10/25/12

IT Por,olio Management
Week 9

You have $100,000 to invest.

What would you invest in and why?

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MDCM, Inc. Case

What were MDCMs business objecSves?

1. Consolidate Where Possible

2. Increase Overall Scale
Eciencies
3. Single Global Company
4. Focus on Core Competencies
5. Mend Customer RelaSonships

MDCM, Inc. Case

What were the proposed IT projects?
1. Unify Methodology & 7. Manage Supply Chain
Technical Standards 8. Streamline Design
2. Consolidate Data Systems
Centers 9. Improve CollaboraSon
3. Outsource Non- Systems
Strategic IT 10.CRM/Data Warehouse
4. Standardize Hardware 11.E-Procurement
5. Implement ERP 12.Customer Self-Service
6. Create Employee Portal
Portal

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MDCM, Inc. Case

What model would you use to determine
balance?
InformaSonal Strategic
10 12

TransacSonal
5, 6, 7 , 9, 11

Infrastructure
1, 2, 3 , 4, 8

MDMC Inc. Case

How would you rank the projects?
BO1 BO2 BO3 BO4 BO5 Business Ability to
(2X) (1.5X) (1X) (1X) (.5X) Value Succeed
Unify Methodology & Technical
Standards
Consolidate Data Centers
Outsource Non-Strategic IT
Standardize Hardware
Implement ERP
Create Employee Portal
Manage Supply Chain
Streamline Design Systems
Improve Collaboration
Systems
CRM/Data Warehouse
E-Procurement
Customer Self-Service
Portal

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MDMC Inc. Case

How would you rank the projects?
BO1 BO2 BO3 BO4 BO5 Business Ability to
(2X) (1.5X) (1X) (1X) (.5X) Value Succeed
Unify Methodology & Technical
Standards 10 2 0 10 10 38 90
Consolidate Data Centers 10 10 0 10 2 46 50
Outsource Non-Strategic IT 2 8 0 10 10 31 70
Standardize Hardware 10 10 0 10 2 46 40
Implement ERP 6 6 4 8 8 37 30
Create Employee Portal 6 10 0 8 8 39 60
Manage Supply Chain 6 6 2 8 8 35 20
Streamline Design Systems 2 8 4 8 8 32 80
Improve Collaboration
Systems 10 2 6 8 10 42 60
CRM/Data Warehouse 8 2 10 6 6 38 20
E-Procurement 6 10 2 8 8 41 70
Customer Self-Service
Portal 6 8 10 8 8 46 50

MDCM, Inc. Case

Balancing Value and Ability to Succeed

50

Cust Self Service

Hardware Data Centers

CollaboraSon
Value

eProcurement

Employee
CRM Methodology
Intranet
ERP

Supply Chain
Design Systems
Outsource

30
0
Ability to Succeed 100

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MDMC Inc. Case

How would you schedule the projects?
Year 1 Year 2 Year 3
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Unify Methodology & Technical Standards

Consolidate Data Centers

Outsource Non-Strategic IT

Standardize Hardware

Implement ERP

Create Employee Portal

Manage Supply Chain

Streamline Design Systems
Improve Collaboration Systems

CRM/Data Warehouse

E-Procurement

Customer Self-Service Portal

Implement

Implement with caution due to risk

Review for feasibility

Using COBIT 5 - APO05, Manage Por,olio how

would you rate MDCMs eorts? Why?
1. Establishing the target mix
2. Determining funding
3. EvaluaSng & selecSng programs
4. Monitoring investment performance
5. Maintaining their por,olios
6. Managing the acheivment of benets

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What is an IT project
por,olio and why would you
want one?

Portfolio Categories
New
Business
Innovation Models or
Competitive
Capability
Discretionary

Incr
Revenue
Growth Incr Cust
Intimacy

Cost-Out
Efficiency Productivity
Engine
Run The

Sustain
Run the Engine Operations

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Discretionary Budget in Portfolio Perspective

Targets
2%
We can change Innovation $0.5MM 1 Yr
the por-olio
3 Yr
targets to shi1

Discretionary
investment to
business Growth
30%
1 Yr
$12MM
opportuni6es.
3 Yr

38% 1 Yr
Efficiency $15MM
3 Yr

1 Yr
30%
3 Yr

Engine
Run The
$12MM

Run the
Run the Engine
Engine

Strategic Themes
Business Need
Business Need
Business Need

Strategy 1
The IT
Business Need

Strategy
filter `
Business
Value Creation
IT Opera6ng
&
Principles
IT Investment
Portfolio"
Strategy
Enabling IT Alignment
Capabili6es,
Talent,
and
Enterprise IT
Infrastructure Portfolio

