Turning Portfolio Management into Decisions

Transcription

1 Turning Portfolio Management into Decisions Elliot Chikofsky 2006 EM&I - distributed by SSTC 2006 by permission 2006 ENGINEERING, MANAGEMENT & INTEGRATION, INC. 455 Spring Park Pl.Ste.350 Herndon, VA Tel: Fax:

2 Turning Portfolio Management into Decisions IT Portfolio Management Selection, Analysis, Control, and Evaluation of a manageable portfolio of IT investments Portfolio-based decision making Decision process Supporting leadership with information Portfolio management as part of a comprehensive capabilities framework EM&I

3 Why IT Portfolio Management? What percent of our projects meet their original targets, benefits, and outcomes? How do we know if our process improvement efforts are effective? How do we detect programs that are in danger of not meeting their goals? EM&I

4 The Portfolio Objective Projects that are clearly aligned with the agency's mission and strategy Emphasis and resources on high value projects Spending that better supports the agency's priorities; easier to justify spending rationale Good balance of investments and the right number for agency resources EM&I

5 Drivers on the Business Side of DoD NDAA FY2005, Section 332 Investment Review Board ConOps DoDD DoD IT Portfolio Management DoDI 8115.bb IT Portfolio Management instruction Investment Certification and Annual Review Process - User Guidance BEA Compliance Guidance DITPR Annual Guidance Component decision-making process Acquisition rules and procedures IT Budget Guidance EM&I

6 EM&I IT Portfolio Management Strategic Alignment of projects and programs with the Mission and Enterprise Goals Balancing among investments for short-term, term, intermediate, and long-term value Making decisions among hard-to to-compare project opportunities Valuing assets and managing trade-offs Implementing Enterprise Architecture and technical architectures Integrating with financial management and the PMO Valuing results and controlling projects in progress Enabling early warnings Ensuring continued alignment

7 Analysis EM&I DoD IT Portfolio Mgt (DoDD ) (1) Links portfolio objectives to Enterprise vision, mission, goals, objectives, and priorities; develops quantifiable outcome-based performance measures; identifies capability gaps, opportunities, and redundancies; identifies risks; and provides for continuous process improvement. Selection. Identifies and selects the best mix of IT investments to strengthen and achieve capability goals and objectives for the portfolio and demonstrates the impact of alternative IT investment strategies and funding levels.

8 Control EM&I DoD IT Portfolio Mgt (DoDD ) (2) Ensures a portfolio is managed and monitored using established quantifiable outcome-based performance measures. Portfolios are monitored and evaluated against portfolio performance measures to determine whether to recommend continuation, modification, or termination of individual investments Evaluation. Measures actual contributions of the portfolio against established outcome-based performance measures to determine improved capability as well as to support adjustments to the mix of portfolio investments

9 IT Investment Review and Management from DoDI 8115.bb March 2006 draft EM&I

10 Coordinated Processes BUDGET MANAGEMENT (Formulation, Execution Monitoring) PORTFOLIO MANAGEMENT SYSTEM LIFE CYCLE; ACQUISITION MANAGEMENT System Acquisition System Maintenance EM&I

11 IT Portfolio Management Active Portfolio Entry Process Exit Process Periodic Review (pit stop) EM&I

12 Repositories and Tools Defense IT Portfolio Repository Select and Native Programming for IT $NaP-IT DITPR IRB Portal (AT&L Portal) Component IT Budget preparation EV IT System Inventory / Portfolio document management procedures (or Portal) EM&I

13 Decisions Strategic direction Tactical plans Funding priorities Policies and procedures Go / No Go milestones Resource allocation trade-offs What kinds of information does the leadership need to make the best choices? EM&I

14 Decision Components Goal or Objective of the Decision Constraints Who are the players and their objectives? Related and Prior Decisions Options / Alternatives What factors distinguish the alternatives? What information is needed? EM&I

15 EM&I Dashboard - presenting critical factors

16 Decision Dimensions Support for the Mission Financial Soundness and Benefits Risk Abatement EM&I

17 Decision Expectation Car Repainted Designer Sneakers Orthodontics Vacation Pay Down Credit Card Debt EM&I

18 Decision Factors Social Benefit 15 % Long-Term Benefit 60 % Psychological Benefit 25 % EM&I

19 Evaluation of Decision Elements Expectation Car Repainted Designer Sneakers Orthodontics Soc = High LT = Medium Psy = High Soc = High LT = Low Psy = Medium Soc = Medium LT = High Psy = Low Score Vacation Soc = High LT = Low Psy = High Pay Down Credit Card Debt Soc = Medium LT = High Psy = High EM&I

20 Understanding a Score Is a score of 63 good or bad??? Relative Score Against the Weighted Criteria Measure with Respect to the Goals and Objectives Evaluation Depends on What all the Other Projects Score as Well as Your Proposal Weights and criteria are adjusted with experience; Learning curve for the organization EM&I

21 Data Analysis - Mission versus Risk 40 High Mission - High Risk High Mission - Low Risk Good Mission Score Low Mission - High Risk Low Mission - Low Risk Risk Mitigation Score Good EM&I

22 Control Phase Ensure that portfolio initiatives are meeting cost, schedule, and performance objectives, within the context of the business case, as well as satisfying risk mitigation and architecture improvement needs. In Process Reviews (IPR) Snapshot of system and initiative status Stationary and Current Moving Target Analysis Tracking to document savings expected and achieved relative to the business case, not just the latest budget EM&I

23 Linking to Enterprise Transformation The Enterprise Today Strategic Driven Transformation The Enterprise s Future Strategic Direction and Governance Integrated Portfolio Initiative #1 Initiatives Move the Enterprise Forward Across Initiatives Balance Overall Risk Strategic Alignment Priority Coverage Initiative #N Individual Initiatives Mission Need Perspective Initiative Identification Expected Outcomes Concept of Operation Performance Measurements Linkage to Strategic Direction Critical Dependencies Financial Perspective Status Quo Baseline Initial Projected of Savings Actual Savings and Current Projection of Future Savings Projected Savings Relative to Current Budget EM&I Project Execution Perspective Project Execution Baseline (Performance, Cost, Schedule), Milestones Measured Performance (Logic Chain) Earned Value Analysis Accomplishments / Issues

24 Criteria on Each Decision Warfighter How does this decision provide better support for the warfighter? Enterprise Architecture Does this decision move us closer to matching the target architecture? Transition Plan Does this decision help meet the transition targets? Net-Centricity Does this decision support the technical direction? Redundancy Does this decision help reduce unnecessary duplication? EM&I

25 Monitoring and Decision Making Ranking of portfolio Monitoring performance Identifying warning signs Ensuring continued strategic alignment Quarterly and annual portfolio reviews Periodic initiative detail reviews; Life cycle decision points Maintaining balance among short-term, intermediate, and long-term investments EM&I

26 EM&I Limits on Decision Making

27 Capabilities Framework Organizational transformation is not an accident. It is built, by design, upon four pillars: Strategy Governance Architecture Business Solutions EM&I

28 For More Information Engineering Management & Integration Inc. 455 Spring Park Place, Suite 350 Herndon, VA (703) Elliot Chikofsky (781) EM&I 75 Lexington St Burlington, MA EM&I 1999 META Group, Inc., Stamford, CT (203)