Table Of Content

IT Project Portfolio Management ForacompletelistingoftheArtechHouseEffectiveProjectManagementSeries, turntothebackofthisbook. IT Project Portfolio Management Stephen S. Bonham artechhouse.com LibraryofCongressCataloging-in-PublicationData Bonham,StephenS. ITprojectportfoliomanagement/StephenS.Bonham. p. cm.—(ArtechHouseeffectiveprojectmanagementseries) Includesbibliographicalreferencesandindex. ISBN1-58053-781-2(alk.paper) 1.Informationtechnology—Management. 2.Projectmanagement. I.Title. II.Series. T58.64.B65 2004 004’.068’4—dc22 BritishLibraryCataloguinginPublicationData Bonham,StephenS. ITprojectportfoliomanagement.—(Effectiveprojectmanagementseries) 1.Informationtechnology—Management 2.Projectmanagement—dataprocessing 3.Strategicplanning I.Title 658.4’04 ISBN1-58053-781-2 CoverdesignbyYekaterinaRatner ©2005ARTECHHOUSE,INC. 685CantonStreet Norwood,MA02062 All rights reserved. Printed and bound in the United States of America. No part of this bookmaybereproducedorutilizedinanyformorbyanymeans,electronicormechani- cal,includingphotocopying,recording,orbyanyinformationstorageandretrievalsys- tem,withoutpermissioninwritingfromthepublisher. All terms mentioned in this book that are known to be trademarks or service marks havebeenappropriatelycapitalized.ArtechHousecannotattesttotheaccuracyofthisin- formation.Useofaterminthisbookshouldnotberegardedasaffectingthevalidityof anytrademarkorservicemark. InternationalStandardBookNumber: 1-58053-781-2 LibraryofCongressCatalogCardNumber:2004046248 10987654321 TomyDad,Charlie,andtomydearwife,Olivia . Contents Preface . . . . . . . . . . . . . . . . . . . . . . . . . . xiii Acknowledgments . . . . . . . . . . . . . . . . . . . . xix 1 Introduction to IT PPM . . . . . . . . . . . . . . . . . 1 1.1 MPT. . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.1.1 FinancialInvestments . . . . . . . . . . . . . . . . . 2 1.1.2 ProjectInvestments . . . . . . . . . . . . . . . . . . 6 1.2 ITProjectManagement. . . . . . . . . . . . . . . . . . . 9 1.2.1 VariableSchedule. . . . . . . . . . . . . . . . . . . 10 1.2.2 VariableCost/Budget . . . . . . . . . . . . . . . . . 12 1.2.3 VariableFunctionality/Scope/Quality . . . . . . . . . . 12 1.2.4 Risk . . . . . . . . . . . . . . . . . . . . . . . . 13 1.3 PortfolioSelection . . . . . . . . . . . . . . . . . . . . 16 1.3.1 Maximization . . . . . . . . . . . . . . . . . . . . 16 1.3.2 StrategicAlignment. . . . . . . . . . . . . . . . . . 17 vii viii ITProjectPortfolioManagement 1.3.3 Balance . . . . . . . . . . . . . . . . . . . . . . . 19 1.3.4 ResourceAllocation. . . . . . . . . . . . . . . . . . 20 1.4 TheITPMO. . . . . . . . . . . . . . . . . . . . . . . 21 1.4.1 PMORollout . . . . . . . . . . . . . . . . . . . . 27 References 29 Appendix1A:ITPPMinAction—GovernmentRegulations . . . . . 33 1A.1 BaselII . . . . . . . . . . . . . . . . . . . . . . . 33 1A.2 Clinger-CohenAct . . . . . . . . . . . . . . . . . . 34 1A.3 Sarbanes-OxleyAct . . . . . . . . . . . . . . . . . . 34 2 Strategic Alignment . . . . . . . . . . . . . . . . . . 37 2.1 CorporateStrategy . . . . . . . . . . . . . . . . . . . . 