More than delivering projects right, we have to be sure we pick the right projects to begin with. A capability called portfolio management is the way to be sure an enterprise does the right work. Portfolio management maps strategy to operations by identifying, selecting and managing investments or project requests based on strategic business objectives. It then selects the right investments, and delivers outcomes that maximize the business value of our IT investments.
Portfolio management selects investments by defining, evaluating, and prioritizing project requests. They’re defined in business cases, evaluated by comparing competing projects to each other, and prioritized so that only opportunities that deliver the most value are funded. That’s how we get a single, comprehensive inventory of the “right” work.
We use our overall business strategy to establish targets in primary asset classes for projects that:
- gain competitive advantage, increase sales, or drive market position);
- provide better information, increase control, improve quality, or faster cycle time);
- reduce the cost of doing business, or process transactions, and
- provide shared services and integration).
classes developed by MIT Sloan Management, Center for Information Systems Research (CISR).
With targets in-place, we build business cases for each requested project to determine business worth. Then evaluate requests based on business value, financial return, strategic fit, technical fit, benefits risk, implementation risk, and operational risk. This is a culling process that rules-out proposals that may be sound on their own, but that have less value to the enterprise than others. It allows us to prioritize projects within categories. Then we pick the top projects until we run out of money or people.
Portfolio management enables us to report how we are performing against our strategy. We measure percent invested in “run the business,” vs. “grow the business”, and how much we invested in each category vs. the targets. We also measure actual vs. expected business benefits, and budget variance.