there are political concerns

The development of the busi-

(and usual y there are) or there

ness case is itself a “mini-proj-

is an obvious organizational

ect” and should be governed by the same investment justifica-comfort with a certain devel-

tion process as the “real project.” There should be a defined opment technology or an approach, these biases, strengths schedule and budget for creation of the business case.

and experiences should be presented.

Ideal y the business case development process fol ows a Clarity: The business case must be easily understood by all spiral, incremental, and iterative process. There is a significant project stakeholders including project sponsors, project man-cost in increasing the quality and reducing the uncertainty agers, process owners, and subject matter experts.

(variance) of the benefit and cost metrics for each alternative scenario investigated. This business case development Many times the financial analysis of alternatives appear com-cost needs to be justified against the potential benefits of plex to the non-financial stakeholder. Likewise, there is signifi-improving the decision making process.

cant complexity in understanding the underlying technology of any large systems investment.

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Mastering Project Portfolio Management, an Internet.com Project Management eBook. © 2009, WebMediaBrands Inc.

Mastering Project Portfolio Management This complexity must be managed and presented in the Use Multiple Metrics

business case with careful y defined terms, approaches, and It is more pragmatic and appropriate to use a simpler ROI results. When in doubt, write to the level of an eighth grader measure, such as payback period on IT projects under a and use business terms while minimizing technical terms.

certain dol ar amount (e.g., $50,000) and a more rigorous measure, such as net present value in addition to payback Efficiency: You can expect reasonable cost in developing period on the large IT projects (e.g., over $50,000).

a comprehensive and valid business case, but the entire process should be designed to effectively manage the costs This approach to applying ROI scrutiny will help keep the IT

of developing the case.

project pipeline full and avoid an elongated “benefits analysis”

phase on projects that can be implemented quickly (e.g., less Three keys to efficient business case development are: than 12 man-months).

• Drive efficiencies with common processes, tools, and

Partner with Finance

appropriately trained and dedicated resources If the financial measurements attached to an IT project are

• Fund business case development (as wel as the to be accepted throughout the company, then an authorita-overall project) in an incremental and iterative manner.

tive representative from the finance department needs to sup-Define checkpoints and tol gates for the project that port the method, as well as the ROI calculation. The IT and enable sponsor review and redirection of effort and expenses.

business staffers responsible for calculating the ROI metrics need to work closely with the financial organization to achieve

• Minimize the calculated financial metrics to those most the needed support from Finance.

important to the organization. Recognize which benefits and costs drive the financial model and focus efforts on clarifying these critical cost or benefit drivers.

Pragmatic Measurement

If it takes more than a few of weeks to evaluate a project, then A Formula for Success

the method is too complex. If an investment of 20 to 40 hours from IT and 20 to 40 hours from the business community can I’ve made the case that for an effective and convincing not produce a viable ROI analysis then the process needs to business case the benefits and costs should be credible, be simplified.

unbiased, and presented in a format that fol ows financial, accounting, and statistical standards.

Ultimately, the value and the success of a project business case is driven from fol owing an efficient and effective pro-Political and human behavioral aspects of the business case cess, ensuring the data is “right” and from making it an creation are just as important as the technical merits of the inclusive process that involves the sponsoring business and business case. While there are many ways to build a project finance personnel.

business case, fol owing is a summary of the most effective industry practices:

The final component of success is a clear, crisp presentation that communicates to decision makers an understanding of Apply ROI Analysis to “Large” Projects the range of potential alternatives along with associated ROI analyses should only be done for the large, strategic IT

benefits, costs and risks of each alternative. If done correctly, projects — those over a certain dol ar amount, certain number the project business case will speak for itself.

of required resource hours, or requiring capital expenditures.

In general, the top 10 to 20 percent of all IT projects will represent 80 to 90 percent of the entire discretionary IT budget.

The Business Owns the Benefits

While the project management documentation for capturing all the aspects of an IT project is the responsibility of IT, calculating the ROI for technology projects isn’t an IT-only endeavor. The business users should gather the data and work on defining the benefits associated to the project being measured.

continued on page 11

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Mastering Project Portfolio Management, an Internet.com Project Management eBook. © 2009, WebMediaBrands Inc.

