Speed to Valuein

Portfolio Management

Presentation Objectives

Creating an environment where IT becomes viewed as a strategy enabler and value driver for the organization

Ensuring investments are strategically aligned with both business strategy and the organization's resources to deliver successfully

Building an imperative for change that drives focus and adoption

Setting up a governance structure that clearly articulates strategic objectives, translates them to business drivers for project prioritization, and maintains focus to ensure benefits are realized by the organization

Attendees will learn about:

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Agenda

MSHA Background – Paul Merrywell CIO, MSHA

Challenges

Objectives

Results

Benefits

Gaining Alignment

The PPM Process

Portfolio Optimization Workshop

Resource Capacity Analysis

Technology Enablement (Microsoft Project Server 2010)

Looking Ahead

Value Proposition of PPM

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MSHA Background

Mountain States Health Alliance (MSHA) is a not-for-profit healthcare organization based in Johnson City, Tennessee

Operates a family of hospitals serving Northeast Tennessee, Southwest Virginia, Southeastern Kentucky, and Western North Carolina

Employ 9,000 staff; 1,300 Physicians; 2,700 Volunteers; 1000 Medical Students

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Challenges

Increased demand on IT Resources supporting business needs

Overlying pressure to do more with less

Lack of visibility into resource and financial needs

IT enabled projects not prioritized in alignment with strategy

Healthcare reform creates substantial need for IT investment

Operational needs balanced with new IT requirements

Overstretched IT resources compromised delivery

All of the above required changes in how IT operates to support the dynamic requirements of technology in

Health Care.

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Objectives

Improve resource demand and capacity planning

Improve the project intake process

Balance resources and investments based on strategy

Create a “level playing field” for differentiating projects based on strategic or financial return

Optimize investments for new capabilities once Safety, Regulatory, and Replacement “must do” projects are identified

Instill a disciplined governance process that supports prioritization based on value to the organization

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Results

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Cross-business oversight and control of IT Enabled portfolio:

Visibility of ALL IT enabled investments

Prioritization of ALL IT enabled investments Strategic value

Financial value

Business Risk

Optimal alignment of IT resources

Annual portfolio planning process

Ongoing intake and governance structure to guide ITGC engagement in monthly portfolio delivery oversight by ITGC Sub-committee

Transparent decisions based on facts within an established governance framework

Results

Cross Organizational Collaboration

Project ManagersPMs involved to drive development of the Business Cases and engage Business Owners

Business OwnersBusiness Owners made accountable for the articulating the business description and benefits in the Business Case

Subject Matter ExpertsSME’s are enthusiastically involved to validate Business Cases prior to ITGC review

Enterprise Perspective

Driving a broader perspective of investment value

Elevated focus on agreed strategic initiatives

Allowed us to determine high value work for MSHA

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Benefits to MSHA

Transitioned from a non-managed project portfolio to a managed project portfolio aligned with MSHA strategy (6 mos)

IT projects are now aligned with strategy with consideration of resource demand and capacity

Investment decisions are made considering the needs of all business requirements – not just IT enabled projects

Instilled a consistent business case process that enables the differentiation of proposed projects by their value to MSHA

Standardized criteria for determining the “right” projects

Improved delivery success by enabling a focus on the most valuable projects

“Speed to Value”Portfolio Management Delivered in 6 months

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Gaining Alignment

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The means to implement a framework for prioritizing, selecting, and governing the portfolio of IT enabled projects and programs.

This includes the development of a portfolio intake and governance framework based on best practices to ensure we achieve our strategy.

Continuous project intake

Lack of prioritization

Resource demand vs. capacity

Dependency awareness

Lack of benefits realization

Alignment with the organizational strategy

Continuing challenge to do more with less

What is It? “Why do we Need This?”

Gaining Alignment (con’t.)

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• Projects not aligned with strategy

• Managing too many of the wrong projects

• Unable to prioritize critical projects or kill the unnecessary ones

• No defined processes for reviewing ideas and business cases

• Senior executives driving personal agendas

• Attempting too many projects simultaneously

• No benefits realization process

• Lack of overall visibility of risks, issues, and conflicts

• Inability to proactively manage the portfolio

• Lack of dependency awareness

• Lack of visibility into project overlaps

Gaining Alignment (con’t.)

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Selecting and Prioritizing Capital InvestmentsMandated Improvements

Regulatory Compliance

Quality Safety

Sustaining the Business

Replacing systems – reducing risk to the business.

New CapabilitiesIntroducing new ways to

drive the business

Responding to a Safety eventMaintaining/Improving Quality Standards

Gaining Alignment (Con’t.)

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A small number of projects that are critical to the organization: High visibility Strong business case data High strategic value alignment

Major Investments with high implementation costs (new technology, facilities, etc.)

