Richard Flanagan
Week 6 Wrap-up: Portfolio Management
For me, IT Portfolio Management is the most important one of the year. Why? Because this is where the organization turns from strategy to execution. Up to this point, the business and IT have been able to talk about purpose and alignment, what an architecture should look like, how they are going to help the company. Now its time to actually do something. As Yogi Berra once said,
In theory there is no difference between theory and practice. In practice there is.
Portfolio management is where theory meets reality.
If a business is using portfolio management, it is probably being done by an IT Steering committee or similar body. Senior business representives serving on the committee are essential. They must be able to examine projects from a corporate perspective so that decision are made on what is best for the company, not any particular interest.
The Gartner article asks five great questions that can serve as your guide to portfolio management. Our discussion focused mainly on question #1 but the other four are also important.
- Are we investing in the right things? – Key techniques here include value orientation,business alignment, standardized business cases, reviewing multiple projects at each meeting, etc.
- Are we optimizing our capacity? – Key questions might be, do we have the right resources? Could we increase our capacity with selected outsourcing? Should we cancel an existing project to fund something new?
- How well are we executing? – This same group needs to be monitoring how existing projects are running. Are they on time? On scope? On budget? Quality good?
- Can we absorb all the changes? – This is about the culture of the organization. How much change can it handle? Will people burn out? Will we be confusing them with too many objectives?
- Are we realizing the promised benefits? – This is the least answered of the five questions. Usually IT has so much to do that it never stops to see if completed projects actually produced the anticipated value. Unless a steering committee or senior executive is forcing the issue, value evaluation is not apt to happen.
Schedule Change
As we discussed last night, the policy project is now due on Friday, October 9 at 11:59 PM. Your comments on each other’s policies are due by Sunday, October 11, also at 11:59 PM. The normal deadlines for the following week, IT Operations & Support are unchanged.
Rich
Week 6: Reading Questions & Case
Readings
- What is the importance of having a target mix before starting to approve projects?
- Why would you want all projects to be proposed in a uniform way? What would you suggest as information that must be available for all projects?
- Do you think most organizations compare their projects’ performance to that which was proposed by the project? Why or why not?
The MDCM Case
Work with your team to prepare project recommendations for the MDCM board. Please come to class ready to present what projects you think MDCM should pursue, when and why.
Based on the information given in parts A & B of the MDCM case, prepare a recommendation for the board. The board is looking for three things:
- List the company’s strategic business objectives (they want to see if you are paying attention)
- List your IT objectives and show how they align to #1.
- Recommend whichever projects you think most support MDCM’s strategy. Explain how you would order them and why.
You may find it useful to create a score card to evaluate each project and to compare the projects using the Portfolio Application Model Matrix exhibit in the case. You should also consider the approximate sequence for executing the initiatives and may find that drawing a simple network diagram including the dependencies is a useful tool for discussion. For purposes of this exercise, the data in the case is deliberately presented at a high level, so where details are not given, feel free to make assumptions based on your experience.
Week 5 Wrap-up: IT Strategy
Very interesting and diverse set of comments this week. Did you notice how quickly the nice orderly world of ISACA (basic and admin controls, enterprise architecture, strategy and steering teams and RACI charts) became chaotic? There is an important point here, its called POLITICS. Not the nation-state kind, nor necessarily the back stabbing kind. The best definition I know of politics is “Who gets what, when, where, why and how.” You can go into an organizatio, find its IT strategy, find a steering team and apparently they are doing the right things. But, until you understand who the members are, what interests they represent, which groups have more power than others, you will not really know what is going on. The Weill and Rose article should open your eyes to some of the possibilities.
The other thing I want you to take away from IT strategy is that implementing it is a political exercise. Yes, having a great plan based on an excellent enterprise architecture is important, but you need to get it accepted throughout the organization. This means you need to get buy in from anyone who is in a position to shut you down. You need to get all the other players to understand, buy in, and support you when things go wrong. This will involve a lot of skills that IT people are not usually known for. There are likely to be difficult negotiations, private lobbying, dramatic speeches, and lots of grass roots communicating. Good CIO’s have these skills and have probably used them to define a comfortable status quo with the rest of the organization. As an auditor, you may find a problem that has the potential to upset that status quo and hence threaten the CIO. Be aware.
Week 5 Slides and Steve Praino’s presentation
Several of you asked for the slides I used last night and also Steve presentation.
Here are the slides I used plus the case analysis that we never got to.
Here are Steve’s slides Also, I am trying to get a video of the entire talk. I will add that if I can get it.
Week 5: Reading Questions and Activity
Readings
- What are the five IT questions that Weill & Ross see all organizations make? Why shouldn’t IT management answer these questions? If not IT management, who?
- Which archetype do you think is the most rare? Most common? Why?
- What is the difference between and IT Strategy committee and an IT Steering Committee?
