© clear lead 2007 best practice in portfolio management and corporate governance david leaney beng,...
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© 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?
© Clear Lead 2007
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
[email protected] 0402 411 888
www.clearlead.com.au 1300 CLEAR1