The previous project portfolio management article provided a high-level overview of a portfolio management framework. This article will provide an overview of the primary portfolio management processes highlighted in yellow in Figure 1. Figure 1: Primary Process Layer Portfolio Planning The portfolio planning process identifies opportunities and develops the initial business case for candidate projects. The process is used to filter all the different IT recommendations and establish a baseline cycle plan for the following year. Participants gather opportunities and develop an initial list of projects and programs. Since these ideas can result from brainstorming sessions, wish lists and high level analysis, the list needs to be filtered. Current business strategies and trends are used to filter the initial list. For each viable opportunity, a preliminary risk assessment is conducted and the total cost of implementing each initiative is estimated to further refine the list of projects and programs. The list is then scored by business value and risk to generate a candidate project/program list. Once a candidate list is developed, a high-level business case is developed for each candidate to be evaluated in the Portfolio Prioritization process. Table 1 lists key inputs, steps and outputs: Inputs | Key Steps | Outputs | 1. IT Wish List 2. Brainstormed Ideas 3. Recommendations List | 1. Review current state 2. Review business strategies 3. Consolidate inputs into an initial list 4. Filter for realistic opportunities 5. Generate opportunities list 6. Develop initial total cost of ownership and risk assessment 7. Generate list of potential project/program candidates 8. Evaluate and select final candidates 9. Develop high level business case for each candidate | 1. Candidate project/program list 2. Candidate business case |
Table 1: Portfolio Planning Key Inputs, Steps, and Outputs The portfolio planning process also takes input from technical roadmap assessments and business road map assessments. Technology has its own lifecycle and needs to be refreshed as new operating systems and hardware is released. The use of IT applications has its own lifecycle as business users migrate from legacy applications to new applications. These lifecycles also help identify potential project and program candidates. Portfolio Prioritization The Program Prioritization process focuses on prioritizing the candidate list of programs and projects to optimize business value. The business case for each candidate project is further refined, risks assessed and the total cost of ownership is updated. Once the candidate projects are categorized and prioritized, the portfolio is rebalanced to create a multi-year cycle plan. IT portfolio managers will rebalance the portfolio based on ongoing, candidate and planned projects and programs. During this process, the IT organization validates IT spending is containable within the budget. Table 2 depicts the inputs, core processes and outputs: Inputs | Key Steps | Outputs | - Candidate Project/Program List
- Business Case
- Risk Assessments
- Total Cost of Ownership Estimates
| - Prioritize Category/Business Strategy
- Prioritize and Select Programs
- Build Final Approval Programs and Projects
| - Prioritized cycle plan with approved or rejected projects
- Final list of approved programs for the following year with timing
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Table 2: Portfolio Prioritization Inputs, Key Steps, and Outputs A key element of the program prioritization process is categorizing each candidate project or program by business strategy. Sample business strategy categories include technology refresh, legal compliance, cost savings or strategic value. These categories will vary by company, and since each category represents a business strategy, the categories are then prioritized according to the organization’s business need. An organization may prioritize strategic projects over technology refresh projects depending on the urgency, impact and need. The output of the prioritization process is a list of selected programs and projects with supporting business cases. These programs represent next year’s cycle plan and are scheduled for development during the Portfolio Execution phase. At the end of the process, the portfolio will include a mix of projects and programs that are categorized by business strategy. Portfolio Execution The selected projects and programs are executed the following year and the application portfolio is updated to reflect the ongoing projects and programs. Table 3 lists the key inputs, steps, and outputs: Inputs | Key Steps | Outputs | - Prioritized Cycle Plan
- List of approve programs and projects
| - Initiate
- Plan
- Execute
- Control
- Close
| - Delivered Business Value
- IT Solution
- Data for Portfolio Monitoring Process
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Table 3: Portfolio Execution Inputs, Key Steps and Outputs
The Program/Project Execution phase is governed by the organization’s software development lifecycle and supporting project management processes. The lifecycles can be influenced by IEEE 12207 standards, spiral development, waterfall development and other models. The core processes within the execution phase ensure the project is delivered on time, within budget and the scope delivers the proposed business value. The data gathered during the execution phases is critical input to the portfolio monitoring process. Project financials, performance metrics, issues, risks and lessons learned are all factors in monitoring the health and performance of an organization’s portfolio. The data is used centrally to manage the project and communicate status to upper management and the individual team members. Portfolio Monitoring Portfolio monitoring includes current-state assessment of existing IT applications, projects and programs within the portfolio. Application and project/program data is reviewed to identify opportunities to eliminate redundant solutions, fix process gaps and improve application health. Table 4 lists the key inputs, steps, and outputs: Inputs | Key Steps | Outputs | - Application Information
- Existing program/project data
- Technology standards and trend documents
| - Generate application monitoring and gap reports
- Analyze application portfolio
- Review initial recommendations
| - IT Recommendations Report
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Table 4: Portfolio Monitoring Key Inputs, Steps, and Outputs
Within any portfolio, portfolio managers will find applications on declining technology. Mature IT organizations have established technology version standards and portfolios are compared against the IT version standards. Non-compliant applications become potential opportunities. Portfolio managers will also identify new opportunities to benefit the portfolio, and all of these data points become inputs into the portfolio planning process. These primary portfolio management processes are cyclical. Planning leads to prioritization, execution, monitoring and back to planning. These processes are just the primary layer of portfolio management. Additional articles in this series will describe the organization, support and architecture processes to effectively deliver portfolio management.
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