The Enterprise-Wide Business-IT Engagement Case
Think about these questions as you prepare for Tuesday’s discussion:
- What are the issues Stefaan faced? What were the issues with the way IT development worked?
- Look at Exhibit 5. What governance instruments did Stefaan address? What are the pro’s and con’s of what they did?
- If you were Stefaan, how would you describe your accomplishments and path forward?
Week 4 Wrap-up: Enterprise Architecture
Several excellent threads on this week’s discussion, good job. There are three concepts that I think are worthy of highlighting:
- EA is about both business and technology. It aims to drive the technology decisions from its business findings but its end result are things like application and infrastructure standards.
- EA can become very bureaucratic. If you are spending time charting and documenting things without providing the output needed to guide the enterprise, its likely a waste of time. EA is difficult to do well.
- Best-of-breed vs packaged ERP is a classic EA question. A well reasoned case for either, communicated throughout the company, would be an excellent outcome for an EA project.
I hope you see the difference between the topics of the first two week and EA. Week 2 and 3 were about defining the IT organization, its mission to produce value for the enterprise, and the internal administrative controls needed to run it effectively and efficiently. All good, necessary stuff but kind of generic. You could apply any of it to any organization.
EA, at least its output, is different. This is the first time we are talking about what the IT organization should do, what it might focus on to add that value we talked about generically earlier. It starts with understanding the business and its processes. What is important? What isn’t? A manufacturing firm will have very different needs than a consulting firm. Just because some type of system is very effective in one industry, doesn’t mean it will work for the other. EA goes beyond this, however, to look at a future state that has all the right applications and infrastructure in place to ensure the continued success of the company. You might sum it up as saying EA strives to make the right IT decisions today, with an eye always on tomorrow.
Considering best-of-breed vs ERP type package. My view is: it depends. If I am a traditional manufacturer I am apt to go ERP. My requirements are very well known and expertly supported by several great software companies. Their tools have been proven to make manufacturers much more efficient. Efficiency is king in my organization (manufacturers must keep SAR costs under control to be profitable) so this all sounds very good to me. EA for such a firm will probably set some standards around infrastructure but say for applications “Use SAP (or whatever) first or explain why not.”
On the other hand, if I am an internet investment company, everything I do is IT. I reach out to my customers through the web, I take their orders through the web, I deliver my work product to them via the web. IT is my company’s life. Here I may not want anyone else calling the shots. I want to bring in whatever will do the best job possible for my most important needs and I will hook it all together. Thats what I do anyway, hook stuff together, so its no big deal. Here EA is apt to be all about infrastructure and middleware. So long as an application can live on our servers and communicate with our middleware, we will be fine.
So each firm will have a different EA for their organization and both will be correct in what they choose.
Week 4: Readings Questions & Activity
Reading Questions
- What is the goal of having an enterprise architecture?
- If a firm decides to add a new line of business, how might it affect its enterprise architecture? Explain?
- Explain five possible ways that an enterprise architecture effort could fail?
The Strategic IT Transformation at Accenture Case
Think about the following questions as you prepare for Tuesday’s discussion of this case:
- What is Accenture’s core IT philosophy?
- Identify three key IT projects from the 2001 – 2208 period and explain how each strengthened Accenture’s enterprise architecture?
- What measures of success did Accenture use for this effort? Why?
Week 3 Wrap-up: General IT Administrative Controls
Another great discussion full of good analysis and some great examples from the real world. Those of you who work, please continue to bring such good examples to each of our discussions. You illustrate the learnings for all of us since we each have a different point of view. I will give you my experiences, but that’s only one person who worked primarily in one company. The more views we have the better.
IT organizations are usually the largest administrative expense in a company. In manufacturing companies they may be only 1% or 2% of revenue but still be the most expensive support service. In banks and trading companies IT can get to 50% of revenue. For this reason the IT organization is a target for cost cutting. It must be incredibly well run with all of its administrative processes very tight or it will constantly be second guessed.
Some CIO’s and business writers lament that CIO’s should have a greater say in the strategy of the company. I agree with this outlook but would add that CIO’s need to prove themselves as well. If my budgeting, procurement or HR practices are a mess why should the owners of the business trust my opinion about other matters. It really goes beyond this. If IT’s projects are not being done on time and on budget while producing value for the corporation, why trust IT. It may be unfair, but by being big and expensive IT puts a spot light on itself and needs to act accordingly.
For much of my career I thought all the administrative controls were nonsense. Only later did I come to see that they are the table stakes for playing in the game of business leadership.
Interview Questions for Potential Employers
Everyone looking for a job,
Please comment here with your list of 10 questions to ask potential employers. You may want to separate you list into questions for a brief introductory meeting (think CSPD Fall Connection) and those you would propose to ask at a full interview. Let’s start compiling a good list of questions for both occaisions.