1. © Clear Lead 2007 Best Practice in Portfolio Management and Corporate Governance David Leaney BEng, MSc, MBA, FAIM, CMC Clear Lead

2. © Clear Lead 2007 Light bulbs, torches and lasers Coherence? Focus?

3. © Clear Lead 2007 Presentation overview 1.Why talk about portfolio management and corporate governance? 2.Portfolio, program and project management: 2.1. Portfolio management concepts 2.2. Select, deliver and assess 2.3. Corporate governance and insights 3.How to use this information 4.Next steps 5.Questions?

4. © Clear Lead 2007 1.1. Context and background With multiple projects, who gets priority for time/resources/money? Are all of your projects heading in the same direction? How do you know? Is it the right direction? What happens when not everyone is aligned to the corporate direction?

5. © Clear Lead 2007 1.1.1. Same aims/direction?

6. © Clear Lead 2007 1.2. How good could/should it be Improved portfolio management means: Planned and coordinated approach to managing multiple projects Consistency in selection, delivery and assessment Prioritisation, balance, and predictability Satisfied customers and stakeholders Less waste and fewer arguments Improved efficiency and effectiveness – better bang for your buck

7. © Clear Lead 2007 1.3. Highlight potential issues There will some technical jargon – but I’ll try to keep it to a minimum There will be some discussion about tools, but technology is not the only answer Not all of this will apply to every organisation (public vs. private sector) You may have already considered many of these issues Cynicism is OK

8. © Clear Lead 2007 1.4. Presentation approach I’ll try to keep this relevant and as non-technical as I can (and finish in time for plenty of discussion in the workshop) Questions welcome, particularly at the end Illustrate with examples and case studies At least some of this applies to: –All government or not-for-profit organisations –All private sector firms –All stages of portfolio management maturity and complexity If you take away even only a few key concepts, then our time will be well spent Example

9. © Clear Lead 2007 2. Portfolio/program/project mgmt 2.1. Portfolio management concepts 2.2. Select, deliver and assess 2.2.1. Selection phase 2.2.2. Delivery management/governance 2.2.3. Assessment 2.3. Clear Lead’s insights

10. © Clear Lead 2007 2.1. Portfolio management concepts Working Definition: Portfolio management = a logical grouping of initiatives/investments to be compared and contrasted for selection and monitoring purposes. Examples of logical groupings include: by time period, by organisational unit, by strategy/goal type, by approval status. Portfolio management has a twofold use: (1) project selection (2) performance monitoring

11. © Clear Lead 2007 2.1.1. Aligning IT with business goals Strategy Objective Strategy Objective Strategy Objective Strategy Objective Goal Vision Business Strategy Goal Mission Task Program Project Management Activity Project Task Project IT Governance – Ensuring Benefits are Realised Project

12. © Clear Lead 2007 2.1.2. Typical pain points Deciding which projects to fund – he who shouts loudest? Whim of director/CEO? Demonstrating ROI Alignment of technology and strategy Coping with rate of business change IT credibility is low (poor track record) Increased financial pressures Wasted resources Changing goalposts Regulatory compliance challenges Case Study

13. © Clear Lead 2007 2.1.3. Common business needs Optimise project value to organisation and alignment with corporate strategy True project cost visibility and management Tie project spend directly to business benefit Portfolio disposition analysis (i.e. decision support for which projects to keep or stop) Manage resource allocation and utilisation Optimise allocation to high value projects Compliance requirements (e.g. SOX)

14. © Clear Lead 2007 2.2. Select, deliver and assess Evaluation and Benchmarking for Continuous Improvement Best Practice Execution for Results Achievement Portfolio Planning for Business Alignment

15. © Clear Lead 2007 2.2.1. Selection phase Define the portfolios –Inventory the opportunities Establish investment criteria –e.g. Risk, cost, benefit, and alignment Make hard decisions –“What if?” scenario planning –Visualise tradeoffs –Select optimal investments Connect plans to delivery –Ensure plan viability –Obtain stakeholder buy-in

16. © Clear Lead 2007 2.2.1. One initiative selection model Desirability: Value Assessment (Is it the right thing to do?) Qualitative value Measures (Soft/Indirect/Intangible) Initiative Go/No-Go (Should we do it?) Feasibility: ability to execute (can we do it?) Risk Profile (inc. Change Readiness) Resource Capacity/Skills Fit / Dependencies with other initiatives Financial (e.g. ROI) Non-Financial (e.g. fewer customer complaints) Quantitative value Measures (Hard/Direct/Tangible) Internal Risks/Hurdles External Risks/Hurdles

17. © Clear Lead 2007 2.2.1. Considering four variables

18. © Clear Lead 2007 2.2.2. Delivery management/governance Process ManagementPortfolio Management Project Management Resource PlanningDemand Management e.g. Request 15: New budget report e.g. Request 23: Application modification e.g. Request 21: Security fix Source: Clarity (CA) StrategicOperational Alignment

19. © Clear Lead 2007 2.2.3. Assessment Measure performance –Score investment results –Determine true costs/benefits Reporting Decision Support Benchmark –Compare to industry leaders Continuously improve –Institute feedback loops –Allocate costs, automate charge backs

20. © Clear Lead 2007 2.3. Clear Lead’s insights Make the hard go/no-go decisions as early as possible (i.e. use preliminary assessments and phase gates) Ranking and drawing a funding line is overly simplistic Need to use a combination of text, numerical and graphical tools to view all information Need to consider integration of process and information Choose fewer projects and spread them evenly on various criteria Client Example

21. © Clear Lead 2007 2.3.1. Balanced spread Avoided hard decisions early Everyone is important Resource clashes No balance or phasing Doomed to failure Balance portfolio of initiatives Proper prioritisation Resource smoothing Phased realisation of benefits 

22. © Clear Lead 2007 2.3.2. Corporate Governance Business plan and IT strategy Structure, decision-making rules, compliance with process Roles and responsibilities Standardised tools and processes Steering committee/project board Program Management Office (PMO) –Program management of multiple projects –Properly resourced and empowered Lesson Learned

23. © Clear Lead 2007 2.3.3. Some final insights You need core project management fundamentals Expectation management, change management, and communications Corporate knowledge capture Education and training Great juggling skills Methodologies, processes and tools all help, but … It all comes down to people Example

24. © Clear Lead 2007 3. How to use this information Guide your strategic planning: –Business strategic plan –Information and Communication Technology (ICT) strategic plan Influence your operational projects: –Business cases, project management –Review and Quality Assurance Discuss with your colleagues and stakeholders: –Circulate within your organisation –Discuss with external stakeholders

25. © Clear Lead 2007 4. Summary Portfolio management and corporate governance: –Select, deliver and assess –Make the hard decisions early –Choose fewer projects and balance them –Use some tools to view & manage information –Get some expert advice Can be rewarding if you manage it well Can be costly, difficult and embarrassing if you don’t

26. © Clear Lead 2007 4.1. Next steps Draw what practical advice you like from this presentation Ask around your own organisation and review portfolio management and corporate governance practices and maturity Invest appropriately in strategy, people, process, and technology Source the resources you need

27. © Clear Lead 2007 5. Questions? David Leaney Clear Lead Pty Ltd dleaney@clearlead.com.au  0402 411 888 www.clearlead.com.au  1300 CLEAR1