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IT Portfolio management step by step - Maizlish B

Maizlish B, Handler R. IT Portfolio management step by step - John Wiley & Sons, 2005. - 401 p.
ISBN.: 978-0-471-64984-8
Download (direct link): itportfoliomanagement2005.pdf
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To this point, objectives have been defined for the IT portfolio. These objectives have been tempered with the realities of the organization’s culture and abilities. The structure of the portfolio has been designed. The portfolio structure has been populated. The populated IT portfolio has been analyzed and assessed against the goals, desired returns, and tolerance for risk. There is most likely a gap between the existing IT portfolio and the desired one.
Using the portfolio performance report, the validated portfolio, and the various views from stage 4, balancing the portfolio involves creating a set of repeatable processes for adding, subtracting, repositioning, and performing what-if trade-off analysis to maximize IT value. During the assessment phase, the performance of the portfolio should have been well documented; a list of gaps should have been made to enable portfolio tuning. Stage 5 is fundamentally the tuning phase, along with the refinement of the tuning processes. Of the various options, the optimal ones are selected and acted upon. Depending on the selected portfolio tuning options, balancing could be as simple as changing the list of funded projects, or it could kick off a large transformation initiative to revamp the portfolio of applications in production. Along with a balanced portfolio, the outputs of this stage include:
• A list of approved portfolio changes and associated change recommendations (e.g., shifting resources from one project to another, developing new skills, providing user training)
STAGE 5: BALANCING 247
• Portfolio reassessment requests when the balancing activities require that additional assessments be conducted
• Approved updates to various portfolio views and associated prioritization based on the new metrics and assessments
Exhibit 5.37 outlines the specific tasks and activities involved in developing the balancing stage. The critical activities of the tasks addressed in this section include:
• Identifying tuning options
• Analyzing portfolio options to determine trade-offs
• Selecting and approving portfolio changes
• Implementing portfolio changes
Balancing, like the other stages discussed in this chapter, is a highly iterative process. One of the most important outputs of IT portfolio management, however, is the ability to create a set of repeatable processes for dynamically adding, subtracting, reprioritizing, and repositioning portfolios and investments to maximize IT value at minimal levels of risk (while satisfying these within schedule, labor, funding, and other constraints). The IT portfolio balancing capability is one of the key competencies that must be ingrained in the fabric of the organization. Ideally, IT portfolio management should not be a one-time event. It should be an
EXHIBIT 5.37 BALANCING STAGE TASKS
Iterate Throughout These Tasks
Identify
Tuning
Options
Determine
Trade-Offs
Select/Approve
Portfolio
Changes
Implement
Changes
Identify options available to fine-tune the portfolio
- Close gaps between actual versus expected results
- Adjust investment mix to reach (or exceed) targets
- Apply management tools and techniques to refine risks and
Identify trade-offs and select tuning options that will be applied
- Impact of tuning options
- Prioritize tuning options
- Select tuning options
Select a subset of tuning options; secure approval to implement
Adjust the portfolio according to the approved changes
returns
248 CHAPTER 5 BUILDING THE IT PORTFOLIO
ongoing balancing of the IT portfolio to match change requirements of the business. The ultimate impacts of not balancing the IT portfolio dynamically are:
• Overspending for value received
• Not aligning resources optimally
• Uncontrolled hardware base growth, driving the need for more personnel
• Accumulation of noncompetitive technology, necessitating tying associated costs to goods and services
• Inability to invest where investment is really needed because capital is tied up where it should not be
• Loss of leverage for IT investments and therefore a reduction of potential return on assets
Balancing is nothing new to investment managers at money management firms who have developed sophisticated portfolio optimization tools that explore the most advantageous risk-adjusted returns for investments. Balancing the IT portfolio is the result of:
• Identifying gaps (e.g., investment and portfolios not meeting expectations, projects or existing assets that should be retired, comparison against benchmarks) with the portfolio performance report
• Spotting inefficiencies (e.g., redundant solutions, solutions showing diminishing returns, lack of reuse)
• Identifying changes in current conditions (e.g., competitor announces a new product that threatens a company’s market share) and their impacts
• Performing what-if analysis (e.g., adjusting key variables in service levels or analyzing alternatives and performing sensitivity analysis on each of these variables)
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