1

Why is Enterprise Portfolio Management Important?

• The Commonwealth must find ways to meet increasing demands through cost savings and increased productivity.

• Investment management can contribute to lower operating costs and the generation of internal capital.

• Portfolio management provides the ability to analyze on-going operational investments to re-evaluate viability and contribution to strategic direction.

• Cheaper alternatives may be found and redundant investments can be retired.

2

How are Business Cases Evaluated?

• The Investment Business Case, as required for project planning and development approval, provides information necessary to evaluate a potential IT investment’s value and risk.

• In the Commonwealth, Investment Business Cases are evaluated for:

Strategic Alignment

Technical Feasibility

Benefits to the Commonwealth

Risk

Funding Requirements

Agency Past Performance

3

A Balanced Scorecard Approach• In order to determine

a potential investment’s overall value, a number of perspectives are analyzed.

• The balanced scorecard determines whether an effective business case has been made to go forward with development.

4

Financial Perspective - Cost-Benefit Analysis• The Cost-Benefit analysis

assists agencies in thinking through how solution options might avoid costs in the future or generate cost savings

• Internally generated revenue is key in increasing return on investment

• A mechanism to measure productivity gains should be explored in the future (not currently in place today)

5

Commonwealth Return on Investment (ROI)• ROI for the Active project portfolio (by Secretariat and by Project Category) is measured quarterly

Discussion Points

• Why do smaller projects tend to have larger ROI and better chance at success?

• How can Agencies/Secretariats balance their individuals portfolios between high ROI projects and projects necessary due to mandates or other business requirements?

Major Project Portfolio ROI

Nov-07

Jan-08

Apr-08

Jul-08-4.00%

-3.00%

-2.00%

-1.00%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

Quarters

RO

I P

erc

en

tag

e

Non-Major Project Portfolio ROI

Nov-07Jan-08 Apr-08

Jul-08

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

Quarters

RO

I Per

cen

tag

e