How Do You Measure Your IT Portfolio?

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Guest Post by Rafael Burde, Niket Desai & Drew Gilliam

We would like to share our recent experiences in designing and building a dashboard focused on the $600M discretionary portion of our client’s IT budget.  The company recently merged two IT groups with similar measurement and tracking functions into one they called “Portfolio and Program Management.”  Unfortunately, this combination created a pile of quality and consistency issues that produced data that wasn’t trustworthy. Furthermore, calls for “good data” resulted in a regular fire drill for the PPM organization to gather, analyze, and report credible, but hand-crafted summaries. The CIO finally blew the whistle on the fire drills and asked us to help sort out the data and organize standard, repeatable reports and an overall portfolio dashboard.

5 Types of Portfolio Dashboard Metrics

Our solution was based on a standard set of qualitative enterprise metrics for evaluating the portfolio. We structured the metrics across 5 categories:

Category Key Question Sample Metrics
Portfolio Mix

Is our funding aligned to strategic objectives?

% portfolio spend in “run the business,” “grow the business,” and “innovate the business” [could use other portfolio models, like the one from MIT CISR]; % of Portfolio in Short/Medium/Long-term Projects; % of Portfolio in Large and Extra Large Projects

Demand & Capacity

Do we have the right prioritization and sequencing of projects given capacity?

% growth in project intake, % growth in initiatives, IT resource utilization, business resource utilization, recruiting pipeline

Value

For our portfolio, to what extent did we achieve our objectives?

% on time, % on budget, Portfolio and Sub-portfolio IRR, # function points delivered vs plan, $ saved for consolidation efforts

Portfolio Health

For projects in-flight, how is our execution progressing?

counts and amounts for projects in Red/Amber/Green status; #issues by severity: opened, closed, on-hold

Financial Management

How effectively are we managing project budgets and what are financial trends?

% variance to plan, % funding in-flight; $ committed but not spent; earned value

Portfolio Measurement Lessons

  1. Introduce new metrics only when necessary and leverage existing information - Reporting maturity differs across organization, first leverage what exists and is understood
  2. Focus on quality versus quantity of metrics - keep it simple
  3. Prototype early and often - Early visualization of the data helps to present information in the optimal format, uncover data gaps sooner and accelerate buy-in
  4. Data credibility is key to adoption success - Given data comes from various sources, it is essential to validate and verify all outputs
  5. Keep the visuals clear and messages crisp - Insights and key messages should be self explanatory and actionable

The portfolio dashboard and its analysis gave our client a new ability to prioritize their IT projects based on relative risks, benefits, resource requirements and dependencies using data that they believed! In addition to increasing transparency and accountability, working with the finance department helped improvement the methodology used (and buy-in from finance) to calculate IRR at both the portfolio and business unit levels. We also found that the fact-based nature of the dashboard eliminated a great deal of ‘politics’ from the portfolio review process and forced every business leader to equally and transparently stand behind their business areas.

Good luck with your portfolio dashboard efforts.  Please let us know what you think.

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  • Steve Romero, IT Governance Ev

    Hi Chris, great PPM dashboard.

    Here is the list of PPM metrics I share with folks. They are a combination of PMI PPM metrics and others I have picked up over the years. I use them as examples and urge Enterprises to choose the ones they understand and are able to map directly to the investment decisions they need to make.
    - Increase of revenue attributable to the Portfolio
    - Development of new markets and expansion of customer base as a result of the portfolio
    - Cost reductions attributable to the portfolio
    - Change in net present value (NPV) of the portfolio
    - Return on investment from the portfolio
    - Internal rate of return (IRR) of the portfolio
    - Degree to which the portfolio and business risks have been reduced by undertaking the portfolio components
    - Availability of resources needed to support the portfolio components, both as planned and in execution.
    - % of investment decisions influenced by PPM Committee
    - % of projects aligned with organizational goals
    - % of projects reviewed during execution by Executive Management
    - % of healthy Projects
    - % of projects delivered ahead of schedule
    - % of actual value versus expected value
    - % of projects that meet or exceed expected value
    - Executive satisfaction with PPM – survey based

    There are many similarities to the ones you list. I will be adding your approach to my PPM presentation because I really like how you lay out the categories and key questions to put the sample metrics into perspective. The context it provides makes them much easier to understand. I think the more alternatives we give folks the greater the chance they will find a method that works best for them.

