Managing a multitude of IT projects is tricky.
You need to take care of many activities, assets, and resources for handling your projects and driving results. But when there is a lack of standardization, managing your IT portfolio might turn out to be even more complicated.
You should have a proper process in place to maintain frictionless progress of projects. IT portfolio management is one such process that empowers you to organize and manage your projects and initiatives, enabling you to gain sufficient data for strategic decision-making.
You can do so manually on spreadsheets for a handful of projects. But it’s advisable to use technology like IT service management software, portfolio management software, and more, when you are doing it on a larger scale.
What is IT portfolio management?
IT portfolio management is a systematic approach of planning and organizing projects, activities, initiatives, and investments in a company’s IT department, ensuring growth, cost reduction, and business continuity. It enables you to manage your resources and infrastructure and govern your IT investments objectively.
Earlier, these were taken care of in an informal way, but with IT portfolio management, you obtain a better and clearer picture of your financials allied with the IT department. Simply put, the process helps you in tracking and managing your IT budgets at a granular level.
Since its inception, IT portfolio management had a project-centric bias, but now it has evolved. It’s not just the usual operational tracking anymore;, it has expanded its scope to include steady-state project entries, application management, and more.
You have a top-down project planning approach in the process where the stakeholders take part in decision-making and share directives among the rest of the teams. Here, the unifying goal of IT portfolio management is to gain complete visibility over the business’ needs from the IT department and better forecast the demands that may arise in the foreseeable future.
What is the IT portfolio management process?
IT portfolio management is a step-by-step process covering all projects and application services, which are a part of overall operations.
Let’s dive deeper into understanding the complete process of IT portfolio management.
Create a strategy
First, you need to evaluate all projects and activities, including those outlined in the future. This includes creating inventories of all IT investments, identifying the project’s present stage in the lifecycle, evaluating them, and driving the business toward its strategic objectives and goals.
Check if the projects and future initiatives are aligned with the business’ goals, and if not, the most functional areas you should address to converge it in the direction of your company’s path. Next, create a business strategy to streamline the operational processes and better achieve those targets. It’s best to build an implementation team with members from the IT department to execute the strategy and the finance department to keep a closer look on the investments. Sometimes the implementation team may have members from the people’s team to manage resources better.
The implementation team will have a governing authority to oversee its operations. This authority can be an individual or a group of professionals from the company’s senior leadership to perform what-if analysis, adjusting key constraints and other parameters of the IT portfolio. They measure the impact of alternative investment options and decide the optimal allocation of investments into different categories.
Analyze your portfolio
While analyzing, evaluate the strengths and weaknesses of your projects objectively. This entails collecting data regarding your project’s milestones, reporting schedule, the potential return on investment (ROI), and resource allocation.
You should give a proper structure to the portfolio, which means establishing metrics to track progress, organizing, and classifying the weightage of activities and processes. Identify any duplication or if some existing projects might not provide substantial efficiency when executed parallelly.
Evaluating risks is a part of this step, where you should set standard criteria with threshold levels, and weigh the anticipated benefits of the IT project/activity against the financial and technical success of the overall portfolio. Establish a screening mechanism to assess the technical conditions, business value, and risk. It’s essential to assure IT’s success in enhancing business and mission performance. In the analysis stage, gaps in requirements, standards, stakeholder analysis, enterprise architecture view, and a comprehensive catalog of IT assets should be made available so that you can map IT investments to these areas quickly.
Ensuring straightforward communication and brainstorming is a pivotal part here; after all, you need to discuss all key variables thoroughly.
Ensure better alignment of your portfolio
Performing an alignment analysis will help you observe the critical projects and whether your critical resources are working on them. Carve out teams’ guidelines to ensure the projects align with the company’s strategic objectives.
Your guidelines should fundamentally include the degree of strategic fit between the portfolio and the company. You need to find a balance between short-term goals, long-term goals, and periodic innovations. Then, showcase the number and nature of the projects aligned to different strategic goals in such a way that they add economic value and deliver expected results. You should also place measures to evaluate associated risks, not only in financial portfolio but also the challenges that may arise in the schedule, resources, scope, or technology.
In the IT portfolio management process, IT investments are tracked and monitored. You have balanced scorecards, KPIs, service level agreements (SLA), and other metrics to measure IT investments’ health. But when these metrics defeat the threshold levels, it triggers changes in the IT portfolio. As the investments are re-evaluated here, the business case should be updated in alignment with the company’s objectives.
Manage your portfolio
In managing your IT portfolio, make essential investment decisions of reallocating budgets, resources, prioritization of projects, and more based on parameters and variables you discovered during the previous stages of the IT portfolio management process.
In this step, focus on risk management, resource management, and change management. During the complete process, collaboration is paramount to make strategic decisions and meet internal requirements.
There may be instances where you don’t get your IT project portfolio management process right on the first try. Test and adapt in real time as the needs of IT organizations are different. It’s best if you always take on feedback. Initially, start with a few stakeholders, take their suggestions, and adopt an agile methodology for managing information technology portfolios. IT project portfolio management can be a bit complex initially, but once you scale your expertise on it, you will be able to guide your IT department better.
The value is demonstrated by assessing execution, evaluating program execution, and measuring the IT portfolio’s actual performance.