37 2.1.1 Problems . . . . . . . . . . . . . . . . . . . . . . 40 2.1.2 Solutions . . . . . . . . . . . . . . . . . . . . . . 41 2.2 ITProjects. . . . . . . . . . . . . . . . . . . . . . . . 42 2.2.1 ChangingDirections . . . . . . . . . . . . . . . . . 42 2.2.2 VectorAnalysis. . . . . . . . . . . . . . . . . . . . 43 2.2.3 ProjectA—Growth . . . . . . . . . . . . . . . . . . 45 2.2.4 ProjectB—Productivity . . . . . . . . . . . . . . . . 47 2.2.5 Lessons . . . . . . . . . . . . . . . . . . . . . . . 48 2.3 StrategicFrameworks . . . . . . . . . . . . . . . . . . . 49 2.3.1 Alignment. . . . . . . . . . . . . . . . . . . . . . 49 2.3.2 PortfolioSelectionandTracking . . . . . . . . . . . . 51 2.4 ReengineeringCumulativeDigression . . . . . . . . . . . . 53 2.5 Summary . . . . . . . . . . . . . . . . . . . . . . . . 55 References 55 Appendix2A:CaseStudy—RoyalCaribbeanCruises—Microstrategies 57 3 Portfolio Flexibility . . . . . . . . . . . . . . . . . . 59 3.1 RiskandMethodologies . . . . . . . . . . . . . . . . . . 60 3.2 Flexibility . . . . . . . . . . . . . . . . . . . . . . . . 61 3.3 InitiativeMethodologies. . . . . . . . . . . . . . . . . . 62 3.3.1 Phase1—UnderstandtheProblemandItsContext . . . . 65 3.3.2 Phase2—Risk/Option/CostAnalysis. . . . . . . . . . . 65 Contents ix 3.3.3 Phase3—PresentationandProjectPreparation . . . . . . 73 3.3.4 Phase4—MetricMapping . . . . . . . . . . . . . . . 75 3.4 ProjectMethodologies. . . . . . . . . . . . . . . . . . . 76 3.4.1 Pitfalls . . . . . . . . . . . . . . . . . . . . . . . 78 3.4.2 AuditPoints . . . . . . . . . . . . . . . . . . . . . 79 3.5 Summary . . . . . . . . . . . . . . . . . . . . . . . . 83 References 85 Appendix3A:CaseStudy—ArtesiaBC—FlexibleBalancedScorecard . 87 4 The IT Portfolio Management Office. . . . . . . . . . 89 4.1 DefiningITPMO. . . . . . . . . . . . . . . . . . . . . 89 4.1.1 ProjectOffices . . . . . . . . . . . . . . . . . . . . 89 4.1.2 ITPMORequirements . . . . . . . . . . . . . . . . 90 4.1.3 TailoredPMOs. . . . . . . . . . . . . . . . . . . . 92 4.2 VirtualPMO. . . . . . . . . . . . . . . . . . . . . . . 93 4.2.1 Committees . . . . . . . . . . . . . . . . . . . . . 94 4.3 PMOStructure. . . . . . . . . . . . . . . . . . . . . . 96 4.3.1 Large,Project-CentricCompanies. . . . . . . . . . . . 96 4.3.2 SmallerorLessProject-CentricCompanies . . . . . . . 102 4.4 OrganizationalChange . . . . . . . . . . . . . . . . . . 104 4.4.1 Impediments . . . . . . . . . . . . . . . . . . . . 104 4.4.2 Benefits . . . . . . . . . . . . . . . . . . . . . . 104 4.4.3 Governance. . . . . . . . . . . . . . . . . . . . . 107 4.5 Summary. . . . . . . . . . . . . . . . . . . . . . . . 112 References 113 Appendix4A:CaseStudies—HCAandHarrah’s—VirtualITPMOs . 115 4A.1 Harrah’s . . . . . . . . . . . . . . . . . . . . . . 115 4A.2 HCA. . . . . . . . . . . . . . . . . . . . . . . . 115 5 Architecture Management . . . . . . . . . . . . . . 117 5.1 TheEBA . . . . . . . . . . . . . . . . . . . . . . . . 121 5.1.1 SupplyandDemand . . . . . . . . . . . . . . . . . 121 5.1.2 ConstraintsandEnablers . . . . . . . . . . . . . . . 124 5.1.3 BusinessSystemModeling . . . . . . . . . . . . . . 125