The ITM's first Section on How to Organize for Iterative Transformation introduced several core concepts and some basic terminology. Having established a basis to communicate about Iterative Transformation, this section describes how to build a solid foundation upon which to implement transformative change. This ITM Section introduces several Portfolio Management (PPM) actions used to identify, define, and track individual Solutions.
To clarify, these are also the actions which manage the highest levels of Iterative Transformation, whether for a single implementation, an initiative involving multiple technologies, or throughout the enterprise. Nevertheless, some organizations forego the benefits of the PPM process. In some cases, they choose to not employ any helpful PPM actions. In others, they allow individuals to ignore them, or work around them, when PPM does exists.
Unfortunately, too many firms simply implement technologies as and when some mid- or senior level management feels it necessary. This is often under the guise of "there's not enough time" to follow proven processes. Alternatively, many firms seek to "get going" quickly, without really knowing where they are headed. Accordingly, it is surprising, and regrettable, how often there is "no time to do it right", yet there is time - and money - to do it again.
To emphasize, do the right things, in the right order, at the right time, and organizations can achieve even the most complex initiatives in a timely and cost-effective manner. The ITM's Portfolio Management approach guides consumers towards effective Solutions, each contributing to greater, overall Portfolio value. Whether a Portfolio involves one, two, or dozens of applications and technologies, getting each off on the right foot saves time and money.
Fair Warning:
Forgoing key Portfolio Management actions almost always creates more impediments to ongoing transformation. To be sure, this is the case whether the "Portfolio" consists of a single system, or many of them. Indeed, avoiding or skipping over PPM actions introduces more complexity, and drives higher costs, than is otherwise needed.
Section Overview
If Portfolio Management is not a topic for your organization or project, think again. Undoubtedly, any firm implementing one or more enterprise systems must address many aspects of PPM - even if they believe they are not dealing with a "Portfolio".
To be sure, some aspects of Portfolio Management - such as Solution Inception - are helpful, even when the "Portfolio" consists of a single Solution or set of Solutions. Hence, even firms that do not apply PPM more broadly will still find substantial value in using many of the actions in this Section. Whether an initiative has but a single application or several, PPM provides the right steps, in the right order, to get transformative change underway properly.
After the Overview below, explore the following in more detail.
Introduction
Consider the breadth of business operations, as well as enabling technologies, within most organizations. It doesn't take long to realize it involves a lot of pieces. Portfolio Management (PPM) is about orchestrating transformative change at its largest scope and scale. PPM assesses large-scale business needs. Further, it directs such needs to an appropriate Solutions. Some needs require new Solutions. Often, needs can be met by extending existing Solutions. And, over time, existing legacy Solutions are retired, replaced by newer Solutions. This high-level cycle of assessing, adding, maintaining, and retiring, specific Solutions, is what Portfolio Management is about.
Generally, Portfolio Management is a precursor to Solution Delivery and Solution Operation. Actions within PPM trigger Solution Definition. Along with Solution Strategy & Architecture, and, when relevant, Business Process Definition, tasks within PPM will conclude Solution Definition, and facilitate the transition on to Solution Delivery.
Portfolio Types
Portfolio Management is a series of tasks which apply systematic management to the investments, projects, and activities of an organization's IT initiative(s). The goal is to prioritize resource demands and facilitate the best possible returns on the organization's technology investments. Overall, IT Portfolio Management addresses three, inter-related, portfolios:
- Application Portfolio - Applications are the major software systems which support business processes and operations. Think ERP, CRM, PLM, amongst others. The ITM categorizes most application Solutions as either Products (if managed internally) or Services (when outsourced). PPM evaluates whether business needs are best served by using existing Solution(s), or by introducing new Solution(s).
- Infrastructure Portfolio - Infrastructure are the technology enablers which support applications and enable generic functions. For example, integration tools, networks, and cloud platforms. The ITM categorizes most of these Solutions as either Systems (if managed internally) or Services (when outsourced). Again, PPM evaluates whether business need(s) are best met by existing, or new, Solution(s).
- Project Portfolio - When new Products, Systems, Services, or functionality, are needed, a Project can be the best way to manage the required effort. However, Projects exist for a relatively short amount of time. That is, once a Project reaches its budget limits, or the amount of new functionality desired tails off, then the Project may wind down. Subsequently, the Solution achieves a steady state. The Solution itself, if successful, will last much longer than the Project.
