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Portfolio Management Initiative Briefing Sessions. Framework for Managing IT Investments. III. Investment Operation and Maintenance, and Renewal, Retirement, or Replacement ( Applications and Assets Portfolio Management ).

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portfolio management initiative briefing sessions

Portfolio Management InitiativeBriefing Sessions

Framework for Managing IT Investments

III. Investment Operation and Maintenance, and Renewal, Retirement, or Replacement(Applications and Assets Portfolio Management)

I. Strategic Business and IT Planning and Investment Selection and Budgeting

(Investment Portfolio Management)

Life Cycle of IT Investments

May 23, 2005

II. Project Implementation (Project Portfolio Management)

session agenda
Session Agenda
  • Welcome and Introduction of Presenters
  • Background of IT Related Legislation, Project History, and Overview of Portfolio Management
  • Key Concepts of Portfolio Management and Proposed Use in State Government
    • Investment Portfolio Management
    • Project Portfolio Management
    • Applications Portfolio Management
  • Implementation Phases in State Government
  • Project Training and Implementation Schedule
  • Workflow for Project Approval and Status Reporting
  • Wrap-up – Questions and Suggestions
four intentions of legislation for better management of it
Four Intentions of Legislation for Better Management of IT
  • Improve the planning for and budgeting of IT investments.
  • Prepare better researched and more thoroughly developed project plans.
  • Provide stronger project management and more appropriate oversight.
  • Improve the inventorying and analysis of major IT assets.
history of portfolio management initiative
History of Portfolio Management Initiative
  • Summer 2004 – Ratification of legislation transferring many duties of the IRMC to the State CIO regarding investment review and project approval and oversight, with involvement of OSBM, OSC, and Sec. of Adm.
  • Late 2004 – Purchase of UMT software tool from competitive bidding process.
  • January 2005 – Begin software tool implementation project.
  • February 2005 – Submission of State CIO IT Plan to the General Assembly – portfolio management is key component of three of the seven initiatives.
  • April 2005 – Completion of extensive design phase involving agency staff participation in configuration of tool to meet state government use.
overview of portfolio management
Overview of Portfolio Management
  • Assists in the life-cycle management of investments - to determine where to invest and what to invest in; perform satisfactorily the acquisition and implementation of them; and decide when and how to renovate, retire, or replace them. Do the right things, in the right ways, at the right times, and for the right reasons.
  • Analyzes and evaluates investments from individual and group perspectives - the group perspective compares and contrasts each investment relative to the others, considers interdependencies among the members of the group, and rates each individually and as a group. An analogy from the financial sector is the management and reporting of a 401(k) account with multiple investments.
  • Guide and direct multi-level review and approval processes - to provide discipline, consistency, and rationality to collaborative decision making.The CIO’s project approval process is an example.
overview of portfolio management1
Overview of Portfolio Management

Involves the following to enhance business/IT decision making activities:

  • Techniques, methodologies, and practices.
  • Governance process for rational and consistent decisions:
        • Leadership.
        • Organizational structures.
        • Direction and processes.
  • Automated support tool
        • Guide process, perform calculations, prepare analyses, and produce reports.
        • Decision support – not decision making - capability.
use of portfolio management concepts and tool in state government
Use of Portfolio Management Concepts and Tool in State Government
  • Identifying, analyzing, and prioritizing potential IT investments(investment portfolio management) – assist departments in evaluating alternative IT investment needs and opportunities and preparing funding requests.
  • Approving and monitoring IT implementation projects(project portfolio management) – Streamline and improve the effectiveness of department and statewide approval and periodic (monthly) status reporting.
  • Analyzing legacy business software(applications portfolio management) – Maintain a statewide database of current business systems and provide analytical capabilities for managing these, including the identification of those at-risk and the forecasting of long-term cost liabilities for replacements and renovations.
framework for managing it investments
Framework for Managing IT Investments

I. Strategic Business and IT Planning and Investment Selection and Budgeting

(Linking IT Investments to Agency Missions and Business/Program Goals and Objectives, and Investment Portfolio Management)

III. Investment Operation and Maintenance, and Renewal, Retirement, or Replacement (IT Service Management; Enhancement, Renovation, or Termination; IT Asset Management; and Applications and Assets Portfolio Management)

Life Cycle of IT Investments

II. Project Implementation (Acquisition of Products and Services, System Development Life Cycle Methodology, Project Management Methodology, Agency and Statewide Governance, and Project Portfolio Management)

investment portfolio management
Investment Portfolio Management
  • Theory dates to 1950s with the evaluation of financial investments on both returns and risks – led to the practice of diversification of capital assets.
  • Since late 1990s, becoming popular in public and private sectors to help align IT investments with organizational missions and business priorities.
  • Recognizes that the management of IT is a joint business and IT responsibility.
  • Helps evaluate and rank potential investments using a variety of criteria – agreement with business strategies and goals (governmental priorities), costs, financial and societal benefits/value, project and business risks, architectural fit, accomplishable within fiscal limitations and staffing constraints, etc.
overview of it investment portfolio management in state government
Overview of IT Investment Portfolio Management in State Government
  • Department Mission
  • Statuary Mandates
  • Governmental Initiatives

