Speed to Value in Portfolio Management

Transcription

1 Speed to Value in Portfolio Management

2 Presentation Objectives Attendees will learn about: Creating an environment where IT becomes viewed as a strategy enabler and value driver for the organization Ensuring investments are strategically aligned with both business strategy and the organization's resources to deliver successfully Building an imperative for change that drives focus and adoption Setting up a governance structure that clearly articulates strategic objectives, translates them to business drivers for project prioritization, and maintains focus to ensure benefits are realized by the organization 2

3 Agenda MSHA Background Paul Merrywell CIO, MSHA Challenges Objectives Results Benefits Gaining Alignment The PPM Process Portfolio Optimization Workshop Resource Capacity Analysis Technology Enablement (Microsoft Project Server 2010) Looking Ahead Value Proposition of PPM 3

4 MSHA Background Mountain States Health Alliance (MSHA) is a not-for-profit healthcare organization based in Johnson City, Tennessee Operates a family of hospitals serving Northeast Tennessee, Southwest Virginia, Southeastern Kentucky, and Western North Carolina Employ 9,000 staff; 1,300 Physicians; 2,700 Volunteers; 1000 Medical Students 4

5 Challenges Increased demand on IT Resources supporting business needs Overlying pressure to do more with less Lack of visibility into resource and financial needs IT enabled projects not prioritized in alignment with strategy Healthcare reform creates substantial need for IT investment Operational needs balanced with new IT requirements Overstretched IT resources compromised delivery All of the above required changes in how IT operates to support the dynamic requirements of technology in Health Care. 5

6 Objectives Improve resource demand and capacity planning Improve the project intake process Balance resources and investments based on strategy Create a level playing field for differentiating projects based on strategic or financial return Optimize investments for new capabilities once Safety, Regulatory, and Replacement must do projects are identified Instill a disciplined governance process that supports prioritization based on value to the organization 6

7 Results Cross-business oversight and control of IT Enabled portfolio: Visibility of ALL IT enabled investments Prioritization of ALL IT enabled investments Strategic value Financial value Business Risk Optimal alignment of IT resources Annual portfolio planning process Ongoing intake and governance structure to guide ITGC engagement in monthly portfolio delivery oversight by ITGC Sub-committee Transparent decisions based on facts within an established governance framework 7

8 Results Cross Organizational Collaboration Project Managers PMs involved to drive development of the Business Cases and engage Business Owners Business Owners Business Owners made accountable for the articulating the business description and benefits in the Business Case Subject Matter Experts SME s are enthusiastically involved to validate Business Cases prior to ITGC review Enterprise Perspective Driving a broader perspective of investment value Elevated focus on agreed strategic initiatives Allowed us to determine high value work for MSHA 8

9 Benefits to MSHA Transitioned from a non-managed project portfolio to a managed project portfolio aligned with MSHA strategy (6 mos) IT projects are now aligned with strategy with consideration of resource demand and capacity Investment decisions are made considering the needs of all business requirements not just IT enabled projects Instilled a consistent business case process that enables the differentiation of proposed projects by their value to MSHA Standardized criteria for determining the right projects Improved delivery success by enabling a focus on the most valuable projects Speed to Value Portfolio Management Delivered in 6 months 9

10 Gaining Alignment What is It? The means to implement a framework for prioritizing, selecting, and governing the portfolio of IT enabled projects and programs. This includes the development of a portfolio intake and governance framework based on best practices to ensure we achieve our strategy. Why do we Need This? Continuous project intake Lack of prioritization Resource demand vs. capacity Dependency awareness Lack of benefits realization Alignment with the organizational strategy Continuing challenge to do more with less 10

11 Gaining Alignment (con t.) Projects not aligned with strategy Managing too many of the wrong projects Unable to prioritize critical projects or kill the unnecessary ones No defined processes for reviewing ideas and business cases Senior executives driving personal agendas Attempting too many projects simultaneously No benefits realization process Lack of overall visibility of risks, issues, and conflicts Inability to proactively manage the portfolio Lack of dependency awareness Lack of visibility into project overlaps 11

12 Gaining Alignment (con t.) Sustaining the Business Replacing systems reducing risk to the business. Regulatory Compliance Mandated Improvements Selecting and Prioritizing Capital Investments New Capabilities Introducing new ways to drive the business Quality Maintaining/Improving Quality Standards Safety Responding to a Safety event 12

13 Gaining Alignment (Con t.) A small number of projects that are critical to the organization: High visibility Strong business case data High strategic value alignment Major Investments with high implementation costs (new technology, facilities, etc.) Many small & midsize projects: Less visible No consistent prioritization approach Value unknown Limited funding available for new/key capability projects Limited visibility and varied value measures of small & midsize projects potentially diverts focus, capital & resources from areas of highest value Numerous Active projects and requests No understanding of financial value No understanding of alignment No feel for resource achievability 13 13

