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The previous project portfolio management article provided a detailed review of the primary processes found in a portfolio management framework. This article examines the support layer processes found in Figure 1. The support layer includes project management, risk management, financial management and technology architecture management processes to adequately support a portfolio management initiative. The primary processes are supported by this layer as projects and programs initiate and execute across the portfolio. Project Management Project Management processes support the Program/Project Execution phase. All aspects of the Initiate, Plan, Execute, Control and Close processes are used to govern the Program Prioritization and Program/Project execution phases. The initiation phase is applied to refine the business case, justify project costs and confirm business value. The remaining phases support the Project/Project execution phases. As previously discussed, the data derived from the project management processes are used in the application portfolio management process. Project management is a critical support process to the entire portfolio management framework. The processes ensure the portfolio deliverables are properly managed and delivered. 
Figure 1: Support Layer Processes Risk Management Every program, project and initiative has a degree of risk. The Risk Management process is conducted at different points in the program or project execution. During the portfolio planning process, initial risk assessments identify any inherent project risks for the candidate list of projects. Additional assessments are conducted during the portfolio prioritization process, and the mitigation strategies are defined and documented. The risk management process continues during the portfolio execution process. (A variety of risk management tools can be found on gantthead by using the Advanced Search for Deliverables and Tools.) The results of the risk assessment are compared with the expected business value and mitigation strategies. All of these factors contribute to the final list of prioritized program and projects. The risk assessments are refined as the business case is further developed and all stakeholders have a better idea of the system initiatives. Risk management is an ongoing process within any portfolio. Organizations may choose riskier investments with the anticipation of higher business value. Other organizations may choose a balanced mix of low risk projects providing incremental value with riskier projects providing greater competitive advantage. Risk assessment tools can also be used at different stages in the framework; however, the process of risk assessment should be conducted on an ongoing basis. Portfolio risk identification and mitigation is a continual process across all four primary processes. Financial Management The financial management process is a key support process during the portfolio management process. Financial data is reported during all four processes in the primary process layer. During the portfolio monitoring process, financials are used to identify total cost of ownership for portfolio. In large organizations, IT systems with similar functionality and purpose can emerge to support similar business functionality in different regions. Europe and North America can develop their own version of an accounting system based on different regional business rules. By examining the portfolio financials, the true cost of maintaining both systems can be made visible to management, and strategic decisions can be made. Financial analysis is used throughout the four processes to calculate the total cost of ownership for each opportunity as the candidate program or project is evaluated. The initial business case includes the hard and soft benefits realized by the project. During the portfolio prioritization process, the business case will be further refined and the total cost of ownership is updated. As the end of the analysis, the final costs are updated and submitted to the portfolio execution process. Technology Architecture Management The primary portfolio management processes are supported by a technology architecture management process. As organizations deliver IT solutions, standard technologies, tools and implementation patterns emerge. By reducing the number of platforms used to develop applications, organizations benefit from cheaper development costs and repeatable development practices. IT organizations implement architecture standards and deploy communization strategies to leverage a common platform. During the application portfolio monitoring processes, applications are compared against architecture standards and gaps are identified. Strategic programs and projects may be initiated to reduce an organization’s operational costs or an asset refresh project may be implemented using the current architecture standards. During the portfolio planning process, the architecture management process provides technical roadmaps that identify the trends or emerging patterns in information technology processing. With the increase in object-oriented technologies and services-oriented architecture, organizations are adopting common development environments that leverage reuse and object architectures. Organizations may standardize on an IBM Websphere application platform as the standard for all new Web application development while they migrate legacy Microsoft solutions to the new platform. These technology standards help provide guidance to the portfolio management process framework as portfolio managers assess the technical health of their portfolio. The challenge is balancing the need to move applications to a new architecture platform while implementing new solutions that drive the business and the portfolio forward. Technology architecture management is just one viewpoint that belongs to a larger enterprise process architecture initiative. Some organizations standardize on enterprise architecture process models like TOGAF and align the portfolio management processes to an enterprise architecture framework. The support layer consisting of project management, risk management, financial management and architecture management all influence the primary process layer. These processes provide data for decision making and influence the balance of projects within the portfolio. In the next article, the Organization process layer will describe the metrics, methodology and terminology used to implement the portfolio management framework. This article was written by Andy Makar and originally published at http://www.gantthead.com/content/articles/238080.cfm
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