Department Business Strategy &

Department Business Architecture (Business Service Models)

  • Business/Program Goals and Objectives
  • Processing and Information Flows
  • Organization Charts
  • Business Reengineering Opportunities

Applications Portfolio Management

Asset InfrastructureManagement

New Initiatives

  • Refreshment Cycles
  • Security/Reliability Upgrades
  • New Applications
  • Infrastructure Additions/Upgrades
  • Retirements
  • Replacements
  • Modernizations
  • Maintenance
  • IT Investment Portfolio Management
  • Identify potential investments and evaluate candidates against defined criteria
  • Prioritize projects based on analysis results (relative weighted scores)
  • Balance staffing and fiscal resources
  • Determine disposition – invest, adjust, or sunset

Current IT Project Portfolio

Other Plans and Strategies

  • State CIO IT Plan
  • Statewide IT Initiatives
  • Department & Statewide Tech. Architectures
  • Department IT Plan
  • Status of all projects (schedule, budget, business objectives, etc.)
  • Projects no longer relevant or with lower priorities
  • Projects with higher priorities or increased urgency

Funding Requests and Project Approvals

objectives of project portfolio management
Objectives of Project Portfolio Management

Advance the management of IT implementation projects:

  • Clarify roles and responsibilities.
  • Provide for well understood and comparable oversight.
  • Ensure projects are:
    • Planned well and researched thoroughly prior to starting – business case.
    • Managed and monitored proficiently to achieve budget, schedule, scope, and quality expectations - dashboard.
    • Completed successfully so that business goals and objectives are realized - post-implementation assessment/closeout review.
project portfolio management
Project Portfolio Management
  • Covers roles and responsibilities for project approval and monitoring.
  • Applies to review and approval processes at both department and statewide levels – integrated workflow.
  • Defines phases of project development, with review points (called gates) at predetermined intervals for approvals to proceed.
project portfolio management1
Project Portfolio Management
  • Approval points (gates) are positioned to:
    • Ensure projects are positioned for success before proceeding to succeeding phase.
    • Verify business cases are still viable based on governmental events and realities and project progress since funding.
  • Monthly status reports monitor costs, schedule, staffing, and results against plans and budgets.
  • Governance process that builds upon – but does not replace – the disciplines and techniques of system development life cycle methodologies (e.g., IEEE model) and project management methodologies (e.g., PMI model).
objectives of applications portfolio management
Objectives of Applications Portfolio Management
  • Develop and maintain a comprehensive database of major state software applications to assist in managing them, including:
    • Identifying present technical and business status.
    • Determining best approaches and ascertaining the priorities and timeframes for remediation/renovation, retirement, or replacement.
    • Estimating associated costs – future liabilities.
management of legacy applications example of risk management
Management of Legacy Applications – Example of Risk Management
  • December 24, 2004 – Comair’s 18-year-old flight crew management systems failed:
    • All 1,100 flights cancelled Christmas day, and Comair did not return to full schedule until December 29 – total 3,900 flights cancelled or delayed.
    • 200,000 passengers stranded at cost of $20 million, and image and reputation tarnished – key executives replaced.
  • No backup system – plans for replacement in works for 7 years, but no implementation.
  • System had a critical flaw that was not known – could handle only 32,000 crew changes/month – tipping point reached Christmas Eve due to snow storm.
management of legacy applications business value
Management of Legacy Applications – Business Value

Percent of Total IT Spending

Business Value of Investment

Expenditure Type

Infrastructure to run the business and maintenance of legacy applications



  • New Applications:
    • Utility
    • Enhancement
    • Frontier










Two-thirds of spending (infrastructure and utility applications) gives one-third of business value – need to reverse this ratio (reduce percents on these and increase percents on enhancement and frontier applications) as much as possible.

issues surrounding systems obsolescence and risk
Issues Surrounding Systems Obsolescence and Risk
  • Over time, sustainability of applications becomes questionable due to age and technology advances, combined with changed business needs. They no longer:
    • Support business goals and objectives,
    • are cost-effective to operate or maintain, and/or
    • are risk-acceptable by presenting too great a likelihood of failure with cataclysmic consequences.

