Case Study: Enterprise Portfolio Management and Budget ing

Global Pharma CIO Transforms ITOrganization into Accountable,Low Risk Business Partner

Capitalizes on new enterprise IT portfolio investment andspend management process and governance framework

CHALLENGE

A global pharmaceutical company hired a new CEO to restructure the organizationafter their industry ranking and market share fell dramatically from first to seventhplace in a relatively short period of time. Among the initial goals introduced by theCEO was a long-term, cost-cutting target of $4 billion within five years. This strat-egy included restructuring the global IT organization, whose yearly budget was ap-proximately $1.5 billion. A new CIO was appointed and tasked with:

� •� Aligning the IT department to the new corporate strategy;

� •� Restructuring 10 separate divisions and consolidating to half the amount;

� •� Reducing spend across the board by 15%; and

� •� Instilling a new company culture focused on delegation and accountability.

To achieve these objectives, the new CIO had to overcome challenges in the following areas:

� •� Once a year planning occurred with little contingency.

� •� A lack of consistency across divisions in terms of technology platforms and process:

� •� Definition including spending categories, tracking criteria, gover-nance, and roles made it;�

� •� Difficulty consolidating and analyzing information to drive the IT transformation.

� •� Lack of clarity as to ownership, funding, and management responsibility of investments within IT divisions and across Business and IT units.

� •� Unclear investment alignment to corporate strategy – investments decisions were made using siloed division objectives only.

Create Portfolio

Select Portfolio

Plan Portfolio

Manage Portfolio

Contributors:

CIO and IT Leadership Team, Strategy and Planning team, Divisional Portfolio Managers

Time to Success:

1 year: Design, Pilot and Full Deployment

Deliverables:

•� Portfolio process and tool framework

•� Comprehensive project repository

•� Integration of portfolio and financial planning and tracking

•� Roles and responsibilities ofstakeholders

Key Benefits:

•� Common cost structure •� Innovation pipeline

•� Budget planning and tracking

Software:

Microsoft Enterprise Project Management Solution

www.umt.com

SolutionUMT Consulting was brought in to help the companyachieve its restructuring goals. The recommendation was to design and roll out a portfolio managementframework across divisions globally to bridge the gapsacross the divisions and units, and harmonize processesand roles. The framework is based on years of experi-ence that UMT Consulting brings and which takes intoaccount the company’s capability to absorb change andsuccessfully implement key components of a newprocess and enhanced governance. Microsoft Office Project Portfolio Server was chosen as the preferred toolgiven the challenges facing the organization. Socializa-tion and adoption plans to assist with change manage-ment aspects were defined in conjunction.

The solution was articulated around three integratedconstructs:

Cost Structure Management: A unified classification ofprojects in three major types of spend, each with differ-ent roles, rules, and lifecycle governance coupled withunified cost categories and list of funding sources en-abled consolidation of investment information in a con-sistent manner across divisions. It provided project andprogram managers with clear data requirements andtouch-points with governing bodies. As a result, portfo-lio reports complement traditional financial plans to en-able the IT Leadership team to understand cost andvalue opportunities.

Budget Planning and Review: Instead of the previousdetailed yearly planning exercise, the budget is now prepared and updated at a higher level using programsas allocation vehicles. The new ongoing process to manage demand and review the portfolio quarterlyhelps avoid planning fire-drills that historically paralyzedparts of the organization for weeks. The portfolio is nowseen as a dynamic innovation pipeline. This allows project managers to focus on planning a smaller numberof relevant projects at a time, resulting in sounderbudget and more accurate resource estimates.

Project and Portfolio Tracking: Common qualitativeand quantitative tracking indicators were defined basedon the unified project classification and cost categories. On a monthly basis, Project Managers track active project forecasts and statuses that roll up to provideprogram and division portfolio health. This monthlytracking process is integrated with the ongoing planning and quarterly reviews.

ResultsThe resulting solution provided executives and theirmanagement teams with a number of capabilities tohelp transform the IT organization and manage it as a business:

� •� Capture 100% of the IT spend in several discre-tionary and non-discretionary classes.

� •� Facilitate governance and exercise oversight using a common Portfolio calendar

� •� Develop business cases and track projects usingstandardized roles and guidelines

� •� Combine the dynamic pipeline and active perspec-tives of the portfolio to reconcile with financial systems

� •� Quickly identify execution risks and research under-lying causes to take necessary actions

� •� More efficiently prepare and maintain an accuratebudget plan while keeping the flexibility for un-planned demand

As a Project Sponsor reflected, "It is amazing how wenow talk with 100% more confidence about the visibilityinto our budgeting plan numbers, using allocation andappropriation reports."

ABOUT UMT CONSULTING

UMT is a recognized provider of ProjectPortfolio & Integrated Portfolio Manage-ment solutions and management consultingbest practices. For over two decades UMThas helped Global 2000 companies gain transparency across their business and technology asset portfolios, rationalizecosts, collaborate to make smarter invest-ment decisions, and maximize ROI. UMT isMicrosoft's Worldwide PPM Partner of theYear 2013 and has been twice named aGartner Cool Vendor in PPM and is posi-tioned as a Visionary in Gartner's IntegratedIT Portfolio Analysis Magic Quadrant.

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