Over the years, the process of Prioritization and Planning IT Investments, as part of the IPfM discipline, has become increasingly complex because of globally distributed teams, more-stringent governance requirements, and the need for greater transparency.
« Not every IT project can be funded, so how can organizations make good decisions about which projects to fund, which projects to delay, and which ones to cancel? »
To achieve a strategic balance between cost cutting and strategic growth, organizations continually strive to innovate and improve. They work to increase efficiency and transparency across business operations and to increase accountability for successes and failures, but the imbalance between project demand and resource supply is an ongoing challenge.
Given economic conditions that are constantly in flux, the mantra “do more with less” has been replaced with “do more—faster—and with much less”. As a result, decisions about investment and prioritization of IT projects can no longer be based solely on limited analysis or gut instinct. Economic uncertainty adds to the pressure on organizations to do a better job of executing their projects, especially when the projects are new or different, or when they affect the operations of the entire company.
Investment Portfolio Management (IPfM)
Effective Investment Portfolio Management (IPfM) maximizes the value delivered by IT investments to the business by ensuring alignment of project activity with business strategy on an ongoing basis. The body accountable for IPfM needs timely, accurate information to enable evidence-based decisions to assess risk, evaluate investment options and ultimately decide on which projects to prioritize.
The IPfM team should maintain an investment-wide view based on risks, resources, skills, stakeholders and benefits. By having a single view, they can focus their attentions appropriately to address issues, display agility in responding to changing business demands, provide leadership and direction to project managers, and maximize relationships with third-party vendors.
As we are reviewed the need to accurate information, analysis and collaboration between IT and the IPfM team is vital among the components of this discipline however, most business facing the following challenges with respect its IT investments:
Limited information: Most financial information about projects were captured and reported using only spreadsheets. The spreadsheets did not provide the CFO’s office with the transparency and depth of analysis needed to make fast, well-informed decisions.
Limited analysis: The project selection and management process was also manually tracked with spreadsheets and was based on inconsistent processes and guidelines. A lack of standardization made it difficult for the executives to make effective decisions at the enterprise-approval level.
Limited collaboration: • Working with the Architecture group on projects from initiation through closure provided significant benefits. However, too often project objectives between finance and IT were misaligned, causing unclear answers to questions of project ownership, project success, and accountability.
Investment Portfolio Management (IPfM): Approach
A simple and common approach to establish a proper IPfM discipline across the organization is:
- Simplify the process: Move from the “old way” to the “best way”
- Standardize the activities: Move from many ways to one way.
- Centralize the governance: Move from many locations to fewer locations.
- Automate all of the steps: Transition from manual to automated processes.
Achieving the right balance of investment across these categories is key to driving appropriate behaviours from IT and delivering on business objectives.