How do you compare the Münchner Dom with the Allianz Arena? That is a key question when you want to control projects in a portfolio.

1. Portfolio €ontrol
Where the numbers really count
Frank Vogelezang, Sogeti Nederland B.V.
International Workshop on Software Measurement – November 19, 2008
Local Touch ‒ Global Reach.

2. About portfolios
Project portfolio
• Investment decisions
Application portfolio
• Budget decisions
• Replacement decisions
It’s all about (inancial) €ontrol
€ontrol
€ontrol
Local Touch ‒ Global Reach.
€ontrol

3. About Portfolio €ontrol
Portfolio €ontrol is the use of metrics
about relevant portfolio aspects
to support and justify
management decisions
about the portfolio
€ontrol
€ontrol
€ontrol
Local Touch ‒ Global Reach.

4. Project Portfolio €ontrol
Which projects will be funded and
which projects will be canceled?
Local Touch ‒ Global Reach.

5. Quick portfolio decision
You are managing a project portfolio of several
hundred projects. You have to decide about:
Project cost: 10 M€
Duration: 3 years
Expected profit: 30 M€
AGREE DISAGREE MORE INFO
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6. $anity €heck
Costs (in millions of €uros)
www.cs.vu.nl
200 projects
750 M€
Duration (in months)
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7. Project Value vs Project Risk
Proj NPV
MeanNPV CAPEX PI Min NPV Max NPV RDiff
A 2,000,000 2,200,000 0.91 1,500,000 2,500,000 0.50
B 1,600,000 5,000,000 0.32 200,000 3,000,000 1.75
C 1,600,000 900,000 1.78 1,100,000 2,100,000 0.63
D 1,000,000 2,000,000 0.50 950,000 1,050,000 0.10
E 900,000 500,000 1.80 0 1,800,000 2.00
NPV MaxNPV-MinNPV
PI=  RDiff= 
CAPEX Mean NPV
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8. Project Value vs Project Risk
2.50
Profitability Index
Invest Add flexibility
2.00
C E
1.50
1.00 A
0.50
D
B
0.00
Postpone Abandon
0.00 0.50 1.00 1.50 2.00
Relative Difference NPV (Risk)
Local Touch ‒ Global Reach.

9. Application Portfolio €ontrol
Which applications are healthy and
which applications need
management attention
€ € n tro l ll
€ o n tro
o o n tro
Local Touch ‒ Global Reach.

10. Functional size as base metric
With the functional size different aspects
of applications in a portfolio can be
compared as a compound metric
≠
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11. Application Portfolio Mgmt
Possible relevant portfolio aspects:
• Service Level
• Application Complexity
• Application Age
• Application Size
• Number of applications
• Architecture fit
•....................
Local Touch ‒ Global Reach.

12. Service level
The agreed service level has an
often underestimated impact:
Electronic banking
Service level : 24/7
1,000 function points
Management reporting
Service level : 2 working days
9,000 function points
Local Touch ‒ Global Reach.

13. Service level – the costs
Electronic banking
Weekly capacity 168 hr
Average cost level 125 €/hr
1,000 function points 21 €/FP
Management reporting
Weekly capacity 20 hr
Average cost level 95 €/hr
9,000 function points 0.21 €/FP
Local Touch ‒ Global Reach.

14. Application Portfolio €ontrol
How to decide what budget is
needed for which applications
Local Touch ‒ Global Reach.

15. Do I get enough budget?
Most used way of budgetting:
• Take last year’s budget
• Correct for inflation (in good times)
• Reduce it (in bad times)
There is a better way . . .
Local Touch ‒ Global Reach.

16. Activity Based Costing
Maintenance budget can be based on portfolio
characteristics by means of Activity Based Costing
3.000
Implementation
2.500
2.000
Cost (EUR/FP).
1.500
End-of-life
1.000
500
0
Applications
Local Touch ‒ Global Reach.

17. Measurable budget
Investments in the portfolio can be made
measurable
Implementation workflow package
• Implementation is a one-off peak
• Costs per fp decrease when more
functionality will be implemented
End-of-life applications
• Invest in migrating functionality
• Savings on yearly license fees
Local Touch ‒ Global Reach.

18. Impact for the organisation
No mea$ure, no €ontrol
Application or project size
• Make fairly precise size estimates
• Document these estimates
€osts
• Good design of time registration
• Out-of-pocket via Control or project office
Local Touch ‒ Global Reach.

19. Portfolio €ontrol
By making the portfolio
measurable you will get more grip
for your (internal) control
By expressing measurable aspects
in financial terms investments in the
portfolio can be “sold” much easier
to the budget holder
Local Touch ‒ Global Reach.

20. metrieken.sogeti.nl
metrieken.sogeti.nl
Local Touch ‒ Global Reach.