Mastering Project Portfolio Management Rationalizing Software

with PPM By Jeff Monteforte

raditional y, project portfolio management consistent approach to evaluating each asset and (PPM) is targeted at directing the demand for determining its disposition.

requested projects that enable new business T services and capabilities. While the manage- Once you determine that rationalizing your software portfolio ment of this investment is critical, because it is necessary and you have executive management’s support represents the most significant opportunity for for such an effort, then I recommend the fol owing six steps: business value, it typical y only accounts for about 25 percent of the total IT budget.

Understand Business Needs:

Business needs are capabilities that must be provided by The remaining 75 percent of the budget is consumed by the system(s). These requirements are often expressed as operational activities required to maintain existing IT

business or operational activities that must be supported by assets that support operations.

the system. A good understanding of the business area’s These operational activities

workflow must be developed

come in a variety of flavors

as part of the business needs

that

include

maintaining

definition activity.

infrastructure, fielding help

desk cal s, performing bug

Map to Your Technical

fixes, etc.

Architectural Direction:

Having a technical architec-

While all of this operational

tural blueprint and direction is

demand should be organized,

critical to successful software

control ed, and managed

evaluation and understand-

within an overall portfolio

ing the technical architectural

managment strategy, the op-

target is required to enable

erational demand I want to

migration from one application

focus on in this article is

to another.

effort required to main-

tain your business system

As systems evolve, they must

software.

move toward the desired tech-

nical environment that best

Software applications, like

fits the organization and its

all IT assets, have their own

skill set.

unique lifecycle, from implementation, to upgrades, to retirement.

A full lifecycle approach should be employed to manage Legacy System and Application Portfolio Analysis: software assets in an effort to deliver maximum business I like to define the borders of individual software portfolios value from investments being made on the application.

by grouping the applications needed to satisfy the business needs of a specified business area.

Evaluating Your Portfolio

Each of these applications can then be evaluated in a one-by-If you are familiar with the core concept of PPM then one fashion within the context of business value (support of you’re well aware there are two fundamental components the business needs) and technical quality (compliance to the required to launch any PPM practice: 1) establishing a target architecture). The evaluation approach should be con-single repository encompassing all the assets that you want sistent whether you’re using if for vendor purchased software to manage (e.g., software), and 2) having a non-biased and or custom software.

9 Table of Contents

Mastering Project Portfolio Management, an Internet.com Project Management eBook. © 2009, WebMediaBrands Inc.

Mastering Project Portfolio Management Each application can be evaluated and charted using the An important item to emphasize is that all estimates (e.g., fol owing criteria:

human resource and capital) need to be presented as simple financial approximations for budgetary planning purposes.

Ability to Support

Technical Quality

Recommended

Business

Disposition

An enormous mistake I consistently witness is the desire Low

Low

Replace

for IT personnel to provide estimates that imply a certain Low

High

Redesign

degree of exactness, which is impossible to approximate at this early stage.

High

High

Maintain

High

Low

Re-engineer

For example, I see human resource estimates in the form of 7.125 FTEs and capital expenses represented as $25,927.63.

Define the Software Modernization Strategy: After the The presence of decimals and fractions send the message applications portfolio has been completely evaluated, each of “thorough analysis” and “wel -thought-out estimates” to replace, redesign, and re-engineer project needs to be business executives. This form of estimating provides no prioritized and sequenced such that the envisioned business added value at this phase of planning, but makes revising the and technical environments are constructed. These initia-estimates after true analysis a difficult and painful task.

tives are then placed on a high-level timeline to il ustrate sequencing, interdependence and estimated delivery Construct “Evolution Program” and Strategy Document: timeframes.

A final step in the systems evolution planning process is to bring all the pieces of information together into a structured Estimates Resources: Once the system’s evolution plan strategy document that describes a comprehensive execution and migration path is determined, the resources required to approach that manages all the individual y identified projects execute the plan must be estimated. These estimates, like all as a coordinated program.

estimates in this high-level plan, are high-level, order-of-mag-nitude approximations.

