How Does Iowa get to Value Based Portfolio Management? Iowa Technology Governance Board May 10, 2007 Mark A. Peterson – Managing Partner Coeur Group – St. Louis

© 2007 Coeur Business Group, St. Louis MO – USA :: CoeurGroup.com :: All materials are confidential and proprietary. Iowa TGB May, 2007 Plan > Invest > Govern 2 Managing Partner – Mark Peterson Experienced Executive (SVP, CIO, CEO) Methodology Developer Organizational Agility Business Value Alignment Enterprise Portfolio Management Innovation and Commercialization Organizational Expertise Technology Background (US Navy, Honeywell, Digital Equipment Corporation, QORE Business Solutions, Sentry Technology, META Group, EVP Partners) Innovator in Cost Reductions and Value Mgt. Experienced Practitioner, Local, State, Federal Author – 3 Dimensional Portfolio Management (J. Ross Publishing, Fall 2007)

© 2007 Coeur Business Group, St. Louis MO – USA :: CoeurGroup.com :: All materials are confidential and proprietary. Iowa TGB May, 2007 Plan > Invest > Govern 3 Technology Governance Board – Portfolio Futures  Building The States Asset Value  Portfolio Management (>Plan > Invest >Govern For Value And Alignment)  Constructing Portfolios  Realizing Maximum Value Accretion

© 2007 Coeur Business Group, St. Louis MO – USA :: CoeurGroup.com :: All materials are confidential and proprietary. Iowa TGB May, 2007 Plan > Invest > Govern 4 TGB Key Questions to Ask The Objectives Of Portfolio Management Are To Address These Questions. l Are we selecting the right projects in order to best maximize business value? l Are we deploying our resources appropriately? l Are we developing the capacity to understand, and learn from, our project failures? l What are we doing to increase the probability of achieving expected benefits from our projects? l Do we have a framework for institutionalizing program and project management best practices?

© 2007 Coeur Business Group, St. Louis MO – USA :: CoeurGroup.com :: All materials are confidential and proprietary. Iowa TGB May, 2007 Plan > Invest > Govern 5 What is TGB’s Real Role – Increasing Asset Value What is the Agenda? Invest for Modernization, Efficiency and Effectiveness of the State’s Business Oversee Increasing the States Technology Asset Value Select High Value Investments Build Portfolios for Value Accretion Management Oversee Investment Portfolio Performance TGB Mission: “Facilitate information technology decisions within the executive branch of Iowa State Government, basing these decisions on business drivers supporting customer requirements.”

© 2007 Coeur Business Group, St. Louis MO – USA :: CoeurGroup.com :: All materials are confidential and proprietary. Iowa TGB May, 2007 Plan > Invest > Govern 6 Enterprise Architecture Government Regulations Business Information Requirements Business Drivers Common Executive Vision Technology Architecture Application Portfolio Infrastructure Environmental Trends Vendors/Suppliers and Partners Business Architecture Governance External Forces Program Management Staff and Organization Operational Excellence Capabilities IT Resource Management Customer ’ IT Governance and Investment Performance TGB Vantage Point for Portfolio Management

© 2007 Coeur Business Group, St. Louis MO – USA :: CoeurGroup.com :: All materials are confidential and proprietary. Iowa TGB May, 2007 Plan > Invest > Govern 7 Two Interacting Portfolios Must Be Managed For Value Principal Process Focus: Generation of Business Value Projects change the IT Assets Portfolio Project attributes:  Add asset  Modify asset  Delete asset Projects Portfolio  Business Data  Business Applications  Technical Infrastructure  Staff  Knowledge  Governing Infrastructure Assets Portfolio Both Applications And Projects Must Be Managed Simultaneously For Maximum Value Accretion and Business Alignment

© 2007 Coeur Business Group, St. Louis MO – USA :: CoeurGroup.com :: All materials are confidential and proprietary. Iowa TGB May, 2007 Plan > Invest > Govern 8 Portfolio Categorization Based on Business Stage Needs High risk, hopefully high rewardTransform The Business NPV – Net Present Value Identify and size projects critical to established strategyGrow The Business ROI – Return on Investment Run The Business Business Continuity Cost Control Assets Applic’s Projects Assets Applic’s Projects Assets Applic’s Projects

