A Portfolio Approach to Managing IT Projects

04/10/2023 STRATEGIC MANAGEMENT OF INFORMATION TECHNOLOGY

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A Portfolio Approach to Managing IT Projects

Presented By:Arvind Kumar

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IT Project Management – Cascading effect of failure

• A major chemical company halts its SAP installation and takes a major write-off(millions of dollars loosed)

• A major credit card company underestimates processing requirements and moved its online credit processing to a new service provider and found when system ‘goes live’ it crashes-> 1.5 million accounts lost -> CIO and whole team FIRED

• 2 similar companies with similar problems and requirements implemented same IT solution, one gained millions of dollar other looses

Major IT projects FAILED because1. Failure to assess(or acknowledge) the implementation risk of a project at the

time it is funded2. Failure to consider the aggregate implementation risk of a portfolio of projects3. Failure to recognize that different projects require different managerial

approaches

STRATEGIC MANAGEMENT OF INFORMATION TECHNOLOGY


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Portfolio

• Selecting and prioritizing projects– Which projects have the greatest impact?

• Organization’s strategy• Internal processes

– Which projects have the greatest risk?– Which projects have the greatest payoff?

• In terms of dollars, tangible and intangible benefits

– Which projects are required?– What is the value of information?


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Corporate Initiatives

• Corporate infrastructure• IT infrastructure

Portfolio

Organization Strategic Plan

IT Strategic Plan

Portfolio Project Implementation

• Long-term projects• “Low-hanging fruit”


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Project Risk

• Serious deficiencies in IT management Failure to assess the implementation risk of a project at

the time it is funded Failure to consider the aggregate implementation risk of

the portfolio of projects Failure to recognize that different projects require different

managerial approaches

Risk

Payoff

The greater the risk, the greater the payoff (benefit)

Potential

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Project Implementation Dip

Most projects don’t go smoothly all the way

New system going live common point

Expectations not always realistic

Short term downward shift may be necessary

All happens in middle of business cycle and worker turnover

Need to focus on end goal to get through value of change when people are complaining

Ideally see it before it comes and get people ready

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Expectations vs. reality


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Project Dimension and Risk

Project size • The larger the

project (budget, staffing levels, duration, number of departments affected), the larger the risk

Experience with technology • Unfamiliarity with

the technology (hardware, software, etc.) increases risk

Requirements volatility • Stable requirements

reduce the risk; “evolving” projects pose greater risks


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Effect of Increasing Risk Components

Project Risk

Number of Risk Factors

Moderate Risk

High Risk

Very High Risk

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Project sizeExperience with technologyRequirements volatility

Risk


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Implementation Risk Categories

Low Technology

High Technology

High Requirements Volatility

Low Requirements Volatility

Spreadsheet support for budgeting (low tech application, requirements unknown)

Online graphic support for advertising copy (high tech application, requirements unknown)

Year 2000 compliance (low tech application, requirements known)

AI-driven bond trading (high tech application, requirements known)


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Low

High

High Low

Tech

nolo

gy

Requirements Volatility

Size

Small

Large

Year 2000 compliance (low tech application, requirements known)

AI-driven bond trading (high tech application, requirements known)

Spreadsheet support for budgeting (low tech application, requirements unknown)

Online graphic support for advertising copy (high tech application, requirements unknown)


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Dimensions Influencing Risk

• Project size • Experience with technology • Requirements volatility (structured vs. unstructured)

Project size

Requirements VolatilityStructured Unstructured

LargeSmall

Experience

High

Low

Large, unstructured project with new

technology

Small structured project with new technology

Large, structured project with known technology

“Low hanging fruit”


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• Project size • Experience with technology • Requirement volatility (structured vs. unstructured)

Project size


LargeSmall

Experience

High

Low

Low risk (unstructured, high experience, small project)

Medium risk (structured, low experience, large project)


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• Project size • Experience with technology • Requirement volatility (structured vs. unstructured)

Project size


LargeSmall

Experience

High

Low

High risk (unstructured, low experience, small project)

Very High risk (unstructured, low experience, large project)

e-busin

ess p

rojec

ts


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Risk Assessment Based on the Strategic Grid

