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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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The business almost invariably exists in the collective consciousness of the
52 CHAPTER 2 PLANNING FOR IT PORTFOLIO MANAGEMENT
company. However, extracting it from the collective consciousness and organizing it into a coherent form that drives consensus among key members of a broad stakeholder group is an art form. Generally, the steps that must be taken are:
1. Collect and analyze business and strategic documents (e.g., internal communications, annual reports, budgets, SEC filings, business plans, strategic plans)
2. Analyze business and strategic documents for trends and patterns (e.g., unmet customer needs, current versus new target markets, operational and service processes and systems, and performance levels), and select the key strategies that are common, coherent, and consistent; will drive change; and will have broad impact across the organization
3. Analyze internal and external trends and value drivers (e.g., technology forecasts) to determine if any strategies are missing, obsolete, or erroneous
4. Pull together a business vision comprised of realistic business and strategic objectives that will drive change across the organization in support of its desired future state.
While seemingly trivial, the creation and subsequent use of the business vision is one of the most important components of effective IT portfolio management. If projects are the building blocks of implementing business and strategy objectives and they fail to map against validated enterprise strategies (and business requirements) in the business vision, why are they being performed? This is one of the key reasons a business vision is required, and it is an indicator of the value and power of IT portfolio management. At this stage, however, the business vision is used as an additional input to determine the appropriateness of the objectives for IT portfolio management. If the goals do not align with the strategy of the business, an alignment issue must be reconciled prior to using IT portfolio management as a decision-making framework.
Once a business vision exists and a scope is defined, the present objectives of IT portfolio management become apparent. Initial objectives either existed or were implicit. These objectives were subjected to a reasonableness test against the organization’s capabilities. This generally leads to an adjustment of IT portfolio management objectives, making them more attainable. Then the scope of the initiative is factored into the equation based on tempered objectives and an understanding of the capabilities of the IT portfolio management team. The organization that must adapt to the new process is assessed. Finally, the objectives are reconciled against the strategy and business vision of the organization. The results are objectives for IT portfolio management that are meaningful to IT and the business, valuable in support of strategy, and attainable based on the capabilities and constraints of the business. The IT portfolio management effort is now set to succeed.
PORTFOLIO METRICS 53
PORTFOLIO METRICS
It is ironic that a discipline like IT, evolving out of mathematics, is so resistant to metrics. Business cases are often based on intuition. Metrics evade. Devoid of quantitative measures to demonstrate the value of portfolio management, however, value gained is left to the perception of key stakeholders. Thus, it is critical to plant the seed that measurable value will be derived from incorporating the discipline of IT portfolio management into the fabric of IT and the company. As with all new initiatives, there is a time lapse between inception and value delivery. Depending on the scope and subportfolio(s) selected, this value delivery time lapse can vary. For example, if IT portfolio management is applied during the funding cycle to eliminate superfluous requests from being funded, each instance of a nonapproved project could conceivably be attributed to IT portfolio management and counted as part of the return on investment. However, failure to consider metrics before embarking on IT portfolio management will lead to a reverse engineering exercise to demonstrate value after IT portfolio management has been performed. This is often fruitless.
There are two fundamental types of metrics that must be considered before commencing with IT portfolio management: value delivery and process improvement. Value delivery consists of cost reduction, increase in revenue, increase in productivity, reduction of cycle time, and reduction in downside risk. Process improvement refers to improvements in the IT portfolio management process. While the metrics are similar and in many ways interrelated, process metrics focus on the effectiveness of the IT portfolio management process. Is the process improving? Is the process providing perceived value? Is the process expanding in scope? More and more, leaders are looking into the metrics microscope to eliminate non—value-added activity and focus on value-added activity. The IT portfolio management discipline must therefore demonstrate its value with metrics.
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