The core components of IT Portfolio Management
IT portfolio management emphasises a strategic focus on goals such as revenue growth, cost reduction, regulatory mandate and business continuity rather than just typical operational objectives such as project cost, timescales and deliverables. IT portfolio management requires input from across the organization, including finance managers, executive management, and business groups, as well as IT managers.
With IT portfolio management, project planning is viewed as a fundamentally top-down initiative and external stakeholders are required to take part in the decision making process. IT portfolio management moves away from the project-centric, bottom-up approach, forces everyone to accept responsibility for critical systems, and designed to prevent a single stakeholder, for example IT, being blamed for poor decisions.
The key driver for IT portfolio management is to gain visibility of all the business demands being placed on IT and elevating performance through the effective use of resources, people, funding, assets and processes – in order to maximize business value.
Below is a check list of four key components required for successful IT Portfolio Management
#1 Build a registry: Portfolio management begins with gathering a detailed registry of all the projects in the company, ideally in a single database, including name, length, estimated cost, business objective, ROI, and business benefits.
#2 Identify strategic objectives: This involves a business compiling a list of projects during the annual planning cycle and supporting them with business cases that show estimated costs, ROI, business benefit and risk assessment and so on. One of the core criteria on which projects get funded is how closely a project meets the company’s strategic objectives for the upcoming year.
#3 Prioritize and categorize: The prioritization process allows the business to fund the projects that most closely align with your company’s strategic objectives. The business then attaches valuation criteria to rank projects in terms of their importance.
#4 Manage and review the portfolio: The portfolio has to be actively managed and monitored. Many businesses use a centralized Program Management Office (PMO) to get financial work progress updates from project leaders. This information goes into a database and is reported to executives via a Project Portfolio Management Team (PPMT), giving the project inventory and its status. Typically businesses use a RAG method - Red (Help!), Amber (caution), or green (good) – to identify project status.
You can find out more on how to simplify key components of your IT Portfolio Management here