IT (Information Technology) Portfolio Management Step-by-Step

Praise for IT Portfolio Management Step-by-Step

"Bryan Maizlish and Robert Handler bring their deep experience in IT 'value realization' to one of the most absent of all IT management practices--portfolio management. They capture the essence of universally proven investment practices and apply them to the most difficult of challenges--returning high strategic and dollar payoffs from an enterprise's IT department. The reader will find many new and rewarding insights to making their IT investments finally return market leading results."
--John C. Reece, Chairman and CEO, John C. Reece & Associates, LLC Former deputy commissioner for modernization and CIO of the IRS

"IT Portfolio Management describes in great detail the critical aspects, know-how, practical examples, key insights, and best practices to improve operational efficiency, corporate agility, and business competitiveness. It eloquently illustrates the methods of building and integrating a portfolio of IT investments to ensure the realization of maximum value and benefit, and to fully leverage the value of all IT assets. Whether you are getting started or building on your initial success in IT portfolio management, this book will provide you information on how to build and implement an effective IT portfolio management strategy."
--David Mitchell, President and CEO, webMethods, Inc.

"I found IT Portfolio Management very easy to read, and it highlights many of the seminal aspects and best practices from financial portfolio management. It is an important book for executive, business, and IT managers."
--Michael J. Montgomery, President, Montgomery & Co.

"IT Portfolio Management details a comprehensive framework and process showing how to align business and IT for superior value. Maizlish and Handler have the depth of experience, knowledge, and insight needed to tackle the challenges and opportunities companies face in optimizing their IT investment portfolios. This is an exceptionally important book for executive leadership and IT business managers, especially those wanting to build a process-managed enterprise."
--Peter Fingar, Executive Partner Greystone Group, coauthor of The Real-Time Enterprise and Business Process Management (BPM): The Third Wave

"A must-read for the non-IT manager who needs to understand the complexity and challenges of managing an IT portfolio. The portfolio management techniques, analysis tools, and planning can be applied to any project or function."
--Richard "Max" Maksimoski, Senior Director R&D, The Scotts Company

"This book provides an excellent framework and real-world based approach for implementing IT portfolio management. It is a must-read for every CIO staff considering how to strategically and operationally impact their company's bottom line."
--Donavan R. Hardenbrook, New Product Development Professional, Intel Corporation

Foreword xi

Overview of the Book xv

Introduction 1

Chapter 1 IT Portfolio Management: An Overview 7

Cha Cha Changes in the Current Environment 7

Focus on IT Investments 8

Forming, Norming, Storming: The IT Life Cycle 13

Does IT Really Matter? The IT Productivity Paradox 14

IT Portfolio Management 101 17

Comparison of IT Portfolio Management and Financial Portfolio Management 27

Value and Risks 28

Conclusion 33

Appendix 1A: Selected Firm-Level Studies of IT Returns 36

Chapter 2 Planning for IT Portfolio Management: Ready, Aim, Then Fire 39

Introduction 39

Baseline Assessments 41

Organization Readiness 42

IT Portfolio Management Maturity 42

IT Portfolio Management Capability Assessment 46

Stakeholder Analysis 47

Refining IT Portfolio Objectives 49

Portfolio Metrics 53

Chartering the Effort 54

Task Planning 55

Communication Planning 55

IT Portfolio Management Software Selection 57

Conclusion 58

Appendix 2A: IT Portfolio Management Maturity Levels 59

Chapter 3 People and Governance: The Most Important Success Factors of IT Portfolio Management 65

Introduction 65

A Demanding Environment 67

The New Focus for IT: Business 71

The Business–IT Alignment 80

IT Governance 81

CobiT: Managing the Risk and Control of IT 91

Getting Started 92

Appendix 3A: Sarbanes-Oxley Compliance Road Map 97

Appendix 3B: Top Issues Faced by Management 99

Appendix 3C: Top Issues Mapped to Key Individuals and Governance Bodies 102

Chapter 4 IT Portfolios and Their Content in Context 107

Introduction 107

IT Discovery Portfolio 121

IT Project Portfolio 128

IT Asset Portfolio 142

Conclusion 168

Appendix 4A: Technology Readiness Levels: Hardware and Software 171

Chapter 5 Building the IT Portfolio 175

Introduction 175

Stage 1: Game Plan 185

Stage 2: Planning 202

Stage 3: Creating 211

Stage 4: Assessing 234

Stage 5: Balancing 246

Stage 6: Communicating 260

Stage 7: Governance and Organization 266

Stage 8: Assessing Execution 270

Conclusion 274

Appendix 5A Value Categories and Value Factors 276

Appendix 5B Risk Categories and Risk Factors 278

Appendix 5C Readiness Assessment: Business, Internal, and Operational Diagnostics 280

Chapter 6 The IT Portfolio Management Market and Industry Provider Assessment Methodology 285

Introduction 285

IT Portfolio Software Market 286

IT Portfolio Software Selection Process 289

Industry Provider Assessment Methodology 292

Conclusion 303

Appendix 6A Advanced IT Portfolio Software Provider Evaluation Criteria 304

Chapter 7 Final Thoughts 321

The Future Vision 326

Case Studies 329

Index 367

"Among the works that are aimed more towards business leaders, IT Portfolio Management is certainly one of the most accessible." (Business Digest, March 2007)

BRYAN MAIZLISH, PMP, is Chief Technology Officer—Program Team at Lockheed Martin Integrated Systems & Solutions. He is also the Chairman for the annual Strategic & Operational Portfolio Management conference cosponsored by the PDMA and IIR. He is a certified Project Management Professional (PMP^®) by The Project Management Institute (PMI^®). He has served in management roles for companies that developed the Internet strategy, design and architecture, systems integration, and implementation for many global 2000 companies. He received his MBA from the Wharton School of Business and was a member of the 1983 Rose Bowl Champion UCLA football team.

