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Page 3 of 5
Software Tools
An important point, especially when selling management on the idea of IT project portfolio management, is that while it is possible to do this without a specific automation tool, managing the portfolio will quickly get out of hand. True, one can educate all stakeholders and team members on the bigger picture of portfolio management and define the process for how projects get initiated, approved, planned, staffed, executed, and monitored. But without the support of an automated tool:
- Key resources will spend hours and even days pulling together status reports.
- Managing the assessment and approval process will become so onerous that it will not be followed.
- Creating a view of resource allocation will not accurately reflect what people are actually doing.
- Any calculations used to assess or track projects become suspect if done manually.
- A manual approach, while possible for a very small portfolio, is not scaleable as the portfolio increases in size.
Therefore, it is best practice to utilize an automated system to enforce assessment and approvals, capture the project inventory, maintain standards, establish visibility of status, produce reports, provide metrics, and enforce process work flows.
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It is important to distinguish between project management tools and portfolio management tools. The former focuses on the management of individual projects, and supports capabilities like Gantt charting/PERT/CPM, resource allocation, milestone tracking, project cost management, and reporting of status versus plan (for deliverables, milestones, costs, resource allocation, and scope changes). The latter focuses on individual projects at a high level only, instead managing key components like initial assessments, approvals, status, risks, issues, and cross-dependencies.
The IT portfolio management system enables a view of the totality of projects and work streams in various stages (status, costs to budget, risks and issues indicators, realization of benefits, and so on) so that informed decisions can be made about project choice, resource allocation, project execution and delivery, while tweaking the portfolio as needed. In this context, such a system is used to categorize projects and work streams, assess their values and risks, score investments, and assess value and risk at a portfolio level (under varying scenarios).
To do so, the portfolio management solution must be able to manage and report at portfolio, program, and (summary) project level. In this capacity, flexible drill down and reporting of the portfolio and its components (by workflow, initiator/investor, by status, by risk, by budget allocation, and in totality as a dashboard or summary) is considered critical functionality of an automated solution.
When considering reporting needs, remember that senior management, business managers, and IT managers will have different needs for information. Managers who must decide on the portfolio composition will need to see value measures for portfolio components supported by impact statements, cost-benefit analyses, and risk assessments. Program and project managers and relevant stakeholders will want to see project status, risks, actual spending versus budget, and so on. Auditors and regulators will be interested in seeing the support for key project, program, and portfolio decisions as well as audit trails of key changes to portfolio composition.
The portfolio management system can help act as the gatekeeper to project approvals, and to ensure that project methodologies are being followed across the board. Many tools also help to manage budget requests by program and project, so an overall view of such requests can be formed. Others help to forecast, schedule, and manage human, financial, and technical resources across the portfolio, even providing "scenario analysis" functionality allowing management to see the effects on the entire portfolio of changing the project and work stream mix, adjusting resource or budget allocations, changing the sequencing and delivery dates of projects, and so on.
The following vendors provide IT portfolio management software and services:
Artemis International
Barometrix
Mercury
Pacific Edge
PeopleSoft
Planview (includes Business Engine)
Primavera
ProSight
UMT
Standards for IT Portfolio Management
It is difficult to talk about tools without talking about standards. Tools are often built around and can enforce standards, and the same should be true for IT portfolio management tools.
One such standard is Val IT, a suite of documents that provide a framework for the governance of IT investments, produced by the IT Governance Institute. Val IT is a formal statement of principles and processes that can be used for IT portfolio management. In fact, it is an overall IT governance framework, composed of the principles of value governance, portfolio management, and investment management. Val IT is tightly integrated with another IT governance framework known as COBIT, from the Information Systems Audit and Control Association. Val IT extends and complements COBIT, which provides a comprehensive control framework for IT governance extending from line of business issues, to IT-specific issues, to process and governance. Specifically, Val IT focuses on the investment decision (are we doing the right things?) and the realization of benefits (are we getting the benefits?), while COBIT focuses on the execution (are we doing them the right way, in a controlled manner, and are we getting them done well?)
Value Measuring Methodology (VMM), which has the motto "it's not just about ROI any more," provides more specific guidance than Val IT about the different types of value (tangible and intangible) that can be considered, and how to compare the "apples" (tangibles) with "oranges" (intangibles) from individual projects to help maintain balance.
VMM uses concepts of economic value of projects and metrics to help manage the portfolio. Each of the major processes/activities have a RACI diagram, indicating the responsibilities of the senior executives, business managers, and information managers, along with the major and minor COBIT control objectives associated with the activity. It is these linkages and assignments of accountabilities that make VMM a practical ready-reference that can be actioned, rather than it just being another list of "motherhood and apple pie" statements.
The portfolio management principles of VMM include the following:
- PM1: Maintain a human resource inventory.
- PM2: Identify resource requirements.
- PM3: Perform a gap analysis.
- PM4: Develop a resourcing plan.
- PM5: Monitor resource requirements and utilization.
- PM6: Establish an investment threshold.
- PM7: Evaluate the initial program concept business case.
- PM8: Evaluate and assign a relative score to the program business case.
- PM9: Create an overall portfolio view.
- PM10: Make and communicate the investment decision.
- PM11: Stage-gate (and fund) selected programs.
- PM12: Optimize portfolio performance.
- PM13: Re-prioritize the portfolio.
- PM14: Monitor and report on portfolio performance.
VMM defines an Investment Management domain, which is tightly coupled to the portfolio management domain and includes the following principles:
- IM1: Develop a high-level definition of investment opportunity.
- IM2: Develop an initial program concept business case.
- IM3: Develop a clear understanding of candidate programs.
- IM4: Perform alternatives analysis.
- IM5: Develop a program plan.
- IM6: Develop a benefits realization plan.
- IM7: Identify full lifecycle costs and benefits.
- IM8: Develop a detailed program business case.
- IM9: Assign clear accountability and ownership.
- IM10: Initiate, plan and launch the program.
- IM11: Manage the program.
- IM12: Manage/track benefits.
- IM13: Update the business case.
- IM14: Monitor and report on program performance.
- IM15: Retire the program.
Next: Meeting The Challenges
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