IT portfolio management is the process of aligning your IT investments with your business goals. It helps you optimize the value, performance, and risk of your IT assets and projects. But how do you manage your IT portfolio effectively? What are the tools and frameworks you use for IT portfolio management? Here are some of the common methods and tips for IT portfolio management.
One of the key aspects of IT portfolio management is to ensure your IT projects support your business strategy and objectives. Have a clear vision of what you want to achieve, how you measure success, and what resources you need. A common framework for strategic alignment is the balanced scorecard, which helps you define and monitor four perspectives: financial, customer, internal, and learning. You can use this framework to align your IT portfolio with business goals, identify gaps and opportunities, and communicate your value proposition.
At this point, measuring the “as-is against the “will be” ensures not only that the strategy will be met by projects and programmes but also serves as data to feed into the business case (specifically, the cost-benefit analysis).
Optimize your portfolio based on criteria like value, cost, risk, interdependencies, and alignment. Have a systematic way of evaluating and prioritizing your IT projects, and balancing the trade-offs between them. A helpful tool for portfolio optimization is the portfolio matrix, which helps you categorize your IT investments into strategic, tactical, operational, and support quadrants. This tool helps allocate your resources and focus your efforts on the most valuable IT initiatives.
Alongside the portfolio matrix, regular discussion and review against the categories (strategic, tactical, operational and support) helps to ensure that initial categorisation keeps up to date with changing segments, business objectives and customer feedback.
Establish and maintain effective governance mechanisms for your IT portfolio. Have a consistent process for decision making, oversight, and accountability for your IT projects. Also have a transparent and collaborative communication system for stakeholder engagement, feedback, and reporting. One framework for portfolio governance is the project management office, which helps you define and enforce the standards and procedures for your IT portfolio. This framework manages the quality, scope, schedule, budget, and risk of your IT projects.
Governance approach should be unique to each organisation (and arguably to each project. A large-scale, regulated organisation may have a different risk appetite and profile. Rather than blindly following the existing norm or a particular governance framework, unpick it. Base your governance approach on the items most frameworks manage: What is the desired quality level? How variable is the scope and under what conditions? Based on the variability of the scope, how fixed is the schedule? What are the implications of flexing the budget/resource? What is the risk appetite? How will you track the strategic nature of the project and what happens if this changes? This one in particular is key - markets, customers and objectives shift over time.
Measure and improve the performance of your IT portfolio. Have a reliable set of metrics that reflect the value and impact of your IT projects. And don't forget to have a regular and rigorous process for evaluating and reporting on your IT portfolio performance. A common tool for portfolio performance is the dashboard, which helps you visualize and communicate the status, progress, and results of your IT portfolio. This can help you track and compare your IT portfolio performance against your goals and benchmarks.
Dashboards are powerful BUT they require significant investment, skill and tooling to be so. As many of us know, the act of monitoring something changes it’s behaviour. Be sure that your performance measures are designed to limit encouraging the wrong behaviours. For example, measuring post-implementation defects and categorising +Xn as red means staff my not surface important defects for fear of being labelled. The inverse is also true..prize the most number of defects logged and fill your ticket logging system with little benefit. This is a simple example to prove the point. Measuring performance is hard but can be pivotal, don’t skimp on getting it right.
Enhance the agility of your IT portfolio. You must have a flexible and adaptive approach to your IT projects and services that can respond to changing business needs, customer demands, and market conditions. It is also important to have a culture of innovation and learning that can foster creativity and experimentation. The agile methodology is a popular portfolio agility framework that helps deliver value faster and cheaper. This framework can also help implement iterative and customer-centric IT solutions.
This really comes down to the risk appetite of your business and product. Life-critical system development may be less suited to a framework which prizes agility and post-production iteration. Find the framework that suits your product, segment and risk appetite.
Integrate your IT portfolio with other aspects of your business. Have a holistic view of your IT portfolio that can align with your business processes, capabilities, and systems. Also conduct a seamless and efficient collaboration with other business units and partners. A common tool for portfolio integration is the enterprise architecture, which helps you design and manage the structure, relationships, and interactions of your IT portfolio. You can use this tool to optimize the fit, interoperability, and alignment of your IT portfolio with your business architecture.
In my experience, projects have several changing elements, knowing which are fixed and which are fluid will prompt you to introduce and embed the right tools and processes for success. Know your product, business, segments and customers. This will help design the right IT project approaches and be able to measure the success of them, which enables you to continuously improve. If you’re reading, attempting, learning and improving, your projects will get better and better.