© Clear Lead 2007

Best Practice in Portfolio Management and Corporate Governance

David LeaneyBEng, MSc, MBA, FAIM, CMC

Clear Lead

© Clear Lead 2007

Light bulbs, torches and lasers

Coherence?

Focus?

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Presentation overview

1. Why talk about portfolio management and corporate governance?

2. Portfolio, program and project management:

2.1. Portfolio management concepts

2.2. Select, deliver and assess

2.3. Corporate governance and insights

3. How to use this information

4. Next steps

5. Questions?

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1.1. Context and background

• With multiple projects, who gets priority for time/resources/money?

• Are all of your projects heading in the same direction?

• How do you know?

• Is it the right direction?

• What happens when not everyone is aligned to the corporate direction?

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1.1.1. Same aims/direction?

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1.2. How good could/should it be

Improved portfolio management means:

• Planned and coordinated approach to managing multiple projects

• Consistency in selection, delivery and assessment

• Prioritisation, balance, and predictability

• Satisfied customers and stakeholders

• Less waste and fewer arguments

• Improved efficiency and effectiveness – better bang for your buck

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1.3. Highlight potential issues

• There will some technical jargon – but I’ll try to keep it to a minimum

• There will be some discussion about tools, but technology is not the only answer

• Not all of this will apply to every organisation (public vs. private sector)

• You may have already considered many of these issues

• Cynicism is OK

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1.4. Presentation approach

• I’ll try to keep this relevant and asnon-technical as I can (and finish in time for plenty of discussion in the workshop)

• Questions welcome, particularly at the end

• Illustrate with examples and case studies

• At least some of this applies to:

– All government or not-for-profit organisations

– All private sector firms

– All stages of portfolio management maturity and complexity

• If you take away even only a few key concepts, then our time will be well spent

Example

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2. Portfolio/program/project mgmt

2.1. Portfolio management concepts

2.2. Select, deliver and assess

2.2.1. Selection phase

2.2.2. Delivery management/governance

2.2.3. Assessment

2.3. Clear Lead’s insights

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2.1. Portfolio management concepts

• Working Definition: Portfolio management = a logical grouping of initiatives/investments to be compared and contrasted for selection and monitoring purposes.

• Examples of logical groupings include: by time period, by organisational unit, by strategy/goal type, by approval status.

• Portfolio management has a twofold use:

(1) project selection

(2) performance monitoring

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2.1.1. Aligning IT with business goals

Strategy Strategy

Objective

Strategy

Objective

Strategy Strategy

Objective

Strategy

Objective

Goal

Vision

BusinessStrategy

Goal

Mission

Task Task Task

Program ProjectManagement

ActivityProject

Task Project

IT Governance – Ensuring Benefits are RealisedIT Governance – Ensuring Benefits are Realised

Project

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2.1.2. Typical pain points

• Deciding which projects to fund – he who shouts loudest? Whim of director/CEO?

• Demonstrating ROI

• Alignment of technology and strategy

• Coping with rate of business change

• IT credibility is low (poor track record)

• Increased financial pressures

• Wasted resources

• Changing goalposts

• Regulatory compliance challenges

Case Study

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2.1.3. Common business needs

• Optimise project value to organisation and alignment with corporate strategy

• True project cost visibility and management

• Tie project spend directly to business benefit

• Portfolio disposition analysis (i.e. decision support for which projects to keep or stop)

• Manage resource allocation and utilisation

• Optimise allocation to high value projects

• Compliance requirements (e.g. SOX)

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2.2. Select, deliver and assess

Evaluation and

Benchmarking

for Continuous

Improvement

Best Practice Execution

for Results

Achievement

Portfolio Planning

for Business

Alignment

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2.2.1. Selection phase

• Define the portfolios– Inventory the opportunities

• Establish investment criteria– e.g. Risk, cost, benefit, and alignment

• Make hard decisions– “What if?” scenario planning– Visualise tradeoffs– Select optimal investments

• Connect plans to delivery– Ensure plan viability– Obtain stakeholder buy-in

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2.2.1. One initiative selection model

Desirability: ValueAssessment

(Is it the right thing to do?)

Qualitative value Measures

(Soft/Indirect/Intangible)

InitiativeGo/No-Go

(Should we do it?)

Feasibility: ability to execute (can we do it?)

Risk Profile(inc. Change Readiness)

Resource Capacity/Skills

Fit / Dependencies with other initiatives

Financial(e.g. ROI)

Non-Financial(e.g. fewer customer

complaints)

Quantitative valueMeasures

(Hard/Direct/Tangible)

Internal Risks/Hurdles

External Risks/Hurdles

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2.2.1. Considering four variables

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2.2.2. Delivery management/governance

Process Management

Portfolio Management

Project ManagementResource PlanningDemand

Management

e.g. Request 15:

New budget report

e.g. Request 23:

Application modification

e.g. Request

21:Security fix

Source: Clarity (CA)

Strategic OperationalAlignment

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2.2.3. Assessment• Measure performance

– Score investment results– Determine true

costs/benefits

• Reporting• Decision Support

• Benchmark– Compare to industry leaders

• Continuously improve– Institute feedback loops– Allocate costs, automate

charge backs

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2.3. Clear Lead’s insights

• Make the hard go/no-go decisions as early as possible (i.e. use preliminary assessments and phase gates)

• Ranking and drawing a fundingline is overly simplistic

• Need to use a combination of text, numerical and graphical tools to view all information

• Need to consider integration of process and information

• Choose fewer projects and spread them evenly on various criteria

ClientExample

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2.3.1. Balanced spread

• Avoided hard decisions early

• Everyone is important• Resource clashes• No balance or phasing• Doomed to failure

• Balance portfolio of initiatives

• Proper prioritisation• Resource smoothing• Phased realisation of

benefits

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2.3.2. Corporate Governance

• Business plan and IT strategy

• Structure, decision-making rules, compliance with process

• Roles and responsibilities

• Standardised tools and processes

• Steering committee/project board

• Program Management Office (PMO)

– Program management of multiple projects

– Properly resourced and empowered

LessonLearned

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2.3.3. Some final insights

• You need core project management fundamentals

• Expectation management, change management, and communications

• Corporate knowledge capture

• Education and training

• Great juggling skills

• Methodologies, processes and tools all help, but …

• It all comes down to people

Example

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3. How to use this information

• Guide your strategic planning:– Business strategic plan

– Information and Communication Technology (ICT) strategic plan

• Influence your operational projects:– Business cases, project management

– Review and Quality Assurance

• Discuss with your colleagues and stakeholders:

– Circulate within your organisation

– Discuss with external stakeholders

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4. Summary

• Portfolio management and corporate governance:

– Select, deliver and assess

– Make the hard decisions early

– Choose fewer projects and balance them

– Use some tools to view & manage information

– Get some expert advice

• Can be rewarding if you manage it well

• Can be costly, difficult and embarrassing if you don’t

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4.1. Next steps

• Draw what practical advice you like from this presentation

• Ask around your own organisation and review portfolio management and corporate governance practices and maturity

• Invest appropriately in strategy, people, process, and technology

• Source the resources you need

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5. Questions?

David LeaneyClear Lead Pty Ltd

dleaney@clearlead.com.au 0402 411 888

www.clearlead.com.au 1300 CLEAR1