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Our 2007 Investment Plan: Align Investment to

Strategy
We strive to
minimize
Business Change 2007 Invest Value Risk this investment
category.
However,
significant
Must Do BDC
$7MM $7MM
Must Do architecture
EOL, Networks Sustain renewal is
ahead of us
SAP,
Collaboration,
Ac6ves LDR $3MM $10MM
More
Low - Med Office
Intangible

Phase 2
Talent
$4-5MM $15MM Strategic Med +
60+ %
of the
APO Investment
Business 21C
More Tangible
$6-8MM $23MM Med - High Portfolio
Eciency Logis6cs
Financials
invests in
Business
OR Value
Sales + Market Content
Mix of Tangible
$2-3MM $26MM Med + Creation
Excellence PC
+ Intangible

R+D
ELN $1-2MM $28MM Strategic High
Innova6on
IT Investment Portfolio

Portfolio View
Portfolio View ( Pipeline + Approved Projects ) * Size of circles = Cost

High Shop floor Talent / SAP

Integration HR Upgrade Must-Do Projects
Energy Elec Lab
Dashboard S+M 2 Notebooks
HO E Upgrade
Talent
Value Index

Learning Price EOL

Program
Nrg SmartOps

Inv Optim
Middleware
Learn Price
Execution ELN
Inv
Agro S
LM
Agrofresh
Rollout SR DR/ L D ECMR
APO
Sales Shop
Reporting I SBS
SMK FMP
S+M CPA M SAP APO /
Knowledge S Logistics ECMR
Sec Duty Mgmt Manu replace
ERP Lead Formulation
Security S+M Fixit Digital Logistics Managemt Mgmt Powder
Design Rights Dashboard
Mgmt
Low
Service
Low CRM Portal Risk Business High
Agrofresh Support

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Portfolio Project Ranking

Project List

Wow!
Pipeline Projects

IT PORTFOLIO: Learning Objectives

What is Balance ? Achieve Balance

What is Alignment ? Align to Strategy

How to Look at Portfolio ? Perspec6ves

How to Support Governance Decisions and Tradeos
Discussions ?

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Exercise

Read the business context

Read the portfolio pipeline

Pick out the projects from the pipeline that are the best candidates
for investment, given the budget target of $25MM

Then number (rank) your projects 1 through x

(Where1 indicates the top candidate, etc.)

Sample Portfolio in a Value, Risk Quadrant Analysis

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SAMPLE ANSWERS
TALENT

A INNOVATION

EFFICIENCY

B GROWTH

C EFFICIENCY

Business Case: Learning Objectives

At the end of this Session, you will be able to explain:

Who Does Biz Case ? Roles

When to Do Biz Case ? Context

What is Biz Case ? Elements of Good Case

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Initiate Process

Input
Collect and Organize Ideas
Who
Understand Goals and Objectives Project Manager
Leaders
Consider Alternative Solutions
Sponsors
Create Project Business Case Stakeholders
Value
Cost
Risk
Return on Investment ROI, Payback period

Output
Project Proposal Ready for Consideration by Decision Makers
(Governance)

What Makes Up a Good Business Case?

Execu6ve Summary

Objec6ves

Scope

Deliverables SUPPORTING
DETAILS
Value Cost Risk

Assump6ons

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Hierarchy of Business Value Measures

Value Delivery
Impact Sought Sample Value Measure Responsibilities
Revenue growth

Business Management
Business financial values
ce
Return on assets
Revenue per employee
viden

Time to bring a new product

to market Business operational values
ail of E

Sales from new products )

ss
Product or service quality ce
uc
S

IT Management
Fewer handoffs of
rs Business process values
Ability to cross-sell ato
e IT Tr

ic
nd
Supplier integration
(I
(Project Layer)
Implementation time of new IT application business value
n of th

application IT investments
Implementation cost of new
application
IT infrastructure business value
Dilutio

(Infrastructure Layer)
Infrastructure IT investments
availability
Cost per transaction
Cost per workstation Time for business impact
Source: The New CIO Leader, Broadbent and Kitzis

Cash Flow Analysis

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