© 2007 Coeur Business Group, St. Louis MO – USA :: CoeurGroup.com :: All materials are confidential and proprietary. Iowa TGB May, 2007 Plan > Invest > Govern 9 Financial Views and Value Categorization Nondiscretionary Costs Risk Discretionary Projects Risks Value/Timing Venture Growth DiscretionaryEnhancements Non-Discretionary Core RTB TTB GTB Developing the Financial Views of The Portfolios is Essential for Gaining Value and Aligning to the Departmental Business Needs. Results: 10% to 35% Increase in Project Returns 10% to 20% Cost Avoidance 5% to 15% Improvement in Resource Utilization What business stage?  Run The Business  Grow The Business  Transform The Business IT Investment Portfolios 10% To 25% Cost Reductions Overall Are Fairly Normal For First Pass Portfolio Management Implementations Source: Gartner Group

© 2007 Coeur Business Group, St. Louis MO – USA :: CoeurGroup.com :: All materials are confidential and proprietary. Iowa TGB May, 2007 Plan > Invest > Govern 10 Building the 3 Dimensional Portfolios  Everything maps back through the business requirements RTB, GTB, TTB  Start with business information and process requirements Business units and processes Technology Alignment Focus  Categorize current IT portfolios Asset and Projects Business stage (RTB, GTB, TTB) Identify cost, risks, returns, and timelines  Determine what changes should be made Evaluate business information requirements pain points and opportunities The IT Portfolio Is Driven By The Business Requirements And Prioritized By The Investment Model (RTB, GTB, TTB) Portfolio Mgt. Dimensions

© 2007 Coeur Business Group, St. Louis MO – USA :: CoeurGroup.com :: All materials are confidential and proprietary. Iowa TGB May, 2007 Plan > Invest > Govern 11 An Iterative and Maturing Process – (Example Applications Portfolio)  Adhoc: No Portfolio Inventory or Management Process  Foundational: Application/Project Inventory Performed  Evaluation: Optimization and Rationalization  Management: Application Portfolio Transformation Process  Maturity: Application Portfolio Management is Implemented Enterprise Wide Source: UMT Consulting - Application Portfolio Maturity

Coeur Group’s P f M Process High Level ViewPortfolioPlan CategorizeBusiness Stage Needs CreateAsset/ProjectPortfolios AssessPortfolios ConsolidateEliminateReinvest MeasureValue Gov. & Gov. &Org. DevelopFinancialViews

© 2007 Coeur Business Group, St. Louis MO – USA :: CoeurGroup.com :: All materials are confidential and proprietary. Iowa TGB May, 2007 Plan > Invest > Govern 13 Where do we need to be? Are We Changing Our Investment DNA? Developing Application and Project Portfolios as the Starting Point: 1. Offering agencies the opportunity for individual agency ratings (providing agency focus) 2. Offering state government focus (providing direction to meeting various Culver administration goals) IT Portfolio Management is the methodology and associated processes that provide highly leveraged selection, prioritization, implementation and measurement of Business/Technology investments.

© 2007 Coeur Business Group, St. Louis MO – USA :: CoeurGroup.com :: All materials are confidential and proprietary. Iowa TGB May, 2007 Plan > Invest > Govern 14 Maximizing Value Accretion with Portfolio Management  What’s the Problem? Uncoordinated Value Management Project, Application and Asset, replacement cost and business values are unknown Governance and measurement processes are rudimentary and manual  What’s the Solution? 1.Online Inventory Projects and Applications 2.Select Groups for Portfolios based on Business Stage Needs 3.Integrate Portfolio Management Automation 4.Development of Project and Application Portfolios 5.Develop Financial Views – (Core, Non-Discretionary, Discretionary, Growth and Venture Investment Portfolios) 6.Prioritize and Cull Investments – a continuous process 7.Governance must include Measurements, Dashboards and Scorecards

© 2007 Coeur Business Group, St. Louis MO – USA :: CoeurGroup.com :: All materials are confidential and proprietary. Iowa TGB May, 2007 Plan > Invest > Govern 15 Coeur Group - Recommended Steps 1.Analysis Of Iowa’s Current Portfolio Management Methods, Processes And Tool 2.Identify Critical Business Needs And Required Processes 3.Identify and Inventory Applications and Projects Project Portfolio Status Success = Simplicity and Limited Scope Coeur Point: Develop one or two Portfolio’s, then develop processes and define business value with Key Performance Indicators (KPI’s)  Identify Available Tools In The Market For “Portfolio Management” And “Investment Performance” Tracking  Select Vendor And Portfolio Management Application(s) That Meet Iowa’s Requirements  Develop Baseline Dashboard & Measures

© 2007 Coeur Business Group, St. Louis MO – USA :: CoeurGroup.com :: All materials are confidential and proprietary. Iowa TGB May, 2007 Plan > Invest > Govern 16 Questions