IT Project Portfolio Management TEAM LinG - Live, Informative, Non-cost and Genuine ! For a complete listing of the Artech House Effective Project Management Series, turn to the back of this book TEAM LinG - Live, Informative, Non-cost and Genuine ! IT Project Portfolio Management Stephen S Bonham artechhouse.com TEAM LinG - Live, Informative, Non-cost and Genuine ! Library of Congress Cataloging-in-Publication Data Bonham, Stephen S IT project portfolio management / Stephen S Bonham p cm.—(Artech House effective project management series) Includes bibliographical references and index ISBN 1-58053-781-2 (alk paper) Information technology—Management Project management I Title II Series T58.64.B65 2004 004’.068’4—dc22 British Library Cataloguing in Publication Data Bonham, Stephen S IT project portfolio management.—(Effective project management series) Information technology—Management Project management—data processing Strategic planning I Title 658.4’04 ISBN 1-58053-781-2 Cover design byYekaterina Ratner © 2005 ARTECH HOUSE, INC 685 Canton Street Norwood, MA 02062 All rights reserved Printed and bound in the United States of America No part of this book may be reproduced or utilized in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without permission in writing from the publisher All terms mentioned in this book that are known to be trademarks or service marks have been appropriately capitalized Artech House cannot attest to the accuracy of this information Use of a term in this book should not be regarded as affecting the validity of any trademark or service mark International Standard Book Number: 1-58053-781-2 Library of Congress Catalog Card Number: 2004046248 10 TEAM LinG - Live, Informative, Non-cost and Genuine ! To my Dad, Charlie, and to my dear wife, Olivia TEAM LinG - Live, Informative, Non-cost and Genuine ! TEAM LinG - Live, Informative, Non-cost and Genuine ! Contents Preface xiii Acknowledgments xix Introduction to IT PPM 1.1 MPT 1.1.1 Financial Investments 1.1.2 Project Investments 1.2 IT Project Management 1.2.1 Variable Schedule 10 1.2.2 Variable Cost/Budget 12 1.2.3 Variable Functionality/Scope/Quality 12 1.2.4 Risk 13 1.3 Portfolio Selection 16 1.3.1 Maximization 16 1.3.2 Strategic Alignment 17 vii TEAM LinG - Live, Informative, Non-cost and Genuine ! viii IT Project Portfolio Management 1.3.3 Balance 1.3.4 Resource Allocation 1.4 The IT PMO 1.4.1 PMO Rollout References 19 20 21 27 29 Appendix 1A: IT PPM in Action—Government Regulations 1A.1 Basel II 1A.2 Clinger-Cohen Act 1A.3 Sarbanes-Oxley Act 33 33 34 34 Strategic Alignment 37 2.1 Corporate Strategy 2.1.1 Problems 2.1.2 Solutions 2.2 IT Projects 2.2.1 Changing Directions 2.2.2 Vector Analysis 2.2.3 Project A—Growth 2.2.4 Project B—Productivity 2.2.5 Lessons 2.3 Strategic Frameworks 2.3.1 Alignment 2.3.2 Portfolio Selection and Tracking 37 40 41 42 42 43 45 47 48 49 49 51 2.4 Reengineering Cumulative Digression 53 2.5 Summary 55 References 55 Appendix 2A: Case Study—Royal Caribbean Cruises—Microstrategies 57 Portfolio Flexibility 59 3.1 Risk and Methodologies 3.2 Flexibility 3.3 Initiative Methodologies 3.3.1 Phase 1—Understand the Problem and Its Context 3.3.2 Phase 2—Risk/Option/Cost Analysis TEAM LinG - Live, Informative, Non-cost and Genuine ! 60 61 62 65 65 Contents 3.3.3 Phase 3—Presentation and Project Preparation 3.3.4 Phase 4—Metric Mapping 3.4 Project Methodologies 3.4.1 Pitfalls 3.4.2 Audit Points ix 73 75 76 78 79 3.5 Summary 83 References 85 Appendix 3A: Case Study—Artesia BC—Flexible Balanced Scorecard 87 The IT Portfolio Management Office 89 4.1 Defining IT PMO 4.1.1 Project Offices 4.1.2 IT PMO Requirements 4.1.3 Tailored PMOs 89 89 90 92 4.2 Virtual PMO 93 4.2.1 Committees 94 4.3 PMO Structure 96 4.3.1 Large, Project-Centric Companies 96 4.3.2 Smaller or Less Project-Centric Companies 102 4.4 Organizational Change 104 4.4.1 Impediments 104 4.4.2 Benefits 104 4.4.3 Governance 107 4.5 Summary 112 References 113 Appendix 4A: Case Studies—HCA and Harrah’s—Virtual IT PMOs 115 4A.1 Harrah’s 115 4A.2 HCA 115 Architecture Management 117 5.1 The EBA 5.1.1 Supply and Demand 5.1.2 Constraints and Enablers 5.1.3 Business System Modeling TEAM LinG - Live, Informative, Non-cost and Genuine ! 121 121 124 125 ... technology? ?Management Project management I Title II Series T58.64.B65 2004 004’.068’4—dc22 British Library Cataloguing in Publication Data Bonham, Stephen S IT project portfolio management. —(Effective project. .. of, its project portfolio and its executive committee This book begins with a chapter that defines IT PPM by first drawing links to modern financial portfolio theory and then expanding into IT project. .. implemented by a project portfolio management office (PMO) IT PMO An established IT PMO that is actively supported at the executive level can help solve problems with project auditing and initiative