14 The PPM Process Defined Process (ensure adoption) Strategic Drivers and Rankings Governance Structure Project Categorization Project Intake Analysis Qualification Criteria & Impact Analysis Portfolio Prioritization and Optimization Prioritization Workshop 14

15 Process Overview Engaged the organization to achieve strategies. Cross-business involvement. Senior executive direction & executive leadership of portfolio delivery. Corporate Constraints Stakeholder Engagement & Communications 15

16 Define Right Level of Process Rigor Burdensome process constrains responsiveness & leads to disengagement The IS organization or IS PMO cannot own the process With this in mind, the approach is designed to: Position ITGC Sub Committee as the owner and driver of portfolio intake and governance. Leverage appropriate forums for communications and stakeholder engagement. Right Data Right People Right Decisions 16

17 Strategic Business Drivers Collaboratively defined Strategic Business Drivers (Senior executive team). Defined evaluation criteria and validation approach for each Business Driver (for use during strategic impact assessment). Established Business Driver weightings. Driver Weightings Driver Weightings incorporate leaderships input on Priorities 17

18 Governance Structure Organizing for Success Engaged Executives Established Governance Organization Cross-business Representation Roles & Responsibilities 18

19 Prioritization & Alignment Ongoing Annual Vision & Direction Governance Structure (con t.) ITGC Executive Committee ITGC Sub-Committee 19

20 Project Categorization Mandatory legal, safety, environmental or other regulatory requirements. May include compliance with internal policies. COMPLY WITH LAW & CORPORATE POLICY INCREASE COMPETITIVE ADVANTAGE Adding or improving capability that generates long term competitive advantage The minimum amount of spend to maintain current operations No Capital Projects REDUCE COST & OPERATE EFFICIENTLY REDUCE RISK & ENHANCE ASSETS Risk Mitigation Non-Discretionary Discretionary Clearly defined spend categories enable optimized allocation of funding and resources across the portfolio and allow external benchmarking.

21 Portfolio Intake Analysis Compiled portfolio inventory Rolled out Business Case template Estimated cost, resources, benefits, timing constraints and related dependencies Conducted assessment of inflight and proposed requests 21

22 Constraints & Strategy Investment Strategy Road Maps Local Governance & Approvals Project Intake Analysis (con t.) Regulatory, Compliance & Safety Regulatory & Compliance: Specific Regulation? Not Deferrable? Safety: Meets specific criteria? Yes No Force in to portfolio Discretionary Projects Impact on Weighted Strategic Drivers: Portfolio Strong Impact Driver 1 Optimization Review Selected Portfolio C New Capabilities Low Impact Extreme Impact Driver 2 Driver 3 Score Strategic Value Financial Value Force in to portfolio No Sustain (Replacement) Risk Score Indicates High Impact, High Probability? Yes Defined process with built in checks and balances ensures the best portfolio 2 22

23 Qualification and Impact Analysis Project X Company A has acquired a medical center. The intent of this project is to standardize the corporate systems and eliminate legacy systems. Driver Mapping Operational Efficiency. Measured in reduction of Annual Operating Expense This migration would allow the elimination of duplicate systems allowing the ability to save annual system maintenance costs. Impact Scale Op. Efficiency- Driver Measure None Low Moderate Strong Extreme Annual OPEX Savings 0 - <= $99,999 $100,000 - <= $499,999 $500,000 - <= $999,999 $1,000,000 - <= $1,999,999 $2,000,000 + Projects may impact more than one driver. In such an instance a project would be scored against all impacted drivers to assess value contribution 23

24 Identify Strategic Drivers Pair-Wise Comparisons Portfolio Prioritization/Optimization Use enterprise strategy Discrete, Measurable Drivers Driver Weightings Impact Evaluation By Owner Enterprise Strategy Business Drivers: Sample Project 1 Project 2 Driver 1 % Strong Extreme Driver 2 % None None Driver 3 % Moderate None Driver 4 % Extreme None Driver 5 % None Moderate Driver 6 % None None Driver 7 % None Strong Driver 8 % None None Strategic Alignment Score X Y Executive involvement is critical in selecting and weighting the relative importance of the strategic drivers against which projects should be assessed for alignment to business strategy