Keep in mind that beginning a software portfolio manage-

ment practice is similar to establishing any kind of portfolio Resource estimates should be made in four primary management discipline. It’s a 20 percent effort working out categories:

the nuts and bolts methodology and 80 percent managing the perception and organization change.

1. Internal IT human resources

2. External IT human resources

3. Business unit human resources

4. Capital expenditures (i.e., hardware and software).

continued on page 11

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Mastering Project Portfolio Management, an Internet.com Project Management eBook. © 2009, WebMediaBrands Inc.

Mastering Project Portfolio Management Using PPM to Align IT

By Jeff Monteforte

first became involved with trying to “align IT

organization, strong leadership, appropriate prioritization, and with the business” more than 10 years ago.

last but definitely not least, effective communication.

I was working for a CIO at a major national I bank and his top priority was ilustrating to the Similar to the confusion of trying to define business/IT align-CEO and other bank executives that IT was ment is attempting to define the scope of alignment activities.

working on those things the business wanted Many clients initial y define the focus of alignment as the proj-and that he wasn’t squandering any valuable resources.

ect work produced by the IT department. Some of my clients who implement project portfolio management (PPM) define This was understandable at the time, since the IT budget was the scope of alignment to include not only the project work, approximately $200 mil ion and the bank was going through but the resources required by the project work.

another cycle of cost cutting. Unfortunately, aligning IT to business wasn’t easy. In fact,

While this is often a very good

at the time, I didn’t even know

place to begin your alignment

exactly what that meant. Did

efforts, it is not the complete

alignment apply only to the

extent of all areas required for

projects we were working on

a mature and successful align-

or was it something more?

ment of business and IT. Keep

in mind the typical company

IT alignment, although it has

spends more than 75 percent

taken on several different

of its IT budget on non-dis-

names today, remains on the

cretionary, “run-the-business”

lips of most IT executives. A

activities, such as application

simple Google search on “IT

support, operations, and help

Alignment” delivered more

desk activities.

than 48 mil ion links.

A singular focus on project

Today my definition of busi-

work limits your alignment

ness/IT alignment is quite

activities to only the discre-

straightforward: “Business/IT

tionary investment spending

alignment is the effective and

and thus, on less than 25

efficient use of IT investments

percent of all the IT activities

and assets in executing business strategies and achieving occurring.

business goals.”

While PPM enables the alignment of IT projects and new in-Achieving the highest level of alignment requires a trusted vestments with the business goals, it is extending these disci-relationship between IT and the business, where the plines across the entire IT portfolio to enable complete busi-function of IT and other business functions adapt their ness/IT alignment. To clear up any confusion, let’s again take strategies together. Achieving alignment is evolutionary, a moment to define the complete IT portfolio.

dynamic, and ongoing.

Similar to a personal financial portfolio, the IT portfolio is Sustaining business/IT alignment requires strong support comprised of two major sections:

from senior management, a thorough understanding of the

• Section one: new investments (these are the business and technical environments, transparent decision-discretionary projects that I referred to above).

making, good working relationships at multiple levels of the 11 Table of Contents

Mastering Project Portfolio Management, an Internet.com Project Management eBook. © 2009, WebMediaBrands Inc.

Mastering Project Portfolio Management

• Section two: existing assets (these include the sub portfolios of hardware, software, and data that reside in Opportunity Identification

your company’s production IT environment, as well as OK, let’s assume the RM role has a well established track re-the governance processes that manage the IT

department and human resources).

cord in your company. At this point, the RM function enables project portfolio analysis, which includes measuring progress Now that your concept of the IT portfolio is broadened, you and communications control.

should be asking, “What portfolio disciplines do I need to concentrate on to improve alignment with the business?”

IT is beginning to be looked upon by the business as a trusted Excel ent question, even if I say so myself!

partner with business leadership in proactively assessing new opportunities. Likewise, the proof that IT planning is in harmo-While the disciplines required to manage the various sections ny with business needs starts to become evident. Business/IT

and sub-portfolios of the overall IT portfolio are similar, it is a alignment is progressing from the top down and the interface specific sub-set of these activities that are continual y used to between IT and the business becomes blurred as projects create and sustain alignment with business objectives.

and activities become joint efforts.

