Using Investment Life-Cycle to Manage IT Cost, Risk, and Benefit  Joseph D.K. Wheeler MTG Management Consultants, LLC May ...
AGENDA <ul><li>IT as an Enterprise Asset </li></ul><ul><li>Portfolio-Based IT Management </li></ul><ul><li>Risk Management...
IT AS AN ENTERPRISE ASSET <ul><li>Common Enterprise Assets </li></ul><ul><li>IT Assets  </li></ul><ul><li>IT Asset Lifecyc...
Common Enterprise Assets <ul><li>What are your agency’s most valuable assets? Why? </li></ul><ul><li>Asset value declines ...
IT Assets <ul><li>Clear and tangible value. </li></ul><ul><li>Value declines over time. </li></ul><ul><li>Costs change ove...
IT Asset Lifecycle Cost /  Benefit Time Plan Acquire Implement Operate / Maintain Costs Benefits
PORTFOLIO-BASED IT MANAGEMENT <ul><li>Content of Portfolios </li></ul><ul><li>Principles </li></ul><ul><li>Management Cycl...
Content of Portfolios <ul><li>Mission, strategies, programs </li></ul><ul><li>Installed infrastructure </li></ul><ul><li>T...
Principles <ul><li>Sound business justification. </li></ul><ul><li>Part of overall portfolio. </li></ul><ul><li>Senior exe...
Management Cycles Investment Management Project  ASSESS PLAN FUND IMPLEMENT OPERATE/ MAINTAIN
The Management Cycles Project Management Initiation Creation / Planning Implementation Control Close Scope Support Funding...
Integration into Agency IT Portfolios <ul><li>Introduce new assets into the portfolio. </li></ul><ul><li>Reassess:  </li><...
RISK MANAGEMENT  MECHANISMS  <ul><li>Investment Risk </li></ul><ul><li>Mitigating Investment Risk </li></ul><ul><li>Projec...
Investment Risk <ul><li>Scope </li></ul><ul><li>Cost/Benefit </li></ul><ul><li>Organizational Commitment </li></ul><ul><li...
Mitigating Investment Risk <ul><li>Clear business case. </li></ul><ul><li>Incremental:  </li></ul><ul><ul><li>Development ...
Project Risk Management Project Risks <ul><li>Project Management </li></ul><ul><li>Organization Capabilities </li></ul><ul...
Project Risk Management Mitigation Strategies <ul><li>Assess and address </li></ul><ul><li>Employ structured project manag...
SUMMARY <ul><li>Manage IT assets in the context of the an agency’s overall operations. </li></ul><ul><li>Develop and deplo...
THE BUSINESS CASE For IT Portfolio Management <ul><li>IT assets are enterprise assets. </li></ul><ul><li>The investment is...
QUESTIONS
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  • What are your agency’s most valuable assets? Facilities Equipment Vehicles Why are Assets these valuable? Meets the agency mission Labor saving Safety Service Costs change over time Initial investment Operations Maintenance Service Asset value declines over time Wear and tear Changing needs Enhancements Your agency maintains a fleet/inventory/portfolio for each type of asset. Class of assets to meet a certain need Various ages Various designs Various technologies Each investment has risk Supplier/builder fails to deliver/complete on time, budget, and features It won’t go into service It won’t work (design flaw) It is stolen or damaged
  • IT Asset Lifecycle Costs Investment Maintenance Operations Value/Benefit Stable? Declining (New procedures)
  • Mission, strategies, programs, and business processes Installed hardware, software, and networks and physical facilities Technical management and staff capabilities Applications that support agency programs and business processes Partnerships or interfaces with other organizations Current and planned projects Cost and benefits of current and planned investments Problems and opportunities involving IT
  • Scope Change Functionality Organizations Technologies Budget Duration Cost/Benefit Clarity Likelihood Pay Back Period Organizational Commitment Executive Management Staff Stakeholders Technology Maturity Organizational readiness
