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1  

IT  Por,olio  Management    Week  9  

You  have  $100,000  to  invest.      What  would  you  invest  in  and  why?  

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2  

MDCM,  Inc.  Case    

1.  Consolidate  Where  Possible  2.  Increase  Overall  Scale  

Efficiencies  3.  Single  Global  Company  4.  Focus  on  Core  Competencies  5.  Mend  Customer  RelaSonships  

What  were  MDCM’s  business  objecSves?  

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  

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MDCM,  Inc.  Case  What  model  would  you  use  to  determine  

balance?  

TransacSonal    

Infrastructure    

Strategic  InformaSonal  

1,  2,  3,  4,  8  

 

5,  6,  7,  9,  11  

10   12  

MDMC  Inc.  Case  

How  would  you  rank  the  projects?  BO1  (2X)  

BO2  (1.5X)  

BO3  (1X)  

BO4  (1X)  

BO5  (.5X)  

Business  Value  

Ability  to  Succeed  

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

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4  

MDMC  Inc.  Case  

How  would  you  rank  the  projects?  BO1  (2X)  

BO2  (1.5X)  

BO3  (1X)  

BO4  (1X)  

BO5  (.5X)  

Business  Value  

Ability  to  Succeed  

Unify  Methodology  &  Technical  Standards   10   2   0   10   10   38   90  Consolidate  Data  Centers   10   10   0   10   2   46   50  Outsource  Non-­‐Strategic  IT   2   8   0   10   10   31   70  Standardize  Hardware   10   10   0   10   2   46   40  Implement ERP 6   6   4   8   8   37   30  Create Employee Portal 6   10   0   8   8   39   60  Manage Supply Chain 6   6   2   8   8   35   20  Streamline Design Systems 2   8   4   8   8   32   80  Improve Collaboration Systems 10   2   6   8   10   42   60  CRM/Data Warehouse 8   2   10   6   6   38   20  E-Procurement 6   10   2   8   8   41   70  Customer Self-Service Portal 6   8   10   8   8   46   50  

MDCM,  Inc.  Case  Balancing  Value  and  Ability  to  Succeed  

Value  

Ability  to  Succeed  30  

100  

50  

0  

Hardware  

Cust  Self  Service  

Data  Centers  CollaboraSon  

eProcurement  

Employee  Intranet     Methodology  

Design  Systems  Outsource  

CRM  ERP  

Supply  Chain  

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5  

MDMC  Inc.  Case  

How  would  you  schedule  the  projects?  Year  1   Year  2   Year  3  

Q1   Q2   Q3   Q4   Q1   Q2   Q3   Q4  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        

Implement    Implement with caution due to risk    

Review for feasibility    

Using    COBIT  5  -­‐  APO05,  Manage  Por,olio  how  would  you  rate  MDCM’s  efforts?    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  benefits    

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

want  one?  

Portfolio Categories

Innovation

New Business Models or Competitive Capability D

iscretionary

Growth Incr Revenue Incr Cust Intimacy

Efficiency Cost-Out Productivity

Run the Engine Sustain Operations

Run The

Engine

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Discretionary Budget in Portfolio Perspective

Innovation 2% $0.5MM

Discretionary

Growth 30% $12MM

Efficiency 38% $15MM

Run the Engine

30% $12MM

Run The

Engine

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

1  Yr  

3  Yr  

1  Yr  

3  Yr  

1  Yr  

3  Yr  

1  Yr  

3  Yr  

Targets

Run the Engine

Strategic Themes

Business Value Creation & Investment Portfolio"

Enabling  IT    Capabili6es,  Talent,  and  Enterprise  Infrastructure  

IT  Opera6ng  Principles  

IT Strategy

Strategy The IT Strategy “filter”`

Business N

eed

Business N

eed

Business N

eed

Business N

eed

IT Portfolio

1

Alignment

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Our 2007 Investment Plan: Align Investment to Strategy …

Must  Do  

Ac6ves  

Talent  

Business  Efficiency  

Sales  +  Market  Excellence  

R+D  Innova6on  

Phase  2      

LDR  

APO  21C    Logis6cs  

OR  Content  PC  

ELN  

BDC  EOL,  Networks  

IT Investment Portfolio

$7MM  

$3MM  

$4-­‐5MM  

$6-­‐8MM  

$2-­‐3MM  

$1-­‐2MM  

2007  Invest  

Must  Do  Sustain  

More  Intangible  

Strategic  

More  Tangible  Financials  

Mix  of  Tangible  +  Intangible  

Strategic  

Low  -­‐  Med  

Med  +  

Med  -­‐  High  

Med  +  

High  

$7MM  

$10MM  

$15MM  

$23MM  

$26MM  

$28MM  

Value   Risk  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

Business  Change  

Portfolio View

Risk

Value Index

Price Execution

ECMR

High

Low

Low High

Must-Do Projects § HO E Upgrade § EOL § Middleware

* Size of circles = Cost Portfolio View ( Pipeline + Approved Projects )

Digital Rights Mgmt

ELN  

Elec Lab Notebooks

Learning Program

Agrofresh Rollout

Logistics Duty Mgmt

Learn                    

DR/IM                    

Inv  

Price  Talent  

Talent / SAP HR Upgrade

SmartOps Inv Optim

D  

Agro  

ECMR                    

S  

S+M Fixit

Sec  

ERP Security Design

Nrg        

Energy Dashboard

S        

S+M 2

L        

Logistics Dashboard

LM        

Lead Managemt

SR        Sales Reporting SBS        

Service Business Support

CPA        

CRM Portal Agrofresh

APO  

SAP APO / Manu replace

Shop        

Shop floor Integration

SMK        S+M Knowledge

FMP        

Formulation Mgmt Powder

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9  

Portfolio Project Ranking

2  

Wow!

1  

Project  List  

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  Tradeoffs  

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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 …

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SAMPLE ANSWERS …

TALENT  

INNOVATION  

EFFICIENCY  

GROWTH  

EFFICIENCY  

A

B

C

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

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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

•  Output –  Project Proposal Ready for Consideration by Decision Makers

(Governance)

Who  Project  Manager  Leaders  Sponsors  Stakeholders  

What Makes Up a Good Business Case?

Execu6ve  Summary  

Objec6ves  

Cost  Value   Risk  

Scope  

Deliverables  

Assump6ons  

SUPPORTING DETAILS

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Hierarchy of Business Value Measures

Source: The New CIO Leader, Broadbent and Kitzis

Business process values

Business operational values

Business financial values

• Infrastructure availability • Cost per transaction • Cost per workstation

• Implementation time of new application • Implementation cost of new

application

• Fewer handoffs • Ability to cross-sell • Supplier integration

• Time to bring a new product to market • Sales from new products • Product or service quality

• Revenue growth • Return on assets • Revenue per employee

IT infrastructure business value

IT investments

IT application business value

IT investments

Impact Sought Sample Value Measure Value Delivery Responsibilities

Time for business impact

Bu

siness M

anag

emen

t

IT Man

agem

ent

Dilu

tion

of

the

IT T

rail

of E

vid

ence

(Infrastructure Layer)

(Project Layer) (In

dicators of Success)

Cash Flow Analysis