How Do You Measure Your IT Portfolio?post by Chris Curran on April 23, 2010
Guest Post by Rafael Burde, Niket Desai & Drew Gilliam
We would like to share our recent experiences in designing and building a dashboard focused on the $600M discretionary portion of our client’s IT budget. The company recently merged two IT groups with similar measurement and tracking functions into one they called “Portfolio and Program Management.” Unfortunately, this combination created a pile of quality and consistency issues that produced data that wasn’t trustworthy. Furthermore, calls for “good data” resulted in a regular fire drill for the PPM organization to gather, analyze, and report credible, but hand-crafted summaries. The CIO finally blew the whistle on the fire drills and asked us to help sort out the data and organize standard, repeatable reports and an overall portfolio dashboard.
5 Types of Portfolio Dashboard Metrics
Our solution was based on a standard set of qualitative enterprise metrics for evaluating the portfolio. We structured the metrics across 5 categories:
|Category||Key Question||Sample Metrics|
Is our funding aligned to strategic objectives?
% portfolio spend in “run the business,” “grow the business,” and “innovate the business” [could use other portfolio models, like the one from MIT CISR]; % of Portfolio in Short/Medium/Long-term Projects; % of Portfolio in Large and Extra Large Projects
|Demand & Capacity||
Do we have the right prioritization and sequencing of projects given capacity?
% growth in project intake, % growth in initiatives, IT resource utilization, business resource utilization, recruiting pipeline
For our portfolio, to what extent did we achieve our objectives?
% on time, % on budget, Portfolio and Sub-portfolio IRR, # function points delivered vs plan, $ saved for consolidation efforts
For projects in-flight, how is our execution progressing?
counts and amounts for projects in Red/Amber/Green status; #issues by severity: opened, closed, on-hold
How effectively are we managing project budgets and what are financial trends?
% variance to plan, % funding in-flight; $ committed but not spent; earned value
Portfolio Measurement Lessons
- Introduce new metrics only when necessary and leverage existing information - Reporting maturity differs across organization, first leverage what exists and is understood
- Focus on quality versus quantity of metrics - keep it simple
- Prototype early and often - Early visualization of the data helps to present information in the optimal format, uncover data gaps sooner and accelerate buy-in
- Data credibility is key to adoption success - Given data comes from various sources, it is essential to validate and verify all outputs
- Keep the visuals clear and messages crisp - Insights and key messages should be self explanatory and actionable
The portfolio dashboard and its analysis gave our client a new ability to prioritize their IT projects based on relative risks, benefits, resource requirements and dependencies using data that they believed! In addition to increasing transparency and accountability, working with the finance department helped improvement the methodology used (and buy-in from finance) to calculate IRR at both the portfolio and business unit levels. We also found that the fact-based nature of the dashboard eliminated a great deal of ‘politics’ from the portfolio review process and forced every business leader to equally and transparently stand behind their business areas.
Good luck with your portfolio dashboard efforts. Please let us know what you think.
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