10/25/12

IT Por,olio Management
Week 9

You have $100,000 to invest.

What would you invest in and why?

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MDCM, Inc. Case

What were MDCMs business objecSves?

1. Consolidate Where Possible

2. Increase Overall Scale
Eciencies
3. Single Global Company
4. Focus on Core Competencies
5. Mend Customer RelaSonships

MDCM, Inc. Case

What were the proposed IT projects?

1. Unify Methodology &
Technical Standards
2. Consolidate Data
Centers
3. Outsource Non-
Strategic IT
4. Standardize Hardware
5. Implement ERP
6. Create Employee
Portal

7. Manage Supply Chain

8. Streamline Design
Systems
9. Improve CollaboraSon
Systems
10.CRM/Data Warehouse
11.E-Procurement
12.Customer Self-Service
Portal

10/25/12

MDCM, Inc. Case

What model would you use to determine

balance?
InformaSonal

Strategic
10

12

TransacSonal
5, 6, 7 , 9, 11

Infrastructure
1, 2, 3 , 4, 8

MDMC Inc. Case

How would you rank the projects?

Unify Methodology & Technical
Standards
Consolidate Data Centers
Outsource Non-Strategic IT
Standardize Hardware
Implement ERP
Create Employee Portal
Manage Supply Chain
Streamline Design Systems
Improve Collaboration
Systems
CRM/Data Warehouse
E-Procurement
Customer Self-Service
Portal

BO1
(2X)

BO2 BO3
(1.5X) (1X)

BO4
(1X)

BO5
(.5X)

Business
Value

Ability to
Succeed

10/25/12

MDMC Inc. Case

How would you rank the projects?

Unify Methodology & Technical
Standards
Consolidate Data Centers
Outsource Non-Strategic IT
Standardize Hardware
Implement ERP
Create Employee Portal
Manage Supply Chain
Streamline Design Systems
Improve Collaboration
Systems
CRM/Data Warehouse
E-Procurement
Customer Self-Service
Portal

BO1
(2X)

BO2 BO3
(1.5X) (1X)

BO4
(1X)

BO5
(.5X)

Business
Value

Ability to
Succeed

10
10
2
10
6
6
6
2

2
10
8
10
6
10
6
8

0
0
0
0
4
0
2
4

10
10
10
10
8
8
8
8

10
2
10
2
8
8
8
8

38
46
31
46
37
39
35
32

90
50
70
40
30
60
20
80

10
8
6

2
2
10

6
10
2

8
6
8

10
6
8

42
38
41

60
20
70

10

46

50

MDCM, Inc. Case

Balancing Value and Ability to Succeed
50
Cust Self Service

Value

Hardware

Data Centers
CollaboraSon
eProcurement

CRM
ERP

Employee
Intranet

Methodology

Supply Chain
Design Systems
Outsource

30
0

Ability to Succeed

100

10/25/12

MDMC Inc. Case

How would you schedule the projects?

Year 1
Q1

Unify Methodology & Technical Standards

Consolidate Data Centers
Outsource Non-Strategic IT

Q2

Year 2

Q3

Q4

Q1

Standardize Hardware
Implement ERP
Create Employee Portal

Manage Supply Chain

CRM/Data Warehouse
E-Procurement
Customer Self-Service Portal
Implement
Implement with caution due to risk
Review for feasibility

Year 3

Q3

Q4

Streamline Design Systems

Improve Collaboration Systems

Q2

Using COBIT 5 - APO05, Manage Por,olio how

would you rate MDCMs eorts? Why?
1. Establishing the target mix
2. Determining funding
3. EvaluaSng & selecSng programs
4. Monitoring investment performance
5. Maintaining their por,olios
6. Managing the acheivment of benets

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What is an IT project
por,olio and why would you
want one?

Portfolio Categories

Efficiency

Cost-Out
Productivity

Run the Engine

Sustain
Operations

Run The
Engine

Growth

Incr
Revenue
Incr Cust
Intimacy

Discretionary

Innovation

New
Business
Models or
Competitive
Capability

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Discretionary Budget in Portfolio Perspective

2%
$0.5MM

Innovation

Targets

1 Yr
3 Yr

30%
$12MM

Growth

1 Yr
3 Yr

38%
$15MM

Efficiency

1 Yr
3 Yr
1 Yr
3 Yr

Run the
the Engine
Engine
Run

Run The
Engine

30%
$12MM

Discretionary

We can change
the por-olio
targets to shi1
investment to
business
opportuni6es.