25 Prioritization Workshop Approach 1 Review Active Carryover Projects 2 Review Regulatory, Compliance, & Safety projects 3 Review Sustain Projects 4 Review New Capabilities Projects 5 Review Preliminary Strategic Portfolio 6 Refine Portfolio All projects were evaluated using a common framework allowing consistent view of the entire portfolio. Business Cases provided foundational information reinforced and validated by knowledge of ITGC Sub-committee members. IT Enabled Portfolio Active Carryover Regulatory Compliance Safety Regulatory (Forced-In) Compliance (Forced-In) Safety (Forced-In) New Capability Sustain (Forced-In) New Capabilities Sustain

26 Prioritization Workshop (con t) Outcomes: Optimized and balanced portfolio of investments and delivery plan. ITGC Sub Committee enabled for collaborative and objective investment decisions Visibility of portfolio composition (e.g., breakdown of projects by classification) Resource capacity and demand awareness Dependency awareness IT Enabled Portfolio Composition Budget and IT resource constraints balanced to achieve the most value to the organization Investments aligned with organizational strategy 26

27 Prioritization Workshop (con t.) Preliminary IT Enabled Portfolio Going Into the Workshop 53 Projects Summary Reduced the number of projects that need to be Forced In from 26 to 18. Increased Sustain projects from 9 to validated Business Risk of each Sustain project Increased New Capabilities, providing the ITGC with additional flexibility on when and if to proceed with a selected project based on their strategic value, budget, resources, and other priorities. Safety Regulatory, Compliance Reduced from 17 to 6 Sustain Validated Business Risk New Capabilities Increased from 27 to 31 Final ITGC-recommended IT Enabled Portfolio 49 Projects 27

28 Prioritization Workshop (con t.) Engaged Non-IT Executives Established and sustained non-it operational ownership a critical element of sustaining change. Established a portfolio delivery organizational structure that facilitates effective cross-business ownership and accountability Drove the Change Identified and communicated targeted changes and lead the shifts necessary to evolve portfolio delivery capabilities. Communicated the case for change (why) and the path (how) Socialized the value proposition Set and Managed expectations Target Benefits and Communicate Successes Demonstrate measurable and incremental improvements in the IT Governance environment and communicate them to the enterprise. 28

29 Resource Capacity Analysis Resource estimates validated. Initial analysis of IT Resource capacity against the selected project portfolio was conducted to determine the resource actions required to deliver the portfolio. Specific resource analysis conducted from two perspectives: Projects Roles Addition capacity vs. demand scenario analyses were conducted to support selection of optimal scenario and provide real data for resource discussions by IT leadership. 29

30 Resource Capacity Analysis (con t.) Enhanced Visibility & Control of Resources* Multiple views to support IT resource management Resource availability Demand Portfolio Visibility Project Requirements Generic role demand at the project level Resource Visibility (Deficit & Surplus) Holistic look at organizational resources by generic role 30

31 Technology Enablement (MSP 2010) Created a PDP to capture essential Business Case information to support the portfolio planning and optimization process. Results loaded into Project Server 2010 to enable portfolio analysis. Leveraged Project Server 2010 technology to accelerate results (e.g., what-if analysis, resource capacity vs. demand, budget, timing, dependencies.) 31

32 Portfolio Management Roadmap Build an Improvement Roadmap Portfolio intake and governance requires a comprehensive improvement roadmap with many integrated parts: It is not a onetime event effective governance is part of overall IT delivery capability evolution IT governance should be addressed from both top down and a bottom up Clearly defined roles, ownership, and accountability is essential for success Plan and deliver incremental value to the organization Creating a more effective and sustainable IT governance environment and portfolio delivery organization requires time and investment to deliver incremental value (quick wins) and to build and sustain Balance Improvement Activities IT governance requires three pillars to succeed: Leadership, organization and people Consistent, but scalable and flexible policies and processes Enabling technologies 32

33 Taking Steps to Avoid Pitfalls Think Long-term Delivery of Benefits Treat the implementation initiative as a long-term improvement program with a series of phases with timetables and clearly defined benefits to the organization Ensure Non-IT Executives are part of the process and committed Established and sustained non-it operational ownership essential for success. Lead the Change and Transition Implementation requires leading behavioral shifts, supported by: Marketing the value proposition Managing change and transformation Manage expectations Organizational structure that facilitates effective ownership and accountability Target Benefits and Communicate Successes Demonstrate measurable and incremental improvements in the IT Governance environment and communicate them to the enterprise 33

34 Value Proposition Firms with mature Portfolio Management and IT Governance had 20% higher profits than companies with poor Governance given the same strategic objectives. Dr. Peter Weill, Director of the Center for Information Research, MIT (Based on a recent study of 250 enterprises in 23 countries) 34

35 Contact Questions? Please contact sean.o Tel. 1(720) with any questions for Sean or Paul Merrywell 35