  • Project Management Experience Commitment Authority Approach / Work Plan Relationships Organization Capabilities Development/deployment experience Tool / Technology experience Commitment Approach User Involvement Acceptance Involvement Responsibility Justification Technology Change Infrastructure (Hardware/Software/Network) Vendor / standard Software Methods Scope Size Change control Diversity of functions Resources Oversight Procurement Process Independent Oversight Error / Productivity Tracking Business Impact Agency Mission User Customer Tight performance requirements Dependencies Cost-Benefit Size Timing Achievability Measurability Justification Implementation Conversion Training Documentation Technology Transfer
  • Comprehensive information about the context of an agency’s overall operations is readily available for decision-making The development and deployment of IT is driven by the clearly defined business needs of an agency in serving citizens and fulfilling its legislative mandate Agency heads bring executive focus to IT investments and will have new management tools for meeting statutory responsibilities for the stewardship of IT investments in their respective agencies A formal, objective process exists to evaluate whether a project should be initiated and by which to determine the most appropriate form of oversight based on a comprehensive risk analysis Large projects are broken into smaller, more easily managed projects with each phase adding value on its own without committing funding authorities to subsequent phases Agencies base procurements on the desired outcome or business solution, not specific technologies that may be outdated by the time they are deployed
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    1. 1. Using Investment Life-Cycle to Manage IT Cost, Risk, and Benefit Joseph D.K. Wheeler MTG Management Consultants, LLC May 1, 2006
    2. 2. AGENDA <ul><li>IT as an Enterprise Asset </li></ul><ul><li>Portfolio-Based IT Management </li></ul><ul><li>Risk Management Mechanisms </li></ul><ul><li>Questions </li></ul>
    3. 3. IT AS AN ENTERPRISE ASSET <ul><li>Common Enterprise Assets </li></ul><ul><li>IT Assets </li></ul><ul><li>IT Asset Lifecycle </li></ul>
    4. 4. Common Enterprise Assets <ul><li>What are your agency’s most valuable assets? Why? </li></ul><ul><li>Asset value declines over time. </li></ul><ul><li>Costs change over time. </li></ul><ul><li>Your agency maintains a fleet/inventory/portfolio for each type of asset. </li></ul><ul><li>Each investment has risk. </li></ul><ul><li>Your Chief Executive “owns” them. </li></ul>
    5. 5. IT Assets <ul><li>Clear and tangible value. </li></ul><ul><li>Value declines over time. </li></ul><ul><li>Costs change over time. </li></ul><ul><li>You maintain a portfolio of technologies. </li></ul><ul><li>Each asset has a set of risks to manage. </li></ul><ul><li>Your Chief Executive “owns” these assets. </li></ul>
    6. 6. IT Asset Lifecycle Cost / Benefit Time Plan Acquire Implement Operate / Maintain Costs Benefits
    7. 7. PORTFOLIO-BASED IT MANAGEMENT <ul><li>Content of Portfolios </li></ul><ul><li>Principles </li></ul><ul><li>Management Cycles </li></ul><ul><ul><li>Investment Management </li></ul></ul><ul><ul><li>Project Management </li></ul></ul><ul><li>Integration into Agency IT portfolios </li></ul>
    8. 8. Content of Portfolios <ul><li>Mission, strategies, programs </li></ul><ul><li>Installed infrastructure </li></ul><ul><li>Technical management and staff capabilities </li></ul><ul><li>Applications </li></ul><ul><li>Partnerships or interfaces </li></ul><ul><li>Current and planned projects </li></ul><ul><li>Cost and benefits of each investment </li></ul><ul><li>Problems and opportunities involving IT </li></ul>