Business Issues

  • Impediment to the implementation of new and more cost-effective service delivery models
  • Becomes a constraint in meeting regulatory requirements

Staffing issues - Unavailability of Skills

  • Unavailability of staff skills to maintain or integrate with application
  • Unavailability of third-party vendors
  • Dependency on individual contractors

Technology issues

  • Expired warranties, with no vendor support
  • Cannot handle increased usage or volumes of data
  • Does not run anymore on available platforms
  • Used beyond original intent, and cannot be enhanced
  • Cannot meet security, privacy, or confidentiality requirements
  • System can fail, with untraceable error

Sources of Risks

Seems to run forever, but ultimately has a finite business, economic, and/or technical life

legacy applications study statewide findings
Legacy Applications Study - Statewide Findings
  • In the portfolio of approximately 900 applications: 40% are considered critical for department mission/strategy and 17% are enterprise (statewide) applications.
  • The statewide portfolio is relatively young, with an average age of 7.5 years.
  • Health status is: 23% presenting functional, technical, or both problems; 50% with some problems, but manageable; and 27% healthy.
  • Remediation timeframes are: 11% require action immediately (within next two years), 35% require action in the near term (2 to 4 years), and 54% require action in the long term (4 to 6 years).
  • Although the immediate needs of the portfolio appear to be manageable, projections of its future status if no remediation actions are taken indicate an increasingly deteriorating condition as the applications age – pay some now or pay a lot later.
gartner perspective on portfolio management

Key IT Management Processes

Strategic Planning



ApplicationPortfolio Management

Investment and Project Portfolio Management

IT Mgt and Governance


Supported by

Enterprise Architecture

Gartner Perspective on Portfolio Management

Portfolio management approaches are maturing across the industry, and significant savings or budget reallocations are not uncommon

Source: Gartner Research

key points
Key Points
  • Portfolio management is a business responsibility:
    • Review current projects and their status for continued viability, priority, and staffing and fiscal resource commitments.
    • Review staffing and fiscal commitments to applications and infrastructure maintenance and renovations/upgrades for benefits and priority.
    • Present new investment recommendations.
    • Reprioritize portfolios based on needs and resources.
    • Examine completed projects for effectiveness and performance against business goals and objectives.
  • IT investment management is a joint business and IT responsibility – ensure IT sustains and extends the enterprise’s mission and objectives in a planned manner.
portfolio management tool implementation priorities
Portfolio Management Tool – Implementation Priorities
  • First priority (Summer 2005) is project approval and monitoring – streamlining and simplifying of present processes:
    • Important ongoing activity.
    • No change in underlying concepts and principles, but better way of managing and communicating.
    • Immediate benefit to projects, departments, and oversight organizations.
  • Second priority (Fall 2005) is legacy applications – transfer of study data to tool and department update of information:
    • Validate study findings, especially for immediate action applications.
    • Begin cost estimating efforts for submitting long-term liabilities to General Assembly.
portfolio management tool implementation priorities1
Portfolio Management Tool – Implementation Priorities
  • Third priority (Winter 2005-06) is planning and budgeting – investment analysis and funding requests:
    • Involves more sophisticated techniques and analysis activities (portfolio optimization and staffing resource scheduling).
    • Less pressing timetable, as follows budget cycle.
    • Some departments have volunteered to test these capabilities further before statewide rollout.
training approach
Training Approach

Theory and Concepts of Portfolio Management (the “Why”)

Hands-On with Tool (the “What” and “How”)

Overview Briefing

Abbreviated Hands-On Tool Course

  • Two sessions lasting 11/2 hours each
  • May 23
  • CIOs, CFOs, CBOs, etc.
  • Understanding of key principles and practices
  • 4 sessions lasting 3 hours each
  • June 23 and July 13.
  • CIOs, CFOs, CBOs, etc.
  • How to use tool to perform reviewer and approver jobs – its capabilities and features

Conceptual Portfolio Management Course

Hands-On Tool Course

  • Three sessions lasting 3 hours each
  • June 6, 10, and 13
  • PMs, QAs, Architects, etc.
  • Understanding of key principles and practices
  • Major concepts and uses of business cases
  • 11 sessions lasting 6 hours each
  • June 13-16, 20-22, 27-28, and July 7 and 14.
  • PMs
  • How to use tool to perform project manager jobs – its capabilities and features

People with Assigned Licenses and Attendance Slot Limitations

Prerequisites and no Attendance Limitations

implementation schedule
Implementation Schedule
  • Convert current 34 projects in portfolio (does not include registrations) with required information fields
  • Convert latest monthly status report for the 34 projects in portfolio (risk will only be High, Issues will only be Open, MS Project file conversion if provided)
  • Exceptions – projects ending by August, 2005 will not be converted to the tool
  • For those trained by June 24 –monthly status will begin with report due in mid-July
  • For all others – monthly status will begin with report due in mid-August
  • All SB 991 Approvals must be entered using the tool once trained (after 7/15/2005, all SB 991 approval requests must be through the tool)
  • After 8/31/2005, all monthly and quarterly status reports must be entered using the tool