How Successful Organizations Align Business with IT Using IT Portfolio Management and an IT Governance Framework

Aligning business and IT has been a challenge even for the most focused organizations. With multiple applications requiring continuous tuning and monitoring and multiple projects running simultaneously, organizations find it difficult to focus adequate attention on their value-added application and project portfolios. Most top executives also have limited insight into projects executed and the "value" these projects deliver.

The Challenges of Aligning Business with IT

Due to the absence of a proper governance framework, many organizations lack adequate visibility into their IT assets. The inability to trace and track projects in their portfolios compound the problem. This results in skewed decisions, unwarranted spending, and a struggle to meet business demands and user expectations. Another crippling factor is the fact that most CIOs can't determine the ROI and risks involved.

The typical IT landscape of most large organizations (Figure 1) represents a portfolio of applications that over time has become large and difficult to monitor, causing organizations trouble aligning business operations with IT.

Figure 1: IT decision makers view of the Application Landscape.

The inability of the organization to provide information that can ensure IT and business alignment can be attributed to:

• Inadequate visibility into the application portfolio
• Inadequate processes to continuously monitor and measure an application fit for a business
• Lack of adequate metrics to measure project success
• Time, energy and resources drained into “maintaining” legacy applications, leaving little for value-enhancing initiatives.

CIOs striving to achieve synchronization with business are plagued with issues such as ever-increasing infrastructure and maintenance costs, growing complexity of their IT infrastructure, and keeping pace with a changing business climate. 80 to 90 percent of all IT spending is committed to maintaining “non-value-add” applications, with only the remainder available for new initiatives or projects. To overcome this challenge, the CIO must strike a balance in their IT spending and ensure adequate funding for value-added work.

A properly implemented APM framework will ensure:

• Adequate visibility into the application portfolio.
• A rationalized application portfolio
• A modernized application portfolio

An APM will reduce the maintenance cost of the application portfolio, freeing up time, money, and resources for other value-added work. This will result in benefits such as better business decision-making, quicker time-to-market, and improved customer relationships. Similarly, a Project Portfolio Management (PPM) framework will ensure alignment of projects with business objectives.

Assembling a Portfolio Management Framework

Following is a series of steps to establish a robust framework:

1. Identify Key Business problems: Identify key business problems and diagnose these problems with respect to primary factors such as the enterprise, business processes, geographies involved, users, applications, and IT Infrastructure.
2. Portfolio rationalization: A business audit can help determine who is using various applications, usage frequency, and applications status.
3. Application assessment: Assess applications in terms of their business alignment, and then analyze the applications from a technical and functional perspective.
4. ROI analysis: The key to successful ROI projection is ensuring accuracy of information captured on benefits, costs and risks during the first two steps.
5. Project rationalization roadmap: The rationalization roadmap will list the projects that must be executed to rationalize and modernize the application portfolio.
6. Implement rationalization roadmap: In this step, organizations must decide how they want to implement the rationalization roadmap. Depending on the number of projects, organizations can decide on teaming up with off-shore/near-shore vendors to ensure faster implementation.

Governance Framework
An optimized application and project portfolio will ensure that IT is synchronized with business, but alignment isn’t automatic forever. To ensure that initial gains aren’t frittered away, organizations must pursue continuous alignment with business.

An effective IT governance is a continuous process that:
• Ensures the application and project portfolio remain in strategic alignment
• Provides dashboard-driven application portfolio and project monitoring
• Specifies decision-making authorities and makes them accountable.

The framework will consist of policies, organization structures, roles and responsibilities, and business metrics clearly defined and agreed upon. Depending on the need, the framework should be supported by a good ITG tool. The ITG framework will help govern and manage both the application portfolio and project portfolio. It will help in decision-making while selecting or rejecting projects.

The necessity of monitoring the portfolio is well understood. The questions are: How to monitor? What to monitor? What sort of dashboards are needed so all decisions are well-informed ones?

The Proper Framework

Without the proper framework in place organizations are left with the Sisyphean task of endlessly adapting hardware and software to an ever-changing business environment. This is a tremendous financial drain and puts applications in peril of failing Service-Level Agreements (SLAs) and minimizing staff productivity. The inherent complexities of today’s global businesses necessitate use of common frameworks that will keep systems in check, while still allowing the desired agility to succeed in an unpredictable market.

Figure 3: A Perfect Loop
 

The combination of application portfolio management, project portfolio management, and an ITG framework will ensure continuous improvement in performance and sustain the application portfolio at optimal levels. This will directly impact the organization’s ability to adapt more quickly to business changes, execute new initiatives, adopt new technologies, and efficiently manage changes and resources.

Comments

[lokesh SEO Analyst]

your thought point out beautifully on "IT Portfolio Management"
thanks its memorable post....

[atul]

Good Information