Value-focused portfolio management for IT overview.

1. IT Value Assessment
Seeing Beyond Dollars

2. Agenda
 The Context: IT & Business Disconnects
 Focusing In: From Portfolio Management To
Project Assessment
 IT Project Value Spectrum
 A New Framework – Variable Metrics
 Quantifying Non-Financial Value
 Integrating with IT and Business Management

3. Problem Statement
Defining the value of IT work solely by using financial measures
is suboptimal, and leads to decisions that do not support the
firm’s stated strategy and priorities:
 Inability to recruit any early SOA adopters, as designing for services is
more costly early in the process
 Reluctance to invest in infrastructure and update platforms
 Reluctance to move to new, more nimble technology without an immediate
payback
 Poor decision-making around purchased versus developed systems
 „ROI and NPV do not isolate and measure a project‟s ability to grow and
transform the business.‟ (AEC, 2004)
It is more important to select projects that propel the corporate strategy
forward than to choose solely based on ROI.

4. IT Project Value Spectrum
Large businesses tend to grow in an ad hoc manner, creating a vast landscape of
distributed assets, including incompatible hardware, different software implementations,
different versions of the same software brand, and different enterprise configurations.
(Paigankar, 2008)
Financial Measures Value Measures

5. A New Framework: Variable Metrics
Core Metrics (Standard Corporate Metrics)
3-5 Year Variable Measures
Our Focus
Short Term Priorities
“Say you‟ve got 20 projects and can‟t decide
which to fund. So you underfund all of them.
As a result, everything is delayed, and
accomplishments are lessened. That‟s called
the “Sprinkle Theory,” and it‟s a colossal
drag.” –Lawrence A. Bossidy (Honeywell)
Regardless of maturity level, each company
creates and maintains a standard set of
corporate measures, either integrated with IT or
disaggregated.

6. Quantifying Strategic Impact – Keeping Priority
Measures Quantifiable (EXAMPLE)
 Customer Satisfaction
 Improves satisfaction for a significant number of customers
 Improves satisfaction for a small number of customers
 Impact to satisfaction is not significant or N/A to investment
 Addressing Gaps with Competitors
 Addresses significant, pressing gaps with competitors
 Addresses non-pressing gap with competitors
 Does not address significant, pressing gaps with competitors or N/A to investment
 Provides Competitive Advantage
 Provides significant competitive advantage
 Provides some competitive advantage
 Does not provide significant competitive advantage or N/A to investment
In addition to core metrics, the secondary and tertiary metrics (above) should
be weighted appropriately and included in a business case. A final numeric
score that includes this criteria provides a better view of project VALUE.

7. Zooming In: Portfolio Management
Definition
IT Portfolio Management is the application of systematic management to
large classes of items managed by enterprise information technology
capabilities.
1.Portfolio 2. Portfolio 3. Portfolio 4. Portfolio
Analysis Prioritization Consolidation Management
1.Portfolio Analysis Portfolio Analysis displays the data as summary dashboards and, combined
with business value assessments, provides Portfolio Views.
Portfolio Prioritization identifies the process by which Projects are selected for
2. Portfolio Prioritization inclusion in the cycle plan within budget available within Function.
Portfolio Consolidation is the combining of Functional Project Portfolios within
3. Portfolio Consolidation
the Business.
Portfolio Management monitors projects and ensures development follows the
4. Portfolio Management
direction of benefit; facilitates project adds and deletes during the course of
the year driven by business and IT demands.

8. A New Methodology for Identifying Value
 This is a new method!
 Developed by several portfolio managers in Ford.
 Designed as a prototype; not intended to be fully launched using
Excel macros!
 Piloting illuminated these key issues:
 There is little patience for implementing a structured approach to a
portfolio managers believe they already know well.
 There are some weaknesses in the assessment questions we devised…
Focused attention on the assessment with SMEs would be helpful.
 The next few slides capture the output of the tool, not the
input.