ROBERT HANDLER is Vice President, Enterprise Planning & Architecture at Gartner, Inc., the leading provider of research and analysis on the global information technology industry. Prior to joining Gartner, he led the IT portfolio management research for META Group Inc., and is a sought-after speaker and author of numerous research papers on the topic. He has over fifteen years of experience in all aspects of information technology, and has worked at such esteemed organizations as IBM and Ernst & Young LLP. He holds a bachelor of science in business administration from Pepperdine University and an MBA in information and decision systems from San Diego State University. He lives in San Diego with his wife, two children, and two golden retrievers. Information technology (IT) provides inordinate value if applied properly. Identifying and implementing new value and revenue opportunities, while maximizing return based on existing investments is contingent on understanding the entire portfolio of information technology investments. Just as a financial investment portfolio requires constant monitoring and action, the investments a company has, or is making, in IT must constantly be evaluated. This need is evermore heightened in today's demanding regulatory environment. While silver bullet solutions do not exist for difficult problems, IT portfolio management provides a realistic approach to ensuring that investments in technology continue to support the needs of business.

Based on the authors' combined professional hands-on IT and financial experience of over thirty years, the unparalleled input and support from an army of individuals from the leading IT market research firm in the area of IT portfolio management, extensive research and case studies from many exemplar companies, IT Portfolio Management Step-By-Step provides the closest thing to a Holy Grail solution—the first complete book ever published that presents a proven, pragmatic, and non-technical approach to simplifying the process of achieving a rationalized and business-aligned IT portfolio.

IT Portfolio Management Step-By-Step encapsulates the essential ingredients novices and experts need to build or fortify an existing IT portfolio, including extensive coverage of:

• The comprehensive five-level IT portfolio maturity model and portfolio metrics
• Policies, principles, organizational roles, and other governance aspects of IT portfolio management, including linkages to Sarbanes-Oxley and CobiT
• The IT life cycle and each IT sub-portfolio in their content and context
• The eight detailed stages and specific tasks of building, step by step, the IT portfolio, replete with realities and lessons learned
• Coverage of advanced IT portfolio management topics such as Monte Carlo Simulation, the Efficient Frontier curve, Real Options, Analytical Hierarchy Process, Earned Value Analysis, Balanced Scorecard, and Scenario Planning
• Criteria for selecting an IT portfolio management tool vendor
• Insight regarding the impact of future trends and technologies on IT portfolio management

IT PORTFOLIO MANAGEMENT STEP-BY-STEP

Information technology (IT) provides inordinate value if applied properly. Identifying and implementing new value and revenue opportunities while maximizing return based on existing investments is contingent upon understanding the entire portfolio of information technology investments. Just as a financial investment portfolio requires constant monitoring and action, the investments a company has, or is making, in IT must constantly be evaluated. This need is evermore heightened in today's demanding regulatory environment. While silver bullet solutions do not exist for difficult problems, IT portfolio management provides a realistic approach to ensuring that investments in technology continue to support the needs of all growing businesses.

Based on the authors' combined professional hands-on IT and financial experience of over thirty years; the unparalleled input and support from an army of individuals from Gartner, Inc., the leading provider of research and analysis in the global information technology industry; and extensive research, input, and case studies from many exemplary companies, IT Portfolio Management Step-By-Step provides the closest thing to a holy grail solution—the first complete book ever published that presents a proven, pragmatic, and nontechnical approach to simplifying the process of achieving a rationalized and business-aligned IT portfolio.

IT Portfolio Management Step-By-Step encapsulates the essential ingredients novices and experts need to build or fortify an existing IT portfolio, including coverage of:

• The comprehensive five-level IT portfolio maturity model and portfolio metrics
• Policies, principles, organizational roles, and other governance aspects of IT portfolio management, including linkages to Sarbanes-Oxley and CobiT
• The IT life cycle and each IT sub-portfolio in their content and context
• The eight detailed stages and specific tasks of building, step by step, the IT portfolio, replete with realities and lessons learned
• Advanced IT portfolio management topics such as Monte Carlo Simulation, the Efficient Frontier Curve, Real Options, Analytical Hierarchy Process, Earned Value Analysis, Balanced Scorecard, and Scenario Planning
• Criteria for selecting an IT portfolio management tool vendor
• Insight regarding the impact of future trends and technologies on IT portfolio management

"As most industries evolve, they become increasingly commoditized and IT industry is no exception. Aggressively investing in IT is the right answer in order to achieve competitive differentiation in the marketplace. Successful businesses have long realized that developing unique, innovative business and delivery models, as well as fostering a network of global partnerships is the optimal way to deliver the results that global customers are looking for. IT Portfolio Management provides an all-inclusive approach and methodology on how to balance and align IT and business, and generate superior value and returns from IT investments while mitigating risk."--Scott McNealy
Chairman and CEO
Sun Microsystems, Inc.