Portfolio Management presentation

How Does Iowa get to Value Based Portfolio Management? Iowa Technology Governance Board May 10, 2007 Mark A. Peterson – Managing Partner Coeur Group – St. Louis 636-561-2455 [email_address]

Managing Partner – Mark Peterson
Experienced Executive
(SVP, CIO, CEO)
Methodology Developer
Organizational Agility
Business Value Alignment
Enterprise Portfolio Management
Innovation and Commercialization
Organizational Expertise
Technology Background
(US Navy, Honeywell, Digital Equipment Corporation, QORE Business Solutions, Sentry Technology, META Group, EVP Partners)
Innovator in Cost Reductions and Value Mgt.
Experienced Practitioner, Local, State, Federal
Author – 3 Dimensional Portfolio Management
(J. Ross Publishing , Fall 2007)

Technology Governance Board – Portfolio Futures
Building The States Asset Value
Portfolio Management (>Plan > Invest >Govern For Value And Alignment)
Constructing Portfolios
Realizing Maximum Value Accretion

TGB Key Questions to Ask The Objectives Of Portfolio Management Are To Address These Questions.
Are we selecting the right projects in order to best maximize business value?
Are we deploying our resources appropriately?
Are we developing the capacity to understand, and learn from, our project failures?
What are we doing to increase the probability of achieving expected benefits from our projects?
Do we have a framework for institutionalizing program and project management best practices?

What is TGB’s Real Role – Increasing Asset Value
Invest for Modernization, Efficiency and Effectiveness of the State’s Business
Oversee Increasing the States Technology Asset Value
Select High Value Investments
Build Portfolios for Value Accretion Management
Oversee Investment Portfolio Performance
TGB Mission: “Facilitate information technology decisions within the executive branch of Iowa State Government, basing these decisions on business drivers supporting customer requirements.” What is the Agenda?

TGB Vantage Point for Portfolio Management Enterprise Architecture Government Regulations Business Information Requirements Business Drivers Common Executive Vision Technology Architecture Application Portfolio Infrastructure Environmental Trends Vendors/Suppliers and Partners Business Architecture Governance External Forces Program Management Staff and Organization Operational Excellence Capabilities IT Resource Management Customer Customer Customer Customer ’ IT Governance and Investment Performance

Two Interacting Portfolios Must Be Managed For Value Both Applications And Projects Must Be Managed Simultaneously For Maximum Value Accretion and Business Alignment Principal Process Focus: Generation of Business Value Projects change the IT Assets Portfolio
Project attributes:
Add asset
Modify asset
Delete asset
Projects Portfolio
Business Data
Business Applications
Technical Infrastructure
Staff
Knowledge
Governing Infrastructure
Assets Portfolio

Portfolio Categorization Based on Business Stage Needs High risk, hopefully high reward Transform The Business NPV – Net Present Value Identify and size projects critical to established strategy Grow The Business ROI – Return on Investment Run The Business Business Continuity Cost Control Assets Applic’s Projects Assets Applic’s Projects Assets Applic’s Projects

Financial Views and Value Categorization
What business stage?
Run The Business
Grow The Business
Transform The Business
Developing the Financial Views of The Portfolios is Essential for Gaining Value and Aligning to the Departmental Business Needs.
Results:
10% to 35% Increase in Project Returns
10% to 20% Cost Avoidance
5% to 15% Improvement in Resource
Utilization
Nondiscretionary Costs Risk Discretionary Projects Risks Value/Timing Venture Growth Discretionary Enhancements Non- Discretionary Core RTB TTB GTB IT Investment Portfolios 10% To 25% Cost Reductions Overall Are Fairly Normal For First Pass Portfolio Management Implementations Source: Gartner Group

Building the 3 Dimensional Portfolios
Everything maps back through the business requirements
RTB, GTB, TTB
Start with business information and process requirements
Business units and processes
Technology Alignment Focus
Categorize current IT portfolios
Asset and Projects
Business stage (RTB, GTB, TTB)
Identify cost, risks, returns, and timelines
Determine what changes should be made
Evaluate business information requirements pain points and opportunities
The IT Portfolio Is Driven By The Business Requirements And Prioritized By The Investment Model (RTB, GTB, TTB) Portfolio Mgt. Dimensions

An Iterative and Maturing Process – (Example Applications Portfolio)
Adhoc: No Portfolio Inventory or Management Process
Foundational: Application/Project Inventory Performed
Evaluation: Optimization and Rationalization
Management: Application Portfolio Transformation Process
Maturity: Application Portfolio Management is Implemented Enterprise Wide
Source: UMT Consulting - Application Portfolio Maturity

Coeur Group’s P f M Process High Level View Portfolio Plan Categorize Business Stage Needs Create Asset/Project Portfolios Assess Portfolios Consolidate Eliminate Reinvest Measure Value Gov. & Org. Develop Financial Views

Where do we need to be?
Developing Application and Project Portfolios as the Starting Point:
Offering agencies the opportunity for individual agency ratings (providing agency focus)
Offering state government focus (providing direction to meeting various Culver administration goals)
IT Portfolio Management is the methodology and associated processes that provide highly leveraged selection, prioritization, implementation and measurement of Business/Technology investments. Are We Changing Our Investment DNA?

Maximizing Value Accretion with Portfolio Management
What’s the Problem?
Uncoordinated Value Management
Project, Application and Asset, replacement cost and business values are unknown
Governance and measurement processes are rudimentary and manual
What’s the Solution?
Online Inventory Projects and Applications
Select Groups for Portfolios based on Business Stage Needs
Integrate Portfolio Management Automation
Development of Project and Application Portfolios
Develop Financial Views – (Core, Non-Discretionary, Discretionary, Growth and Venture Investment Portfolios)
Prioritize and Cull Investments – a continuous process
Governance must include Measurements, Dashboards and Scorecards

Coeur Group - Recommended Steps
Analysis Of Iowa’s Current Portfolio Management Methods, Processes And Tool
Identify Critical Business Needs And Required Processes
Identify and Inventory Applications and Projects
Coeur Point: Develop one or two Portfolio’s, then develop processes and define business value with Key Performance Indicators (KPI’s)
Identify Available Tools In The Market For “Portfolio Management” And “Investment Performance” Tracking
Select Vendor And Portfolio Management Application(s) That Meet Iowa’s Requirements
Develop Baseline Dashboard & Measures
Project Portfolio Status Success = Simplicity and Limited Scope

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Portfolio Management presentation

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