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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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Companies are facing ever-increasing legislation with which they must comply, both locally and globally. Failure to accept this trend and address it will lead to excessive fines and possible criminal penalties. By applying lessons learned from Y2K remediation, organizations can formulate a blueprint and execute a plan to maximize return and minimize risk.
Within the federal government, the OMB mandates agencies to submit the Exhibit 300 document, which requires agencies to align their budget proposals with their mission needs and federal enterprise architecture. Detailed business cases are scored against:
• Acquisition strategy
• Project (investment) management
• Enterprise architecture
• Alternative analysis
• Risk management
• Performance goals
• Security and privacy
• Performance-based management systems
• Life cycle cost formulation
• Support to the president’s management agenda
The Value Measuring Methodology developed by the Federal CIO Council provides the foundation for assessing each investment and for preparing OMB’s Exhibit 300. Readers looking for more information on this topic can go to the following web sites: www.whitehouse.gov/omb/circulars/a11/current_year/
THE NEW FOCUS FOR IT: BUSINESS 77
s300.pdf to access OMB Circular A-11 and www.cio.gov/index.cfmPfunction— speedoc&id=359 to access the Value Measuring Methodology.
The Role of the CIO
With IT representing about 70% of all capital expenditures estimated in total at over $1 trillion per annum in the United States, CIOs are expected to run IT like a business, maintaining specialized skills and expertise in:
• Providing utility services—keeping the lights on; and running operations, service, and support flawlessly
• Managing the IT architecture
• Driving and providing oversight to the discovery and development of new products and solutions
• Serving as a key strategist, offering art of the possible ideas and concepts in the formation of corporate strategy and balancing investments among various products, services, business units, and division
• Providing a venture capitalist approach in taking calculated risks based on potential IT solutions that could increase productivity, drive revenue growth, and decrease costs
• Managing and measuring the performance and alignment of the IT portfolio fund; serving a key role on the executive steering committee, translating and demonstrating complex ideas and solutions into a taxonomy that is meaningful, understandable, and demonstrates values
• Providing education; demonstrating marketing saavy and thought leadership skills; providing a balance between managing the status of IT investments, serving as an advocate for new and existing IT solutions, and promoting for the goodness and value created by the IT organization
• Assuring that the best and brightest are hired and retained within the IT organization
• Communicating key messages pertaining to IT throughout the company and overcoming cultural resistance
• Maintaining visibility and acceptable risk threshold levels across the IT portfolio and assuring that financial returns remain within the range of expectations
Given so many responsibilities, it is not surprising that many CIOs report to the CEO and are key members of the executive committee. In a survey completed by more than 100 top IT executives that was published by CIO Magazine, regular use
78 CHAPTER 3 PEOPLE AND GOVERNANCE
of portfolio management or other project prioritization methodology ranked #1 as the most effective practice.4 The use of IT portfolio management is paying off. According to research, CIOs who embrace IT portfolio management have an exemplar record of continuous IT efficiency improvements, with some companies able to reduce costs by 20% to 30%. Maintaining balance and stability within the many roles required of the CIO has been achieved through the use of IT portfolio management best practices. The positive results include better communications, management, alignment, and prioritization of IT investments within the business and the IT organization, and increased credibility and customer satisfaction with IT.
CIOs must develop business acumen and become skillful team players to win the continuing confidence of business managers. They must be able to orchestrate change, focus on business process, and be superb marketeers. This is not a trivial task in light of the transparency that both governance and IT portfolio management create. Eliminating pet projects, requiring business cases prior to selecting an IT investment, exposing performance measurements on a frequent basis, and holding people accountable for results is a change and can be a threat for some employees. The challenge for IT is to work as a full-fledged partner, providing justification of current decisions and communicating future directions and expectations. Maintaining confidence and trust is paramount to IT’s success. According to CIO Magazine, two-thirds of CIOs indicated that IT projects are funded from business unit budgets.5
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