High

Low

HighLow

Impact of Existing IT

applications

Impact of Future IT applications

FactoryOperational IT

SupportBasic elements

TurnaroundGradual adoption

StrategicStrategic IT plan,

initiatives


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Risk PortfolioPr

ojec

t Ris

k

Very high

High

Medium

Low

New core value

New benefits

Improved benefits Variation

Breakthrough systems

New platforms

Derivative systems

Portfolio composed of different projects

Portfolio to mitigate risk

Low-hanging fruit

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Project Management: A Contingency Approach

“There is no single correct approach to all projects”

• Management tools External integration – Link project team

to system users(steering committee, prototyping, reporting etc.) Internal integration – Ensure project team

operates as an integrated unit(team selection, review meetings etc.)

Formal planning – Structure sequence of tasks, estimate time, money and resources(PM s/w, system specifications and estimation processes, post project auditing etc.)

Formal result controls – Evaluate progress and flag potential problems(Status vs. Plan report, milestone review meetings, analysis of deviation from plan)

Use depend

s on the

project

Integration tools assists with COMMUNICATIONS necessary to develop common understanding of project objectives, characteristics and potential outcomes…to make sure

everyone is on ‘SAME PAGE’


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Low Technology

High Technology

High Requirements Volatility

Low Requirements Volatility

Projects easy to manage• External integration necessary • Internal integration less

necessary• Formal planning tools,

traditional• Results controls necessary

Low-risk profiles• External integration critical• Internal integration necessary• Formal planning tools,

traditional• Results controls necessary

Extremely difficult and should not be taken lightly

• External integration critical• Internal integration necessary• Formal planning tools, less

predictive value (due to uncertainties)

• Results controls necessary

Projects not easy to manage• External integration not crucial • Internal integration crucial• Formal planning tools, less

predictive value• Results controls limited,

personnel monitoring important

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Project Management

Relative Contribution of Management Tools• Depends on specific

project• Results-oriented

tools work in structured/formal environment

• Depends on corporate culture

Emergence of Adaptive Project Management Methods• Approaches to

design, deployment, implementation & investment that assume a need to gather info & learn as one goes.

• Not effective universal methods yet

Software Development Life Cycles


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SDLC(Software Development Life Cycle)

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Project Management (cont’d)

Adaptive Methodologies• Quickly build rough preliminary

version• Iterate through stages rather than

finish every stage• Fast cycle through stages• Aim to deliver limited functionality

fast• Require skilled staff

Adaptive Methods and change management• Intensely involve users in evaluating

outcomes• Strictly control migration of system

features from development, testing to production

• Separating stages avoids major problems

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Process Consistency and Agility in Project Management

Balancing tension between process consistency and process agility• Understand interrelationships between projects

Tools useful one place shouldn’t necessarily be applied to everything• Keeping track of all tasks in project

Success in balance often includes minimal formalization• Getting info on status of rest of project

Flow

Completeness

Visibility


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Other Aspects of IT Project Management

Develop and compare feasibility, complexity, scalability and cost of possible solutions• Contingency plans

Project portfolio – investing in the right projects

Aligning projects and initiatives to strategic objectives

Risk management – risk considerations, factors and plans

Managing multiple vendors and workflow

Regulatory and compliance issues

Leveling resources over projects – human, financial, technical


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Other Aspects of IT Project Management

Project planning, execution and scheduling

• Prioritizing, defining performance measures, tracking processes to ensure performance, schedule resources, project monitoring, change and service controls, quality assurance and testing, identify key drivers

Project leadership – Assessing change and change management, communication and organizational skills

Adoption issues

Identify and understanding stakeholders


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Good IT Project Management

Deliver on time

Come in or under budget

Meet the original objectives

Establish ground rules

Foster discipline, planning, documentation and management

Obtain and document the “final” user requirements

Obtain tenders from all appropriate potential vendors

Include suppliers in decision making

Convert existing data

Follow through after implementation

Successful project characteristics


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THANK YOU

A Portfolio Approach to Managing IT Projects

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