Optimizing the value of IT Featured

7:00pm EDT November 24, 2006

Make no mistake: many business units are less than satisfied with the value produced from their Information Technology departments.

The solution? Better alignment of IT assets with business objectives.

“That’s something that most business executives want to believe their company is doing,” says Richard Mitschke, a project manager with Avvantica Consulting LLC. “In reality, many organizations simply do not have the right structures and/or strategies in place to optimize IT value.”

Project portfolio management (PPM) can improve the business value delivered by IT, Mitschke claims. “A strong PPM approach will help align your IT portfolio such that it supports your business strategy.”

Smart Business talked to Mitschke about how to get the most out of IT assets through PPM disciplines.

What exactly is IT PPM?

It is the art and science of optimizing all IT resources — people, capital and knowledge, among others — to support and enable your business strategy. PPM entails prioritizing and executing new initiatives as well as managing all existing IT assets and processes.

A lot of people think of PPM as a set of processes surrounding the evaluation of potential new projects. Although it starts during strategic planning and idea inception, it doesn’t stop there. It also includes managing current IT projects as well as normal support operations.

The key to a strategic PPM approach is a holistic evaluation of your IT portfolio and alignment of its assets with business objectives. IT PPM aims to maximize return by understanding investment opportunities, selecting investments with the highest potential value, and managing those investments throughout their lifecycle.

What does an organization gain from IT PPM?

By managing projects and operational support as a portfolio — as opposed to separate efforts — organizations are better able to focus their limited resources on the most value-added initiatives.

This is achieved by defining and executing standard processes for project selection and execution, as well as ‘keep-the-lights-burning’ operational support.

Once you select the right projects and support operations, you must manage them in a systematic and holistic manner, and adding a central program management office can help assure quality.

With IT PPM, organizations can expect greater return on investment; enhanced ability to manage distributed resources; ability to quickly adapt to change; improved quality of execution; and greater capability to manage expenses.

Don’t IT departments already do this?

While most executives nod their head at the need to align business strategy and IT, many organizations do not have mature processes, structures and tools in place. That includes implementation methodologies, project budgets and a program management office.

In fact, in the average company many IT operational processes are broken. For example, META Group estimates more than 80 percent of companies do not develop and review business cases for technology projects. These and other companies tend to evaluate IT projects individually when they should be managing the portfolio more holistically. If they plan and manage at the individual project level, they will continue to be reactive and remain a step behind the business.

What processes and tools are needed?

Several focused software packages enable project evaluation, project lifecycle management, resource management and finance/budget management.

These tools automate the process of collecting, evaluating and approving project proposals; capturing and reporting real-time status of initiatives; and monitoring project performance against objectives.

What are the critical success factors in implementing project portfolio management?

  • Establish governance and clear accountabilities.

  • Allocate sufficient resources with the necessary skills to support the ongoing PPM process.

  • Ensure that the process is disciplined and sustained.

  • Develop an objective prioritization framework.

  • Maintain communication and cross-functional awareness.

  • Support decision making with tools.

A strong IT project portfolio management approach will help ensure an IT portfolio is properly aligned with business strategies to deliver optimal value.

RICHARD MITSCHKE is a manager in Avvantica Consulting LLC’s Consulting Practice. Reach him at (214) 379-7925 or rmitschke@avvanticaconsulting.com.