Purpose:

Execute the strategic direction set for investments in line with the enterprise architecture vision and the desired characteristics of the investment and related services portfolios, and consider the different categories of investments and the resources and funding constraints. Evaluate, prioritize and balance programs and services, managing demand within resource and funding constraints, based on their alignment with strategic objectives, enterprise worth, and risk. Move selected programs into the active services portfolio for execution. Monitor the performance of the overall portfolio of services and programs, proposing adjustments as necessary in response to program and service performance or changing enterprise priorities.

Objective:

Optimize the performance of the overall portfolio of programs in response to program and service performance and changing enterprise priorities and demands.

Description:

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Inputs:

• Investment Types and Criteria
• Strategic Road Map
• Risk Assessment Initiatives
• Definition of Strategic Initiatives
• Prioritization and Ranking of IT Initiatives
• Definitions of Standard Services
• Service Definitions
• Evaluation of investment and services portfolios
• Evaluation of strategic alignment
• Investment types and criteria
• Architecture concept business case and value proposition
• Proof-of-concept scope and outline business case
• Budget allocations
• Budget communications
• IT budget and plan
• Identified gaps in IT services to the business
• SLAs
• Program benefit realization plan
• Program mandate and brief
• Program concept business case
• Evaluation of Investment and Services Portfolios
• Actions to improve value delivery
• Feedback on portfolio and program performance
• Evaluation of innovation benefits
• Stage-gate review results
• Communication of program retirement and ongoing accountability
• Updated Service Portfolio
• Program budget and benefits register
• Results of benefit realization monitoring

Outputs:

• Defined Investment Mix
• Identified Resources and Capabilities Required to Support Strategy
• Feedback on strategy and goals
• Funding Options
• Investment Return Expectations
• Program business case
• Business case assessments
• Selected programs with return on investment (ROI) milestones
• Investment portfolio performance reports
• Updated portfolios of programs, services and assets
• Benefit results and related communications
• Corrective actions to improve benefit realization

Controls:

Task Instructions:

Establish the Target Investment Mix

1. 1. Validate that IT-enabled investments and current IT services are aligned with enterprise vision, enterprise principles, strategic goals and objectives, enterprise architecture vision, and priorities.
   2. Obtain a common understanding between IT and other business functions on the potential opportunities for IT to drive and support the enterprise strategy.
   3. Create an investment mix that achieves the right balance amongst a number of dimensions, including an appropriate balance of short- and long-term returns, financial and non-financial benefits, and high- and low-risk investments.
   4. Identify the broad categories of information systems, applications, data, IT services, infrastructure, IT assets, resources, skills, practices, controls, and relationships needed to support the enterprise strategy.
   5. Agree on an IT strategy and goals, taking into account the inter-relationships between the enterprise strategy and the IT services, assets, and other resources. Identify and leverage synergies that can be achieved.

Determine the Availability and Source of funds

1. 1. Understand the current availability and commitment of funds, the currently approved spending, and the actual amount spent to date.
   2. Identify options for obtaining additional funds for IT-enabled investments internally and from external sources.
   3. Determine the implications of the funding source on investment return expectations.

Evaluate and Select Programs to fund

1. 1. Recognize investment opportunities and classify them in line with the investment portfolio categories. Specify expected enterprise outcome(s), all initiatives required to achieve the expected outcomes, costs, dependencies, and risk, and how all would be measured.
   2. Perform detailed assessments of all program business cases, evaluating strategic alignment, enterprise benefits, risk, and availability of resources.
   3. Assess the impact on the overall investment portfolio of adding candidate programs, including any changes that might be required for other programs.
   4. Decide which candidate programs should be moved to the active investment portfolio. Decide whether rejected programs should be held for future consideration or provided with some seed funding to determine whether the business case can be improved or discarded.
   5. Determine the required milestones for each selected program’s full economic life cycle. Allocate and reserve total program funding per milestone. Move the program into an active investment portfolio.
   6. Establish procedures to communicate the cost, benefit, and risk-related aspects of these portfolios to the budget prioritization, cost management, and benefit management processes.

Monitor, Optimism and Report on Investment Portfolio Performance

1. 1. Review the portfolio regularly to identify and exploit synergies, eliminate duplication between programs, and identify and mitigate risk.
   2. When changes occur, re-evaluate and reprioritize the portfolio to ensure that the portfolio is aligned with the business strategy, and the target mix of investments is maintained, so the portfolio is optimizing overall value. This may require programs to be changed, deferred or retired, and new programs to be initiated.
   3. Adjust the enterprise targets, forecasts, budgets, and, if required, the degree of monitoring to reflect the expenditures to be incurred and enterprise benefits to be realized by programs in the active investment portfolio. Incorporate program expenditures into chargeback mechanisms.
   4. Provide an accurate view of the performance of the investment portfolio to all stakeholders.
   5. Provide management reports for senior management’s review of the enterprise’s progress towards identified goals, stating what still needs to be spent and accomplished over what time frames.
   6. Include in the regular performance monitoring information on the extent to which planned objectives have been achieved, risk mitigated, capabilities created, deliverables obtained, and performance targets met.
   7. Identify deviations for: Budget control between actual and budget and Benefit management of Actual vs. targets for investments for solutions, possibly expressed in terms of ROI, NPV, or internal rate of return (IRR) and the actual trend of service portfolio cost for service delivery productivity improvement
   8. Develop metrics for measuring IT’s contribution to the enterprise, and establish appropriate performance targets reflecting the required IT and enterprise capability targets. Use the guidance from external experts and benchmark data to develop metrics.

Maintain Portfolios

1. 1. Create and maintain portfolios of IT-enabled investment programs, IT services, and IT assets, which form the basis for the current IT budget and support the IT tactical and strategic plans.
   2. Work with service delivery managers to maintain the service portfolios and with operations managers and architects to maintain the asset portfolios. Prioritize portfolios to support investment decisions.
   3. Remove the program from the active investment portfolio when the desired enterprise benefits have been achieved or when it is clear that benefits will not be achieved within the value criteria set for the program.

Manage Benefits Achievement

1. 1. Use the agreed-on metrics and track how benefits are achieved, how they evolve throughout the life cycle of programs and projects, how they are being delivered from IT services, and how they compare to internal and industry benchmarks. Communicate results to stakeholders.
   2. Implement corrective action when achieved benefits significantly deviate from expected benefits. Update the business case for new initiatives and implement business process and service improvements as required.
   3. Consider obtaining guidance from external experts, industry leaders, and comparative benchmarking data to test and improve the metrics and targets.