    Keep those “real world” experiences coming. They’re invaluable.

    Steve Romero, IT Governance Evangelist
    http://community.ca.com/blogs/theitgovernanceevangelist/

  • Steve Romero, IT Governance Evangelist

    Hi Chris, great PPM dashboard.

    Here is the list of PPM metrics I share with folks. They are a combination of PMI PPM metrics and others I have picked up over the years. I use them as examples and urge Enterprises to choose the ones they understand and are able to map directly to the investment decisions they need to make.
    - Increase of revenue attributable to the Portfolio
    - Development of new markets and expansion of customer base as a result of the portfolio
    - Cost reductions attributable to the portfolio
    - Change in net present value (NPV) of the portfolio
    - Return on investment from the portfolio
    - Internal rate of return (IRR) of the portfolio
    - Degree to which the portfolio and business risks have been reduced by undertaking the portfolio components
    - Availability of resources needed to support the portfolio components, both as planned and in execution.
    - % of investment decisions influenced by PPM Committee
    - % of projects aligned with organizational goals
    - % of projects reviewed during execution by Executive Management
    - % of healthy Projects
    - % of projects delivered ahead of schedule
    - % of actual value versus expected value
    - % of projects that meet or exceed expected value
    - Executive satisfaction with PPM – survey based

    There are many similarities to the ones you list. I will be adding your approach to my PPM presentation because I really like how you lay out the categories and key questions to put the sample metrics into perspective. The context it provides makes them much easier to understand. I think the more alternatives we give folks the greater the chance they will find a method that works best for them.

    Keep those “real world” experiences coming. They’re invaluable.

    Steve Romero, IT Governance Evangelist
    http://community.ca.com/blogs/theitgovernanceevangelist/

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  • IMHO code quality is an important component of IT portfolio management. (I realize it’s a bit more “micro” than the overall dashboard issues.) In terms of the article, I would put it under “Portfolio Health”.

    An important aspect of measuring code quality is automation. As the author of a software engineering meta-tool that provides rule-driven automation of code analysis, re-engineering, and translation for a broad range of languages, I am keenly aware of the extent to which code quality measurement can be automated. Again IMHO, a key to this automation is flexibility, because no two enterprises will have exactly the same code quality measurement needs. So the automation must be provided by a (meta-)tool that can be configured by IT staff to provide precisely the measurements the enterprise needs, and in a format that can feed directly into the “Portfolio Health” part of the dashboard.

  • IMHO code quality is an important component of IT portfolio management. (I realize it’s a bit more “micro” than the overall dashboard issues.) In terms of the article, I would put it under “Portfolio Health”.

    An important aspect of measuring code quality is automation. As the author of a software engineering meta-tool that provides rule-driven automation of code analysis, re-engineering, and translation for a broad range of languages, I am keenly aware of the extent to which code quality measurement can be automated. Again IMHO, a key to this automation is flexibility, because no two enterprises will have exactly the same code quality measurement needs. So the automation must be provided by a (meta-)tool that can be configured by IT staff to provide precisely the measurements the enterprise needs, and in a format that can feed directly into the “Portfolio Health” part of the dashboard.

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  • Benita Gilliard

    Thank you Chris for posting this article. This has been helpful in answering the question “what should we measure”. It has been tough finding project performance metrics defined on the Internet; most sites reference vendor packages, versus providing a stratight forward list of possible metrics to use.

    Best regards,

    Benita Gilliard

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