Strategic Themes
Business Need

Enabling IT
Capabili6es,
Talent,
and
Enterprise
Infrastructure

Business Need

IT
Strategy

Business Need

IT Opera6ng
Principles

Business
Value Creation
&
Investment
Portfolio"

Business Need

Strategy

1
The IT
Strategy
filter `

Alignment
IT
Portfolio

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Our 2007 Investment Plan: Align Investment to

Strategy
Business Change

2007 Invest

Must Do

Value

Risk

BDC
EOL, Networks

$7MM

$7MM

Must Do
Sustain

Ac6ves

LDR

$3MM

$10MM

More
Intangible

Low - Med

Talent

Phase 2

$4-5MM $15MM

Strategic

Med +

Business
Eciency

APO
21C
Logis6cs

$6-8MM $23MM

More Tangible
Financials

Med - High

Sales + Market
Excellence

OR
Content
PC

$2-3MM $26MM

Mix of Tangible
+ Intangible

Med +

ELN

$1-2MM $28MM

Strategic

High

R+D
Innova6on

We strive to
minimize
this investment
category.
However,
significant
architecture
renewal is
ahead of us
SAP,
Collaboration,
Office

60+ %
of the
Investment
Portfolio
invests in
Business
Value
Creation

IT Investment Portfolio

Portfolio View
Portfolio View ( Pipeline + Approved Projects )
Shop floor
Integration

High
Energy
Dashboard

Value Index

Learning
Program

S+M 2

Talent / SAP
HR Upgrade
Elec Lab
Notebooks

Talent

Price
Nrg SmartOps

Inv Optim
Learn
Agro

* Size of circles = Cost

Must-Do Projects
HO E Upgrade
EOL
Middleware

Price
Execution

Inv
LM
ECMR
D
Shop

ELN

Agrofresh
L
APO
Rollout SR DR/
Sales
I
Reporting
SBS
FMP
SMK
S+M
CPA M
SAP APO /
Logistics
ECMR
Knowledge
S
Manu replace
Sec
Duty Mgmt
ERP
Lead
Formulation
Logistics
Security
Managemt Mgmt Powder
S+M Fixit Digital
Rights Dashboard
Design
Mgmt
Low
Service
Business
High
Low
CRM Portal Risk
Support
Agrofresh

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Portfolio Project Ranking

Project List

2
1
Wow!

Pipeline Projects

IT PORTFOLIO: Learning Objectives

What is Balance ?
What is Alignment ?
How to Look at Portfolio ?
How to Support Governance
Discussions ?

Achieve Balance

Align to Strategy

Perspec6ves

Decisions and Tradeos

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Exercise

Read the business context

Read the portfolio pipeline
Pick out the projects from the pipeline that are the best candidates
for investment, given the budget target of $25MM
Then number (rank) your projects 1 through x
(Where1 indicates the top candidate, etc.)

Sample Portfolio in a Value, Risk Quadrant Analysis

10

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SAMPLE ANSWERS
TALENT

INNOVATION
EFFICIENCY

GROWTH

EFFICIENCY

Business Case: Learning Objectives

At the end of this Session, you will be able to explain:
Who Does Biz Case ?

Roles

When to Do Biz Case ? Context

What is Biz Case ?

Elements of Good Case

11

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Initiate Process
Input
Collect and Organize Ideas
Understand Goals and Objectives
Consider Alternative Solutions
Create Project Business Case
Value
Cost
Risk
Return on Investment ROI, Payback period

Who
Project Manager
Leaders
Sponsors
Stakeholders

Output
Project Proposal Ready for Consideration by Decision Makers
(Governance)

What Makes Up a Good Business Case?

Execu6ve Summary

Objec6ves
Scope
Deliverables
Value

SUPPORTING
DETAILS

Cost

Risk

Assump6ons

12

10/25/12

Hierarchy of Business Value Measures

Value Delivery

Revenue growth
Return on assets
Revenue per employee

Business financial values

Time to bring a new product

to market
)
Sales from new products
ss
Product or service quality
ce
uc

of
Fewer handoffs
rs
Ability to cross-sell ato
ic
Supplier integration
nd

Business operational values

Business process values

(I

(Project Layer)
Implementation time of new
application
Implementation cost of new
application

(Infrastructure Layer)
Infrastructure
availability
Cost per transaction
Cost per workstation

IT application business value

IT investments

IT Management

Dilutio
n of th
e IT Tr
ail of E
viden

Sample Value Measure Responsibilities

Business Management

ce

Impact Sought

IT infrastructure business value

IT investments

Time for business impact

Source: The New CIO Leader, Broadbent and Kitzis

Cash Flow Analysis

13