    9. 9. Principles <ul><li>Sound business justification. </li></ul><ul><li>Part of overall portfolio. </li></ul><ul><li>Senior executive sponsorship. </li></ul><ul><li>Active oversight. </li></ul><ul><li>Short cycle implementation. </li></ul><ul><li>Continuing investment based on results. </li></ul>Any significant investment requires careful stewardship to maximize its value and insulate it from threats to its integrity
    10. 10. Management Cycles Investment Management Project ASSESS PLAN FUND IMPLEMENT OPERATE/ MAINTAIN
    11. 11. The Management Cycles Project Management Initiation Creation / Planning Implementation Control Close Scope Support Funding Project Management Acquisition Capabilities Technology Implementation Oversight Scope Support Funding
    12. 12. Integration into Agency IT Portfolios <ul><li>Introduce new assets into the portfolio. </li></ul><ul><li>Reassess: </li></ul><ul><ul><li>Business impact. </li></ul></ul><ul><ul><li>Cost structures. </li></ul></ul><ul><ul><li>Available tools. </li></ul></ul><ul><ul><li>Available solutions. </li></ul></ul><ul><li>Reset lifecycle strategies across portfolio. </li></ul><ul><li>Re-invest as needed. </li></ul>
    13. 13. RISK MANAGEMENT MECHANISMS <ul><li>Investment Risk </li></ul><ul><li>Mitigating Investment Risk </li></ul><ul><li>Project Risk Management </li></ul><ul><li>Mitigating Project Risk </li></ul>
    14. 14. Investment Risk <ul><li>Scope </li></ul><ul><li>Cost/Benefit </li></ul><ul><li>Organizational Commitment </li></ul><ul><li>Technology </li></ul>
    15. 15. Mitigating Investment Risk <ul><li>Clear business case. </li></ul><ul><li>Incremental: </li></ul><ul><ul><li>Development and deployment. </li></ul></ul><ul><ul><li>Technology change. </li></ul></ul><ul><ul><li>Organizational change. </li></ul></ul><ul><li>2 year investment cycle. </li></ul><ul><li>Each investment stands alone: </li></ul><ul><ul><li>Delivers value or positive cost-benefit. </li></ul></ul><ul><ul><li>Without reliance on subsequent phases. </li></ul></ul><ul><li>Informed executive sponsorship. </li></ul>
    16. 16. Project Risk Management Project Risks <ul><li>Project Management </li></ul><ul><li>Organization Capabilities </li></ul><ul><li>User Involvement </li></ul><ul><li>Technology Change </li></ul><ul><li>Scope </li></ul><ul><li>Oversight </li></ul><ul><li>Business Impact </li></ul><ul><li>Cost-Benefit </li></ul><ul><li>Implementation </li></ul>
    17. 17. Project Risk Management Mitigation Strategies <ul><li>Assess and address </li></ul><ul><li>Employ structured project management </li></ul><ul><li>Structure your procurement process </li></ul><ul><li>Actively manage scope </li></ul><ul><li>Employ independent oversight </li></ul><ul><li>Measure progress, errors, budget, and schedule </li></ul><ul><li>Maintain focus on business impact </li></ul>
    18. 18. SUMMARY <ul><li>Manage IT assets in the context of the an agency’s overall operations. </li></ul><ul><li>Develop and deploy IT to meet clearly defined business needs. </li></ul><ul><li>Bring executive focus to IT investments. </li></ul><ul><li>Employ a formal, objective investment process. </li></ul><ul><li>Comprehensively analyze and address risk. </li></ul><ul><li>Break large projects into smaller, more manageable projects. </li></ul><ul><li>Add value with each phase. </li></ul>IT Investment Portfolios provide a framework
    19. 19. THE BUSINESS CASE For IT Portfolio Management <ul><li>IT assets are enterprise assets. </li></ul><ul><li>The investment is significant. </li></ul><ul><li>Risks have proved to be high. </li></ul><ul><li>Organizational support is commonly low. </li></ul><ul><li>Investing in this management effort: </li></ul><ul><ul><li>Increases funding and support. </li></ul></ul><ul><ul><li>Reduces implementation and operating costs. </li></ul></ul><ul><ul><li>Reduces investment and project risk. </li></ul></ul><ul><ul><li>Captures benefits to your agency. </li></ul></ul>
    20. 20. QUESTIONS

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