Principles of Execution

The Value of Portfolio Management

Gerald’s Background

Gerald is currently the President & CEO of

Principles of Execution, a Strategic Project

Portfolio Management and IT

Governance consulting firm based in the

Metro Washington, DC area.

18 years as an IT Project Management

consultant and earned the PMP, MCSE,

MCTS, CQIA, ITILv3 and COBIT 4.1

Certifications

Acquired certifications in PM and BI from the

University of California, Berkeley, as well as

an Executive Leadership Certification from

Cornell University.

Objectives

Portfolio Theory and Portfolio Management

The Impact of PortfolioStat

IT Governance and Portfolio Management

Implementing a Portfolio Office

Portfolio Theory

Portfolio Stat

GovernanceSetting Up the PMO

Napoleon said,

“All plans are useless, but the act of

planning is essential.”

What is Portfolio Theory?

“The theory states, that for any allocation

of resources, there is an efficient set that

yields the greatest return for a given

level of risk, while the right level of

resources to allocate to projects cannot

be known without considering further

factors. What is clear is that once that

level of investment is determined, there is

then an optimal set of projects to

implement for a given level of risk and

investment.” Simon Moore

What is Portfolio Management and

Governance? Portfolio Management is a capability that enables organizations to analyze,

select and manage a collection of project investments that are aligned with

your company’s goals and objectives within a data driven decision making

framework.

Portfolio Management also coordinates the acceptance, approval,

postponement, rejection or cancelation of a project which will not realize the

proposed benefits or the corporation’s strategic outcomes.

Governance is the process of putting policies, procedures and processes in

place to guide organizational operational activities and changes.

Governance warrants the achievement of an organization’s objectives by

strategically aligning daily activities, setting direction, providing guidance on

decision making and monitoring performance.

Benefits of adopting Portfolio

Management?

Positive impact on project

performance and the

organization’s overall project

portfolio

PPM increase the organization’s

project management capability

effectiveness and efficiency

Organizations that implement

PPM have better executive

engagement

The Corpus Callosum for the Business

or Agency

IT Portfolio Management Statistics

84% of companies

do not use a

business case

83% of companies

only adjust their

budgets once or

twice a year

67% of IT

organizations are

not able to adjust

to market trends

when needed

67%

83%

84%

Portfolio Efficiency Frontier

Organizations that use the EF methodology are

able to reduce waste or increase value creation by

20 to 40%

Seven deadly sins of Portfolio

Management

1. Narrowly Defining the Portfolio

2. Investment Decisions Are Like New Year’s

Resolutions

3. Decibel-Driven versus Data-Driven Decision

Making

4. Too Many Metrics, Not Enough Time

5. One-Size-Fits-All Portfolio Management

6. If we install this software, we will be able to

optimize our corporate portfolio

7. It is all about the projections

Is PPM a Bridge or a Hub?

PPM

Budget

Scope

Opportunity

Demand

Resources

Risks Strategic & Tactical

Plans

Business Performance

Project Control

Change Control

Cash Flow

Resource Availability

A Successful Project Portfolio

Management CapabilityShould address the following

questions:

Are we investing in the right

things?

Are we optimizing our capacity?

How well are we executing our

projects?

Can we absorb all the changes we

are implementing?

Are we realizing expected returns

and benefits?

Portfolio Theory

Portfolio Stat

GovernanceSetting Up the PMO

What is PortfolioStat?

PortfolioStat is a requirement from the

Federal CIO for all government Agency CIO’s

to lead an annual IT Portfolio Investment

review session with the goals of eliminating

duplication of commodity IT services and

move to a shared solution paradigm and

assess the maturity of the agency’s portfolio

management processes.

“PortfolioStat will help implement the Shared

First initiative and the requirements set forth

in the Executive Order 13589 (Promoting

Efficient Spending),6 which targets employee

IT devices as a primary area for eliminating

waste and duplication.” Source: M-11-29

Mandate for PortfolioStat On March 30, 2012 the Federal CIO released a memorandum calling

all Federal Agencies to implement a formal PortfolioStat process.

M-11-29 requires that agencies “pool their purchasing power across

their entire organization to drive down costs and improve services for

commodity IT”.

Key areas to be addressed are:

– IT Governance

– Commodity IT

– Program Management

– Information Security

Major Goals:

– Establish a Commodity IT Investment Baseline

– Develop a plan for the consolidation of Commodity IT

– Reduce Duplication of Commodity IT Services

Proposed PortfolioStat and Commodity IT

Workflow

Portfolio Theory

Portfolio Stat

GovernanceSetting Up the PMO

Portfolios, Programs and Projects

Five Critical Decisions IT

Governance must address IT principles, what are the guiding values of the

organization?

IT architecture, how will we define the integration

and standardization of IT solution requirements?

IT infrastructure, which shared and enabling

services will we implement within the organization?

Business applications, What specific business

applications will we run within the organization?

IT investment, which initiatives will we select and

optimize and fund?

Governance Design Framework

Enterprise strategy and organization

IT Organization and Desirable

Behavior

IT governance arrangement

It Governance mechanisms

IT metrics and Accountabilities

Business performance

goals

Portfolio Theory

Portfolio Stat

GovernanceSetting Up the PMO

Questions to consider for your

PMOWhat are the organization’s strategic objectives?

What other projects are competing for resource that will keep the

organization from accomplishing its strategic objectives?

Do we have the right resources and do we have sufficient resources

to complete the approved projects?

What is the root cause to project issues?

How do we do projects here?

How can projects be completed more quickly?

How do we get more projects done with the same resources?

How do we achieve project execution predictability and reliability; on

time, on budget and within scope while delighting our internal and

external customers?

Where Should You Start?

Eight basic stages to Portfolio

Management

Develop an IT Portfolio Management game plan

Planning the IT Portfolio

Creating the IT Portfolio

Assessing the IT Portfolio

Balancing the IT Portfolio

Communicating the IT Portfolio

Develop and evolve IT Portfolio Government

Organization

Assess the IT Portfolio Management processes

and execution strategy.

Portfolio Governance Operational

Model

Portfolio Managed Services

Portfolio Resource

Management

Program Managers

Project Managers

Portfolio

Environment

Technical and Physical

Resources

Portfolio

Governance and Admin

Boards and Committees

Contracts, Budgets, Metrics

and Reporting

Portfolio

Center of Excellence

Education and Training

PPM Governance Decision Process

Portfolio Lifecycle

DecisionMakers

Key Decision

Meeting Frequency

Meeting Input

Portfolio Strategic Planning

CEO, CIO VPs and Senior Mgt

3 to 5 year Strategic Vision

AnnuallyStrategic Plan and

Annual Budget

Portfolio Management

Office

CIO, Director EPMO, SBU

Executives, Mg. Dir

Prioritize Project Proposal, Approve

ChartersQuarterly

Review Business Case, Report on Alignment of IT

Portfolio Spending

Program & Project

Execution

Project Managers, Senior IT, Business

Lead

Day to Day Project Management,

Resource allocation, project

tracking

WeeklyProject Execution

plan, track and monitoring

Q&A

Portfolio Management Training

Click here to learn more.

Principles of Execution, LLC

Gerald J. LeonardPMP, MCTS, CQIA, ITIL, COBIT

President/CEOGerald@Principlesofexecution.com

http://www.principlesofexecution.com

Building the foundation for effective execution to increase your organization’s productivity!