Many small & midsize projects: Less visible No consistent prioritization approach Value unknown Limited funding available for new/key

capability projects

Limited visibility and varied value measures of small &

midsize projects potentially diverts focus, capital & resources from areas of

highest value

Numerous Active projects and requests No understanding of financial value No understanding of alignment No feel for resource achievability

The PPM Process

Defined Process (ensure adoption)

Strategic Drivers and Rankings

Governance Structure

Project Categorization

Project Intake Analysis

Qualification Criteria & Impact Analysis

Portfolio Prioritization and Optimization

Prioritization Workshop

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Process Overview

Engaged the organization to achieve strategies.

Cross-business involvement.

Senior executive direction & executive leadership of portfolio delivery.

Corporate Constraints

Stakeholder Engagement & Communications

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Define “Right Level” of Process Rigor

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Burdensome process constrains responsiveness & leads to disengagement

The IS organization or IS PMO cannot own the process

With this in mind, the approach is designed to:• Position ITGC Sub Committee as the owner

and driver of portfolio intake and governance.

• Leverage appropriate forums for communications and stakeholder engagement.

Right Data Right People

Right Decisions

Strategic Business Drivers

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Collaboratively defined Strategic Business Drivers (Senior executive team).

Defined evaluation criteria and validation approach for each Business Driver (for use during strategic impact assessment).

Established Business Driver weightings.

Driver Weightings incorporate leaderships input on Priorities

Driver Weightings

Governance Structure

Organizing for Success

Engaged Executives

Established Governance Organization

• Cross-business Representation

• Roles & Responsibilities

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Governance Structure (con’t.)

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Vis

ion

& D

irec

tio

nP

rio

riti

zati

on

& A

lign

men

t

ITGC Sub-Committee

ITGC ExecutiveCommittee

An

nu

alO

ngo

ing

Project Categorization

2020

Mandatory legal, safety,

environmental or other regulatory

requirements. May include

compliance with internal policies.

The minimum amount of spend to

maintain current operations

No Capital Projects

Adding or improving capability

that generates long term

competitive advantage

Risk Mitigation

DiscretionaryNon-Discretionary

REDUCE COST & OPERATE

EFFICIENTLY

REDUCE RISK & ENHANCE ASSETS

COMPLY WITH LAW & CORPORATE

POLICY

INCREASE COMPETITIVE ADVANTAGE

Clearly defined spend categories enable optimized allocation of funding and resources across the portfolio

and allow external benchmarking.

Portfolio Intake Analysis

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Compiled portfolio inventory

Rolled out Business Case template

Estimated cost, resources, benefits, timing constraints and related dependencies

Conducted assessment of inflight and proposed requests

Project Intake Analysis (con’t.)

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Defined process with built in checks and balances ensures the best portfolio

Discretionary Projects Impact on

Weighted Strategic Drivers:

Selected Portfolio

Portfolio

Optimization

Review

Strategic

ValueFinancial

Value

Regulatory,

Compliance &

Safety

Sustain

(Replacement)

New Capabilities

Yes

“Force in”

to portfolio

“Force in”

to portfolio

Driver 1

Driver 2

Driver 3Low

Impact

Extreme

ImpactS

core

Strong

Impact

Yes

No

Risk Score Indicates High Impact, High Probability?

Regulatory & Compliance:

Specific Regulation? Not Deferrable?

Safety:

Meets specific criteria?

C

Lo

cal

Go

ver

na

nce

& A

pp

rov

als

Inv

estm

ent

Str

ate

gy

Ro

ad

Ma

ps

No

Co

nst

rain

ts &

Str

ate

gy

Qualification and Impact Analysis

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Project X Company A has acquired a medical center. The intent of this project is to

standardize the corporate systems and eliminate legacy systems.

Operational Efficiency. Measured in

reduction of Annual Operating

Expense

This migration would allow the elimination of duplicate systems allowing

the ability to save annual system maintenance costs.

Driver Mapping

Impact Scale

Op. Efficiency- Driver

Measure None Low Moderate Strong Extreme

Annual OPEX Savings

0 -

<= $99,999

$100,000 -

<= $499,999

$500,000 -

<= $999,999

$1,000,000 -

<= $1,999,999

$2,000,000 +

Projects may impact more than one driver. In such an instance a project would be scored against all

impacted drivers to assess value contribution

Portfolio Prioritization/Optimization

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Enterprise Strategy

Driver 8

Driver 4

Driver 6

Driver 7

Driver 5

Business Drivers:

Driver 1

Driver 3

Driver 2

Sample

Discrete, Measurable Drivers DriverWeightings

Pai

r-W

ise

Co

mp

aris

on

s

%

%

%

%

%

%

%

%

Executive involvement is critical in selecting and weighting the relative importance of the strategic drivers against which projects should be assessed for alignment to business strategy.

