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Portfolio Management Done Right

By Todd Datz

May 01, 2003 — CIO — Ron Kifer, vice president of program management at DHL Americas, is a veteran of the typical project and portfolio planning or lack of planning?process in many companies. "The last three organizations I’ve been in had the same scenario. They didn’t have defined processes for reviewing project proposals; projects were pretty much recommended by senior vice presidents in each business area," he says. "They were attempting to do many more projects than they had the capacity to do. Bad projects squeezed out good projects. There was no visibility of what was being done throughout the organization."

That’s a recipe for disaster. At a time when CEOs are demanding that technology investments return value, CIOs who don’t have control

over their IT project portfolios are fighting losing battles. Surprisingly, that’s a good number of you: A recent report by AMR Research contends that as many as 75 percent of IT organizations have little oversight over their project portfolios and employ nonrepeatable, chaotic planning processes.

But if you’re not doing it already, portfolio management can help you gain control of your IT projects and deliver meaningful value to the business. Portfolio management takes a holistic view of a company’s overall IT strategy. Both IT and business leaders vet project proposals by matching them with the company’s strategic objectives. The IT portfolio is managed like a financial portfolio; riskier strategic investments (high-growth stocks) are balanced with more conservative investments (cash funds), and the mix is constantly monitored to assess which projects are on track, which need help and which should be shut down.

But it’s all in the execution. Jeff Chasney, executive vice president of strategic planning and CIO at CKE Restaurants, notes that "some companies do it poorly and some do it well." The companies profiled in this story reveal their best practices for doing it well.

Why You Need Portfolio Management

Think about how IT investments are managed in your company; do any of the following scenarios ring true? Million-dollar projects, which may or may not match the company’s objectives, are awarded to business units headed by the squeakiest executives; weak IT governance structures mean that business executives don’t have clear ideas of what they’re approving and why; the CIO ends up selling projects that should be generated and sold by line-of-business heads; the company doesn’t build good business cases for IT projects or it doesn’t do them at all; and there are redundant projects.

A strong portfolio management program can turn all that around and do the following:

 

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