Regardless of which sub-portfolio you are managing, the In essence, the RM extends the eyes and ears of the CIO

portfolio of management disciplines that you must leverage throughout the organization. He or she ensures that the CIO

for alignment include:

and IT organization never get surprised by what the business is planning. With RMs performing this function, IT can be in-

• Relationship Management

volved in business decisions that will affect IT before positions

• Opportunity Identification

become deep-rooted.

• Enterprise Architecture Enforcement RMs can also ensure that business leaders are making in-

• Resource Management

formed decisions about the total costs and risks of business

• External IT Oversight

initiatives, as well as getting business leaders to explicitly link

• Prioritization

the requested IT project to the previously discussed business objectives. This is an essential mechanism for evaluating the Relationship Management

alignment of IT projects to business goals.

The first step in “aligning IT with the business” and ensuring that IT is delivering value is to identify and understand what Enterprise Architecture Enforcement has value to the company. The secret to understanding this is Ensuring the compliance of individual projects with a com-hidden in your company’s business strategies. In other words, pany’s enterprise technical architecture is IT’s essential com-the desired value is embedded in the objectives that senior ponent of business/IT alignment (and project portfolio man-business managers are charged with achieving.

agement for that matter).

These objectives may come in many forms, including increas-As part of the business case analysis within PPM, a strucing revenue, retaining customers, growing market share, cut-tured architecture compliance review should be performed ting waste, or improving quality. Whatever the objectives are, that evaluates the compliance of anticipated technical com-be aware that in today’s business climate, they are frequently ponents and measures the potential impacts of proposed IT

not written down and are usual y dependent on IT.

projects against a company’s defined technical architecture.

Thus, to begin the process of aligning IT to the business, the When designed correctly, a company’s technical architecture CIO needs to get the fol owing question answered: “What provides the blueprint for the appropriate information technol-is this senior business manager real y trying to accomplish?”

ogies required to support the current business requirements, Enter the IT Relationship Manager.

as well as the anticipated capabilities identified in business strategies.

Relationship managers (RMs) are responsible for providing the interface between the IT organization and the strategic Thus, when IT continual y deploys engineered solutions business units (SBUs). In doing so, they have a critical role in based on the technical blueprint, it is deploying solutions that planning the deployment of IT resources and assets, appropri-align with business strategies. Tchoen r t

e i’n

s u

thead o

t m n p

agi a

c ge 1

wor 1

d again:

ately identifying new IT solutions, and in the communications align. Stated differently, ensuring solutions are engineered for of both limitations and capabilities of the IT organization.

IT architectural compliance helps ensure the alignment of IT

12 Table of Contents

Mastering Project Portfolio Management, an Internet.com Project Management eBook. © 2009, WebMediaBrands Inc.

Mastering Project Portfolio Management projects with known and planned for business objectives.

• Can we afford not to implement this solution?

An architectural compliance review is typical y targeted for a

• Is the project ranked by the criteria that are most point in time when high-level business requirements are rea-important to the company today (e.g., revenue, expense sonably understood and the basic direction of the project’s reduction, support of high-priority objectives, or architecture is taking shape, but before the project’s official regulatory requirement)?

kick-off.

• Is the execution of this project satisfactory or should it be stopped?

The aim is to hold the review as soon as practical, at a stage when there is ample time to identify and correct any major These are business decisions, not technology decisions. In errors or shortcomings. For those interested, my definition of addition, they require an executive perspective, not those of

“compliant” is when 80 percent or more of a proposed IT so-IT management or end users.

lution’s components conform to the company’s defined tech-

nical architecture specification.

Industry experience has proven that the organizational entity best equipped to make these decisions is an IT steering Resource Management

committee (sometimes cal ed the IT investment council). This Invariably, there will be more projects on the list than there group of senior business executives (e.g., divisional business are IT resources available. At some point, IT resources will be leaders and senior corporate executives) with a strategic busi-exhausted. What happens to projects for which there are no ness perspective is charged with guiding the strategic use of IT resources available?