Strong Extreme

None None

Moderate None

Extreme None

None Moderate

None None

None Strong

None None

Project 1 Project 2

Impact EvaluationBy Owner

YX

Strategic AlignmentScore

Ide

nti

fy S

trat

egi

c D

rive

rs

Use enterprise strategy

Prioritization Workshop

Regulatory(Forced-In)

Safety(Forced-In)

Compliance(Forced-In)

Regulatory

Compliance

Safety

New Capabilities

Sustain

Active Carryover

1 2 3

IT Enabled Portfolio

1 Review Active Carryover Projects

2 Review Regulatory, Compliance, & Safety projects

3 Review Sustain Projects

4 Review New Capabilities Projects

5 Review Preliminary Strategic Portfolio

6 Refine Portfolio

Approach

Sustain(Forced-In)

NewCapability

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All projects were evaluated using a common framework allowing consistent view of the entire portfolio.

Business Cases provided foundational information reinforced and validated by knowledge of ITGC Sub-committee members.

Prioritization Workshop (con’t)

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IT Enabled Portfolio

Composition Optimized and balanced portfolio of investments and delivery plan.

ITGC Sub Committee enabled for collaborative and objective investment decisions

Visibility of portfolio composition (e.g., breakdown of projects by classification)

Resource capacity and demand awareness

Dependency awareness

Budget and IT resource constraints balanced to achieve the most value to the organization – Investments aligned with organizational strategy

Outcomes:

Prioritization Workshop (con’t.)

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53 Projects

Preliminary IT Enabled Portfolio Going Into the Workshop

49 Projects

Final ITGC-recommended IT Enabled Portfolio

Safety Regulatory, Compliance

Reduced from 17 to 6

Sustain

Validated Business Risk

New Capabilities

Increased from 27 to 31

Summary

Reduced the number of projects that need to be Forced In from 26 to 18.

Increased Sustain projects from 9 to 12 -- validated Business Risk of each Sustain project

Increased New Capabilities, providing the ITGC with additional flexibility on when and if to proceed with a selected project based on their strategic value, budget, resources, and other priorities.

Prioritization Workshop (con’t.)

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Engaged Non-IT Executives• Established and sustained non-IT

operational ownership – a critical element of sustaining change.

• Established a portfolio delivery organizational structure that facilitates effective cross-business ownership and accountability

Drove the ChangeIdentified and communicated targeted changes and lead the shifts necessary to evolve portfolio delivery capabilities.

Communicated the case for change (why) and the path (how)• Socialized the value proposition

• Set and Managed expectations

Target Benefits and Communicate SuccessesDemonstrate measurable and incremental improvements in the IT Governance environment and communicate them to the enterprise.

Resource Capacity Analysis

Resource estimates validated.

Initial analysis of IT Resource capacity against the selected project portfolio was conducted to determine the resource actions required to deliver the portfolio. Specific resource analysis conducted from two perspectives: • Projects

• Roles

Addition capacity vs. demand scenario analyses were conducted to support selection of optimal scenario and provide real data for resource discussions by IT leadership.

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Resource Capacity Analysis (con’t.)

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Multiple views to support IT resource management

Resource availability

Demand

Portfolio Visibility

Holistic look at organizational resources by generic roleResource Visibility (Deficit & Surplus)

Project RequirementsGeneric role demand at the project level

Enhanced Visibility & Control of Resources*

Technology Enablement (MSP 2010)

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Created a PDP to capture essential Business Case information to support the portfolio planning and optimization process.

Results loaded into Project Server 2010 to enable portfolio analysis.

Leveraged Project Server 2010 technology to accelerate results (e.g., what-if analysis, resource capacity vs. demand, budget, timing, dependencies.)

Portfolio Management Roadmap

Build an Improvement RoadmapPortfolio intake and governance requires a comprehensive improvement roadmap with many integrated parts:

• It is not a onetime event – effective governance is part of overall IT delivery capability evolution

• IT governance should be addressed from both top down and a bottom up

• Clearly defined roles, ownership, and accountability is essential for success

Plan and deliver incremental value to the organization Creating a more effective and sustainable IT governance environment and portfolio delivery organization requires time and investment to deliver incremental value (quick wins) and to build and sustain

Balance Improvement ActivitiesIT governance requires three pillars to succeed:

Leadership, organization and people

Consistent, but scalable and flexible policies and processes

Enabling technologies

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Taking Steps to Avoid Pitfalls

Think Long-term Delivery of Benefits Treat the implementation initiative as a long-term improvement program with a series of phases with timetables and clearly defined benefits to the organization

Ensure Non-IT Executives are part of the process and committedEstablished and sustained non-IT operational ownership – essential for success.

Lead the Change and TransitionImplementation requires leading behavioral shifts, supported by:

• Marketing the value proposition

• Managing change and transformation

• Manage expectations

• Organizational structure that facilitates effective ownership and accountability

Target Benefits and Communicate SuccessesDemonstrate measurable and incremental improvements in the IT Governance environment and communicate them to the enterprise

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Value Proposition

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“Firms with mature Portfolio Management and IT Governance had 20% higher profits

than companies with poor Governance given the same strategic objectives.”

Dr. Peter Weill, Director of the Center for Information Research , MIT (Based on a recent study of 250 enterprises in 23 countries)

Contact

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Questions? Please contact

sean.o’brien@pcubedTel. 1(720) 289-3534

with any questions for Sean or Paul Merrywell