Key Point
Key Point:
Any firm must work with limited resources. Ensuring that available resources focus upon the best investments, while consciously avoiding poor investments, drives improved returns for all stakeholders. Follow these Solution Portfolio processes to guide resource allocation decisions and achieve better results.
Objective
IT Portfolio Management seeks to quantify IT initiatives and the metrics which enable objective, rather than subjective, evaluation of IT investments.
Portfolio Management began with a project-centric focus - Project Portfolio Management, hence the 'PPM' acronym. It continues to evolve, and now includes ongoing, operational items such as Applications and Infrastructure. To be clear, as used within the ITM, PPM does not extend to the full scope of Portfolio Management used by many organizations. Rather, the ITM's discussion of PPM relates to the Solutions portion of an overall Portfolio. Aspects of PPM beyond Solutions are not in the ITM's scope.
The Beginning of a Solution's Lifecycle
PPM intakes new, large-scale business needs such as those related to: new business opportunities; cost savings; market changes; mergers & acquisitions; or problems unmet by existing Solutions. It evaluates those needs against the existing set of IT investments, and the organization's Business Strategy, to put in motion one or more of the following actions:
- Assess - to further collect and digest information in order to determine the appropriate action(s) to take.
- Define - to align approved needs to Solution(s), or portions thereof, which do not yet exist.
- Build - to establish a new Solution, or to expand upon an existing Solution.
- Maintain - to continue operating a Solution that is currently available to the business.
- Retire - to remove an existing Solution.
Correspondingly, these actions also describe the lifecycle of each Solution. So, another way to view Portfolio Management is to identify and align each Solution to its desired state in its lifecycle.
Only the Biggest Business Needs
Smaller-scale business needs, such as the addition of a new feature or function, typically pass straight through PPM to align with existing Solution(s) suited to address them. There is no need to manage smaller-scale needs at the Portfolio level. Rather, the Solution-level is better for managing these needs.
However, for needs that affect multiple Solutions, PPM also provides the means to orchestrate change, of any size, across multiple Solutions. As a result, dealing with multiple Solutions is managed more effectively. Delivery of individual Solutions is left to Solution management. Orchestration of changes which affect multiple Solutions, including many integration aspects, is managed separately. Each brings its own complexity. There is no need to aggregate those into something that becomes unnecessarily complex, and too difficult to manage.
When properly implemented, a big advantage of Portfolio Management is its agility towards adjusting IT investments by using feedback mechanisms built into the process. Without such a process in place, investment decisions often take inordinately long to make, and frequently sub-optimize other decisions made previously.
What does Portfolio Mean?
A Financial Portfolio is the set of investments, such as stocks, bonds, mutual funds, ETFs, and so on, which comprise overall investments. The same principle applies here - the IT Portfolio is the set of investments, including software, hardware, services, personnel, and projects, which comprise an overall investment in technology to support business needs.
And like a Financial Portfolio, there are means by which to help reduce costs, protect investment value, mitigate risk, and improve returns on investments made.  Portfolio Management provides the means to implement those objectives.
Sequence of Portfolio Events
The following is typical, high-level series of events related to Portfolio Management:
- Identify new requests for change, or a new business need.
- If existing Solution(s) can satisfy the need(s), then route it to the appropriate Solution Backlog(s).
- Otherwise, evaluate new needs which existing Solutions cannot meet, to:
- Assess overall probability of success vs anticipated benefit. In short, assess value and risk.
- Identify and obtain needed resources, including budget, personnel, etc.
- Define related Business Process(es) if appropriate.
- Gather high-level Business, IT and other Solution requirements.
- For needs which progress through the prior step:
- Identify options to meet needs.
- Create high-level plans (Vision & Epics) for new Solution(s).
- Select from suitable options, and complete the Solution's Strategy & Architecture.
- Conduct a Solution Inception. In other words, establish the Solution and begin its lifecycle.
- Complete the Portfolio Management process, and hand-off further work to the designated Project or Solution team.
After completing this Section...
For any Solution intended to support Business operations, typically Products, see the section on Business Process Definitions next.
For all Solutions, proceed to the section on Solution Strategy & Architecture which should occur in parallel with Business Process Definition, or next if some other Solution type.