IT within the Enterprise.

Most companies’ experience is that their IT resources, in The IT steering committee deals with issues such as portfolio terms of funding, technology, and people are a finite com-management, project reviews, project cancel ations, architec-modity and the demand for IT services is greater than the ture compliance, and other significant project governance is-supply. While companies can (and should) maintain multiple sues.

IT project queues, each queue usual y experiences a backlog of requested projects. This leads to a common opinion from Keep in mind that steering committees usual y fail because business leaders that the demand model for IT services is they are focused on tactical, not strategic issues. It is the insufficient and simply not working wel .

CIO’s job, as steering committee chairperson, to ensure this does not occur. Moreover, the CIO needs to leverage the sup-The way in which PPM integrates resource management into port of this group for communicating the alignment strategy the governance of projects is by aligning the IT resources (i.e., to explain why some projects were not selected and how with organizational priorities. It’s about applying IT resources they will be accommodated).

against the projects that add the highest business value and have an acceptable business risk. Fundamental y, you map Prioritization

the current al ocation of IT resources to the business initia-We’ve talked about the importance of being able to explicitly tives that are of the highest priority.

prioritize the IT projects throughout this article. The surprising thing is this activity may be the simplest to understand Il ustrating the “resource pool” is an effective way to commu-and execute. I instruct my clients to keep this activity straight-nicate the al ocation of IT resources and (more importantly) to forward with the fol owing two-step approach: shift the discussion from the total amount of IT resources to resources that are available for investment and how best to al-

• Step 1: To determine what is most important, ask the locate them. Hmmm, this sounds a lot like alignment to me.

executives that create and execute business strategy (i.e., CEO/COO/CFOs and general managers of lines External IT Oversight

of businesses). Rank the business strategies by business value not IT value to create a stack-ranked list To ensure alignment and to maximize IT investment dol ars, of what is most important.

critical questions should be applied to every proposed project. These questions should be asked from the perspectives

• Step 2: Use the IT steering committee to gain the perspective of senior business managers on project of the enterprise and include:

priorities based on consistent criteria. An excel ent set

• Have the right projects been identified?

of criteria to begin with is support of business strategies, project risk, and value (e.g., a return-on-investment

• Is the project valuation (i.e., the business value model appropriate to your company). The final list of IT

associated with the project) reasonable?

projects and priorities that drive alignment will result.

• Is the risk associated to this project acceptable?

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Mastering Project Portfolio Management The Bottom Line on Alignment

Alignment between IT and the business does not occur on In addition, the best management method to achieve a its own and CIOs and senior IT managers cannot make IT

high-degree of alignment is to make IT transparent to

“alignment” decisions. In fact, alignment must be planned and business leaders. IT decision-making should always include continual y managed by senior business executives trying to participation from the business and should never leave your se-achieve the enterprise strategy.

nior business management asking, “Why are we doing that?”

IT leaders must understand that alignment begins with business strategies and that business strategies frequently Specifical y, business executives should not only under-change. Because of this, IT must be prepared to constantly stand, but influence the decisions around project prioritiza-adjust to stay in step. I call this continual updating of plans tion and resource management. Again, this is best accom-

“evergreen” alignment. The vehicle to accomplish this is an IT

plished through the IT investment council. It is through this steering committee or investment council. If it is not in place, council that a steady exchange of information between the IT

it needs to be.

organization and the business can occur.

After an initial alignment strategy has been defined, use Conversely, without continuous feedback, IT activities, organization and process to maintain alignment; PPM to decisions, investments, and priorities will drift away from the govern the flow of project requests through resource al ocation; business and misalignment will exist.

and the steering committee to address enterprise-wide issues and relationship managers to address business unit issues.

These are among the most important steps CIOs can take to increase IT/business communication and planning, and maintain alignment over time.

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Mastering Project Portfolio Management, an Internet.com Project Management eBook. © 2009, WebMediaBrands Inc.

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