How Does Iowa get to Value Based Portfolio Management?

1. How Does Iowa get to Value Based Portfolio Management? Mark A. Peterson – Managing PartnerCoeur Group – St. Louis636-561-2455Mark.Peterson@CoeurGroup.com Iowa Technology Governance Board May 10, 2007

2. Managing Partner – Mark Peterson • Experienced Executive • (SVP, CIO, CEO) • Methodology Developer • Organizational Agility • Business Value Alignment • Enterprise Portfolio Management • Innovation and Commercialization • Organizational Expertise • Technology Background • (US Navy, Honeywell, Digital Equipment Corporation, QORE Business Solutions, Sentry Technology, META Group, EVP Partners) • Innovator in Cost Reductions and Value Mgt. • Experienced Practitioner, Local, State, Federal • Author – 3 Dimensional Portfolio Management • (J. Ross Publishing , Fall 2007)

3. Technology Governance Board – Portfolio Futures • Building The States Asset Value • Portfolio Management (>Plan > Invest >Govern For Value And Alignment) • Constructing Portfolios • Realizing Maximum Value Accretion

4. TGB Key Questions to Ask • Are we selecting the right projects in order to best maximize business value? • Are we deploying our resources appropriately? • Are we developing the capacity to understand, and learn from, our project failures? • What are we doing to increase the probability of achieving expected benefits from our projects? • Do we have a framework for institutionalizing program and project management best practices? The Objectives Of Portfolio Management Are To Address These Questions.

5. What is the Agenda? What is TGB’s Real Role – Increasing Asset Value • Invest for Modernization, Efficiency and Effectiveness of the State’s Business • Oversee Increasing the States Technology Asset Value • Select High Value Investments • Build Portfolios for Value Accretion Management • Oversee Investment Portfolio Performance TGB Mission: “Facilitate information technology decisions within the executive branch of Iowa State Government, basing these decisions on business drivers supporting customer requirements.”

6. TGB Vantage Point for Portfolio Management IT Governance and Investment Performance ’ External Forces Business Architecture Environmental Trends Government Regulations Business Drivers Customer Enterprise Architecture Business Customer Information Customer Requirements Customer Operational Common Executive Excellence Vision Capabilities Technology Architecture Application Portfolio Infrastructure IT Resource Management Program Governance Staff and Management Organization Vendors/Suppliers and Partners

7. Assets Portfolio Projects Portfolio • Business Data • Business Applications • Technical Infrastructure • Staff • Knowledge • Governing Infrastructure • Project attributes: • Add asset • Modify asset • Delete asset Projects change the IT Assets Portfolio Principal Process Focus:Generation of Business Value Two Interacting Portfolios Must Be Managed For Value Both Applications And Projects Must Be Managed Simultaneously For Maximum Value Accretion and Business Alignment

8. Portfolio Categorization Based on Business Stage Needs Transform The Business Projects Projects Projects Assets Assets Assets High risk, hopefully high reward NPV – Net Present Value Applic’s Applic’s Applic’s Identify and size projects critical to established strategy Grow The Business ROI – Return on Investment Run The Business Business Continuity Cost Control

9. IT Investment Portfolios TTB Venture Discretionary Projects Value/Timing Growth Risks GTB Discretionary Enhancements Risk Non- Discretionary Nondiscretionary Costs Core 10% To 25% Cost Reductions Overall Are Fairly Normal For First Pass Portfolio Management Implementations RTB Source: Gartner Group Financial Views and Value Categorization What business stage? • Run The Business • Grow The Business • Transform The Business • Developing the Financial Views of The Portfolios is Essential for Gaining Value and Aligning to the Departmental Business Needs. • Results: • 10% to 35% Increase in Project Returns • 10% to 20% Cost Avoidance • 5% to 15% Improvement in Resource • Utilization

10. Portfolio Mgt. Dimensions Building the 3 Dimensional Portfolios • Everything maps back through the business requirements • RTB, GTB, TTB • Start with business information and process requirements • Business units and processes • Technology Alignment Focus • Categorize current IT portfolios • Asset and Projects • Business stage (RTB, GTB, TTB) • Identify cost, risks, returns, and timelines • Determine what changes should be made • Evaluate business information requirements pain points and opportunities The IT Portfolio Is Driven By The Business Requirements And Prioritized By The Investment Model (RTB, GTB, TTB)

11. An Iterative and Maturing Process – (Example Applications Portfolio) Source: UMT Consulting - Application Portfolio Maturity • Adhoc: No Portfolio Inventory or Management Process • Foundational: Application/Project Inventory Performed • Evaluation: Optimization and Rationalization • Management: Application Portfolio Transformation Process • Maturity: Application Portfolio Management is Implemented Enterprise Wide

12. Portfolio Plan Coeur Group’s PfM Process High Level View Categorize Business Stage Needs Gov. & Org. Create Asset/Project Portfolios Develop Financial Views Consolidate Eliminate Reinvest Assess Portfolios Measure Value

13. Are We Changing Our Investment DNA? Where do we need to be? Developing Application and Project Portfolios as the Starting Point: • Offering agencies the opportunity for individual agency ratings (providing agency focus) • Offering state government focus (providing direction to meeting various Culver administration goals) IT Portfolio Management is the methodology and associated processes that provide highly leveraged selection, prioritization, implementation and measurement of Business/Technology investments.

14. Maximizing Value Accretion with Portfolio Management • What’s the Problem? • Uncoordinated Value Management • Project, Application and Asset, replacement cost and business values are unknown • Governance and measurement processes are rudimentary and manual • What’s the Solution? • Online Inventory Projects and Applications • Select Groups for Portfolios based on Business Stage Needs • Integrate Portfolio Management Automation • Development of Project and Application Portfolios • Develop Financial Views – (Core, Non-Discretionary, Discretionary, Growth and Venture Investment Portfolios) • Prioritize and Cull Investments – a continuous process • Governance must include Measurements, Dashboards and Scorecards

15. Success = Simplicity and Limited Scope Project Portfolio Status Coeur Group - Recommended Steps • Analysis Of Iowa’s Current Portfolio Management Methods, Processes And Tool • Identify Critical Business Needs And Required Processes • Identify and Inventory Applications and Projects • Identify Available Tools In The Market For “Portfolio Management” And “Investment Performance” Tracking • Select Vendor And Portfolio Management Application(s) That Meet Iowa’s Requirements • Develop Baseline Dashboard & Measures Coeur Point: Develop one or two Portfolio’s, then develop processes and define business value with Key Performance Indicators (KPI’s)

16. Questions