PwC Luxembourg. Models for the governance of your investments with Portfolio Management September 2009

Transcription

1 PwC Luxembourg Models for the governance of your investments with Portfolio Management

2 Agenda Welcome The Portfolio Management Concept Portfolio Management in PMI Portfolio Management in Val IT Portfolio Management in ITIL PwC view of Portfolio Management Examples Conclusion

3 Welcome The Portfolio Management Concept Portfolio Management in PMI Portfolio Management in Val IT Portfolio Management in ITIL PwC view of Portfolio Management Examples Conclusion

4 The Portfolio Management Concept Projects, Programmes, and Portfolios

5 The Portfolio Management Concept Portfolio Management: a new focus Are we doing the right things? Focus? Effectiveness Optimal value How? Portfolio management Benefits management Innovation Tools PMBok. ITIL V3 ValIT Are we doing the things right? Focus? Compliance Efficiency Technology How? Project / program management Service management IT Architecture Governance Tools PMBok, Prince 2, etc. ITIL V2 CobiT

7 Portfolio Management in PMI PMI Portfolio Management in 2006 Executive Managemen t Vision Mission Strategic Plan Strategic Objectives Governance Portfolio Management Identification Categorisation Evaluation Selection Prioritisation Portfolio Balancing Authorisation Project and Program Managemen t Authorised Activity Project Management Performance Management Project Reports Actual Data Program Project Close out Operations Managemen t Operations

8 Portfolio Management in PMI PMI Portfolio Management in 2008 (1/2)

9 Portfolio Management in PMI PMI Portfolio Management in 2008 (2/2)

11 Portfolio Management in Val IT Val IT principles The IT Governance Institute is a non-profit, independent research entity that provides guidance for the global business community on issues related to the governance of IT assets. ITGI was established by the non-profit membership association ISACA in 1998 to help ensure that IT delivers value and its risks are mitigated through alignment with enterprise objectives, IT resources are properly allocated, and IT performance is measured. ITGI developed COBIT and Val IT standards. While COBIT sets good practices for the means of contributing to the process of value creation, Val IT sets good practices for the ends, by providing enterprises with the structure they require to measure, monitor and optimise the realisation of business value from investment in IT. To fulfill the Val IT value management goal of enabling the enterprise to realise optimal value at an affordable cost with an acceptable level of risk from IT-enabled investments, the Val IT principles need to be applied within three domains: Value governance Portfolio management Investment management

12 Portfolio Management in Val IT Val IT key processes

13 Portfolio Management in Val IT Overview of the process flow in Val IT

15 Portfolio Management in ITIL A Portfolio of Services A Service Portfolio represents the ability and readiness of a Service Provider to serve Customers and Market spaces. Service Strategy It represents all the resources presently engaged or being released in various phases of the Service Lifecycle. Service Portfolio Management should answer strategic questions: Why should a customer buy a service? Why should the customer buy this service from us? What are the pricing or chargeback models? What are our strengths, weaknesses, priorities and risks? How should our resources and capabilities be allocated? Define Analyse Approve Charter Invento ries Busine ss Case Value Propositio n Prioritisatio n Service Portfolio Authorisati on Communication Resource allocation

16 Portfolio Management in ITIL A Portfolio that takes into account the lifecycle of a service Service Portfolio Service Pipeline Service Catalogue Service concepts Market spaces Continual Service Improvement Service designs Service transition Service operation Third-party catalogue Retired services Customers Resources engaged Common pool of resources Area of circle is proportional to resources currently engaged in the lifecycle phase (Service Portfolio and Financial Management) Return on assets earned from Service operation Resources released

18 PwC view of Portfolio Management Business alignment is key Business Alignment Mgt Information / Data management Systems Architecture Portfolio Management In control IT Governance Strategy & Planning Efficiency Information Security Sourcing, Suppliers relationsh. Service Mgt (ITIL) Budgeting, Cost & Value

