how cios take control of it investments with integrated portfolio management
DESCRIPTION
UMT360 CEO Mike Gruia explores what investment digitalization really means for the future of the CIO. In the presentation he addresses roadblocks to digitalizing IT investments and breakthrough EPM digital business models. May 29, 2014 - see the webinar at http://bit.ly/1jNojI1TRANSCRIPT
Complete Perspective. Smart Decisions.
www.UMT360.com
@UMT360
LinkedIn.com/company/umt360/
How CIOs Take Control of IT Investments with Integrated Portfolio Management
Key Issues Shaping CIO Investment StrategiesMike Gruia, UMT360 CEO
Complete Perspective. Smart Decisions.
The Key to Growth – Go DigitalLabor Productivity
Technology is a gift of God. After the gift of life it is perhaps the greatest of God's gifts. It is the mother of civilizations, of arts and of sciences." — Freeman Dyson
1st Imperative:
Overcome Growth Capacity Gaps
Gartner
RUN THE BUSINESS CONSUMES IT SPENDING
Sources of Innovation:
1. Top - down
2. Bottom - up
3. Middle - core
2nd Imperative: Strike & Maintain the Right Innovation Balance
Complete Perspective. Smart Decisions.
Strike & Maintain the Right Innovation Balance:Where does most of the innovation comes from in your organization?
Poll 1
Complete Perspective. Smart Decisions.The Statistics Are AlarmingTraditional PPM is Failing to Deliver Anticipated Results
33%of projects fail to get completed or implemented
of completed projects experience cost overruns
54%46%Unrealized Business
ValueRealized
Business Value
43%of all projects are delivered late or over budget
Standish Group
Standish Group PMI
33%of projects do not meet their goals or business intent
Gartner
18%
UMT360
Gartner
Complete Perspective. Smart Decisions.
IT Investment Management Roadblocks
• IT investment management under-performance is largely due to a breakdown in five factors.
• The company should evaluate performance and ask: ”How well does our company execute against these five variables?”
Complete Perspective. Smart Decisions.
Overcome IT Investment Roadblocks: Which factors are the most important?
Poll 2
Complete Perspective. Smart Decisions.
Unlocking Digital Investment Best Practices
1Digitalize IT Portfolios
2Digitalize EPM Scenarios
3Shifting from project to product based thinking
4Agile investments and resource allocation
5Performance measurements at all levels
Complete Perspective. Smart Decisions.
Play #1: Digitalize IT Portfolios
Complete Perspective. Smart Decisions.
Play #2: Digitalize EPM Scenarios
Technology Modernization
Project & Program Inventory
Application Portfolio Catalog
Budgeting, Annual
Planning & Funding
Integrated Portfolio
Analysis & Decisions
IT Service Portfolio Catalog
Cost Tracking, Chargebacks & Showbacks
Benefits Realization &
Cost Take-outs
for IT
Demand Management & Roadmaps
Dynamic re-planning &
re-allocation of funds
Project & Program
Tracking & Execution
GovernanceRisk &
ComplianceBusiness Moments
Essential Processes
Complete Perspective. Smart Decisions.
Play #3: Shift From Project To Product Based Thinking
Innovation
Business case analysis
Selection
Budgeting
Planning
Funding
Project management
Tracking
Benefits realization
Measurement
Complete Perspective. Smart Decisions.
Releases New Requests
Sanction Process
Re-directs
New
Revised SAC Sanctioned
Budget
Releases always
ApprovedRe-Directs
Yes
No
Approved?
“Accelerates momentum and agility because it never stops”
Play #4: Adopt Agile Resource Allocation
Complete Perspective. Smart Decisions.
Play #5: Performance Management at All Levels
Cost RONA
Applications Plan ActualVarianc
e
Plan
ActualVarianc
e
CRM 210 250 19% 0.15 0.1 -33%
CRM DX 300 325 8% 0.17 0.1 -41%
Sales Force 125 100 -20% 0.22 0.05 -77%
ACUSOFT 45 150 233% 0.07 0.1 43%
PRTY Aux 75 25 -67% 0.25 0.3 20%
ERP DXO 100 125 25% 0.07 0.1 43%
Oracle DB 35 56 60% 0.1 0.05 -50%
Asset Level – Applications performance
Year 1 Year 2 Year 3$0
$250,000,000
$500,000,000
$365,000,000 $350,000,000 $330,000,000
$135,000,000 $150,000,000 $170,000,000
Run Grow & Transform
73%70%
66%
Portfolio Level - IT Budget by Run, Grow & Transform
Complete Perspective. Smart Decisions.
Digital Investment Strategy:Which factors are most important?
Poll 3
Complete Perspective. Smart Decisions.
Let Benefits Drive Decisions
Effectiveness - Improve the investment decisions Reduce Run Investment by 4% per annum
Efficiency - Increase investment operational efficiency
Reduction in admin cost thru automated reporting
Reduce cycle times through improved decision support
Reduce unnecessary portfolio governance meetings
Baseline Variables
Total IT Budget $500mm
Project Budget $125mm
Run Spend Ratio 75%
UMT360 Total 3 Year Cost $900k (based on 500 user licenses and $300k of implementation services)
UMT360 (3 year Results)
100% Realized 50% Realized 10% Realized
ROI * 9900% 4900% 900%
Total Run Investment Savings ($) $45.00mm $22.50mm $4.50mm
Avg. Yearly Savings ($) $15.00mm $7.50mm $1.50mm
Cost of Postponing (per month) $1.25mm $625k $125k
Tip: PPM Is Not Enough
WHAT IS THE DIFFERENCE BETWEEN PPM AND EPMIT DECISION EPM relative
contributionPM relative contribution
INVESTMENT STRATEGY• Business drivers and portfolio mix High Medium• Prioritization Medium High• Resource Allocation High LowPLANNING• Innovation – creating investment opportunities High Low• Enterprise Transformation – apps, infrastructure & projects High Low• Projects planning Low High FINANCIAL
• Cost estimation, budgeting and tracking High Low• Benefits estimation, planning, tracking and realization High Low• Funding and dynamic allocation High LowEXECUTION• Controls – manage variance High Medium• Measurement – cost, benefits, timing and risk High Medium• Change management High LowGOVERNANCE• Risk assessment and management High Low• Accountability and approvals High Low• Audit and compliance Medium Low
Complete Perspective. Smart Decisions.
IT Leaders Are No Longer in the Driving Seat
Median Percentage of Total Budget for IT Controlled Through Central IT Department (2010, 2011 and 2012)
Total technology spend directed by non-IT is close to 40%
Gartner
Complete Perspective. Smart Decisions.
Take Control!
Invest
ASSET LEVEL DECISION: SALESFORCE-DX
HoldRenovateRetire
Fund
PROJECT FUNDING - METRO
DelayDon’t Fund Increase
TRACKING PROJECT-DXO
DelayReduceCancel
IT INVESTMENTS
Complete Perspective. Smart Decisions.
www.UMT360.com
@UMT360
LinkedIn.com/company/umt360/
Thank You!See us next week at the Gartner PPM & IT Governance Summit, Booth 310
Mike Gruia, UMT360 CEO