19 PwC view of Portfolio Management A two-level process I. Annual Portfolio Planning 2. Ongoing Portfolio Management Primary processes 1. Identify Business Priorities 2. Determine target portfolio 4. Prioritise Project Portfolio 5. Project Management 2. Report Status/ Results 1. Track progress and benefits 3. Identify potential new projects 3. Evaluate Investment Options 4. Re-prioritise Project Portfolio Supporting processes IT Finance processes IT Asset Management processes Resource Management processes IT Portfolio components Project portfolio Applications portfolio Infrastructure portfolio Product/service portfolio

21 Examples Different categorisations for projects can be used for slicing and dicing the project portfolio - Weill IT project categories - Weill Transformation of project portfolio Strategic: gain competitive advantage or position in the market place (e.g. the way Google deploys IT in their business model) Informational: provide information for any purpose including to account, manage, control, report, communicate, collaborate or analyse (e. g. a data mining reporting tool) Transactional : cut costs or increase throughput for the same costs (a trade processing system for a brokerage firm) Infrastructure: provides the foundation for shared IT services used by multiple applications (servers, laptops, customer databases etc); these investments are often made in anticipation of future business needs

22 Examples Different categorisations for projects can be used for slicing and dicing the project portfolio - Gartner IT investment categories Gartner 1 Defining target portfolio with Gartner categories Run: This is an indicator of how much of the IT resource is consumed and focused on the continuing operation of the business. It includes all non-discretionary expense as part of the running-the-business cost. 12% Trans form 23% Grow: This is an indicator of how much of the IT resource is consumed and focused on developing and enhancing IT systems in support of business growth (typically organic growth). Discretionary investments are included in the growing-thebusiness cost. 28% Grow 22% Transform: This is an indicator of how much of the IT resource is consumed and focused on implementing technology systems that enable the enterprise to enact new business models. This is very much a "venture" category and would be represented by activities such as the e- investments in the late 1990s. 60% Run 45% Note 1 Gartner uses benchmarks for the share of these categories

23 Examples Outcome example Quality projects, manageable risks 4 Expected benefits 3 2 Risky projects, reduced quality Risk exposure Project size (costs):

24 Examples Outcome example 10 High C Strategic Alignment A I Financial Worth / Performance Measures Low Procee d Hold Stop E F H B G J D Low Risk High

26 Conclusion Issues addressed by Portfolio Management EVALUATION CRITERIA RETURN ON INVESMENT (ROI) BENEFITS MANAGEMENT How do we get a balanced view of priority based on financial and non-financial factors? Which investments contribute to the bottom line of the organisation and which do not? Actual realisation of expected benefits from investments is not measured and managed PROJECT VALUE Lacking insight in both the financial and non-financial value of projects Implement Portfolio Management processes PRIORITISATION Decision making on investment priorities is not based on rational and transparent arguments COMMUNICATION STRATEGIC ALIGNMENT RESOURCE MANAGEMENT There is a communication gap between the PMO and other executives What does our project portfolio look like and how do we assure alignment with business strategy? We have too many active projects and a huge backlog, how do we prioritise?

27 Conclusion Which standard should you use? ITIL Service Portfolio Management Val IT PMI Standard for Portfolio Management This process covers only a small part of the Service Lifecycle - ITIL s view on Portfolio Management is quite light and high-level. It is a complete methodology, which describes in details the different steps, roles, responsibilities, documents, metrics, etc. required for successfully managing a portfolio. It is recommended for the management of IT portfolios. It is a complete methodology, which includes risk management and governance principles. It is adequate for the management of all types of portfolios (projects, programs, etc.). Whatever the standard chosen, strict procedures, clear responsibilities and adaptation to the context are key success factors for implementing portfolio management processes.

28 Contact for further information Philippe Pierre - Partner philippe.pierre@lu.pwc.com Thierry Kremser Senior Manager thierry.kremser@lu.pwc.com (+352)

29 ITIL is a Registered Trade Mark, and a Registered Community Trade Mark of the Office of Government Commerce, and is Registered in the U.S. Patent and Trademark Office This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law,, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.