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Implementation of Application Portfolio Management

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Presentation on theme: "Implementation of Application Portfolio Management"— Presentation transcript:

1 Implementation of Application Portfolio Management
Background and Planned Approach September 26 and 27, 2005

2 Presentation Objectives
Review key concepts of portfolio management. Highlight progress made in implementing the portfolio management software tool in state government. Outline next steps for completing the implementation of the software tool – management of legacy applications. Introduce plans for IT biennial budget requests. Answer questions.

3 Mission Statement for the Portfolio Management Initiative - 1
Assist state government agencies to improve the management of IT investments by: (1) providing contemporary software tools that incorporate proven theories and methodologies, and (2) following best practice approaches and disciplines to: Identify, rank, and justify investments that are synchronized with governmental initiatives, agency strategies, and business goals; are achievable within personnel and budgetary limitations; offer acceptable risk profiles; maximize financial returns and/or societal benefits; satisfy project interdependencies; fit technical architectures; and meet security, privacy, and recoverability requirements.

4 Mission Statement for the Portfolio Management Initiative - 2
Advance the management of IT investment implementation projects by: clarifying roles and responsibilities; providing for well understood and comparable oversight; ensuring that they are planned well and researched thoroughly prior to starting; facilitating the management and monitoring of them to achieve budget, schedule, scope, and quality expectations; and completing them successfully so that business goals and objectives are realized. Improve the management of software applications to assist in: a) determining the best approaches, priorities, and timeframes for enhancement, remediation, and/or retirement/replacement in order to optimize benefits/costs over their operational life cycles; b) ensuring they provide reliable, secure, and recoverable services; c) estimating associated costs; and d) performing other planning work.

5 Framework for Managing IT Investments
I. Strategic Business and IT Planning and Investment Selection and Budgeting (Linking IT Investments to Agency Missions and Business/Program Goals and Objectives, and Investment Portfolio Management) III. Investment Operation and Maintenance, and Renewal, Retirement, or Replacement (IT Service Management; Enhancement, Renovation, or Termination; IT Asset Management; and Applications Portfolio Management) Life Cycle of IT Investments II. Project Implementation (Acquisition of Products and Services, System Development Life Cycle Methodology, Project Management Methodology, Agency and Statewide Governance, and Project Portfolio Management)

6 Framework for Managing IT Investments
Portfolio Management – Investment Portfolio Management Investment Evaluation and Funding Recommendation III. Investment Operation and Maintenance, and Renewal, Retirement, or Replacement (IT Service Management; Enhancement, Renovation, or Termination; IT Asset Management; and Applications Portfolio Management) I. Strategic Business and IT Planning and Investment Selection and Budgeting (Linking IT Investments to Agency Missions and Business/Program Goals and Objectives, and Investment Portfolio Management) Life Cycle of IT Investments II. Project Implementation (Acquisition of Products and Services, System Development Life Cycle Methodology, Project Management Methodology, Agency and Statewide Governance, and Project Portfolio Management)

7 Drive IT Portfolio Management Use
Policy Drivers and IT Management Expectations for Strategic Business and IT Planning Drive IT Portfolio Management Use Legislative Mandates Plan and budget for future funding more effectively: Encourage the use of shared technical infrastructure, common technical services, and like applications Minimize duplicate and unnecessary expenditures Maximize returns and benefits from investments Decisions to support strategic directions and governmental priorities Selecting the best mix of projects to deliver maximum value to the agency or state Ensuring applications are matched to business needs Demonstrate technology spending is focused on improving agency and program performance Identifies a pool of IT investments that best support core mission functions and prioritized business needs, best fit with approved architectures, have acceptable risks, and are accomplishable within fiscal and personnel limitations Use IT project business cases that cover cost, expected benefit realization, schedule, and risks Requires high quality business cases that increase probability of successful outcomes (on budget, within schedule, and meet user and stakeholder expectations) Collaboration and transparency between IT/non-IT execs via an integrated process and better manage activities, resources, costs throughout the enterprise Focus on common needs that can promote sharing of information and IT resources across organizational lines

8 Consistent and Clear Criteria to Prioritize and Decide on Investments
Strategic Imperative: The basis and rationale for selecting investment candidates need to be broadly understood for effective planning. The criteria may vary by project class and can be as much qualitative as quantitative, but they must be clear. Operational efficiency Costs Head count Transformation Policy objectives Private partnerships Process reengineering Greater participation Closing the digital divide Economic impact Greater transparency Greater accountability More-effective policy making Political return Constituent service Constituent value Lower constituent cost Greater availability Constituent centricity Effective interactions Single point of contact Public Value? Sample Weight PROJECT BUSINESS CASES Financial — Revenue Generation and Cost Savings 0.25 Business Impact — Public Self Service and Unified Services 0.35 Risk — Probability of Success/Failure 0.25 Architectural Fit — Principles Adherence 0.15 1.00 Optimized Finance Optimized Risk Optimized Strategic Portfolio $ IT Portfolio Strategic alignment, mix and optimization – balance risk and reward To select the best-possible investment projects, it’s necessary to have a clear means of evaluating and ranking each one. The basis for ranking starts with selecting and weighting the criteria to be applied. The four business value criteria shown above represent best practices. Architecture has grown as a factor. The determination of relative weight in overall scoring will suit the current enterprise environment and may vary by type of investment. The assigned weights are not changed within a planning session, but may be shifted as the overall strategy shifts, based on other factors (for example, funds are short for capital investments). In government, public value elements — such as those listed for operational efficiency, political return and constituent service — should be factored into the process. The evaluating and scoring process is generally undertaken by a group of 10 to 30 people. Each participant votes, using a score of 1 to 7 (or equivalent) applied to each project, which is presented by the relevant party or sponsor. Votes are public, and debate can occur about why a score is justified. The mix of participants may vary, but ideally it’s a balance of IT and business staff. Typically, each project gets a summary score by criteria and an overall weighted result. Then, groupings of portfolios may be presented for a final mix based on such critical organizational drivers as risk reduction, financial improvement or greatest overall strategic payback. Action Item: Don’t alienate executives, managers and staff with complexity; find the right balance that engineers process analytics to consider both objective quantitative and more-subjective qualitative data.

9 Overview of IT Investment Portfolio Management in State Government
Department Mission Statutory Mandates Governmental Initiatives Department Business Strategy Business/Program Goals and Objectives Processing and Information Flows Organization Charts Business Reengineering Opportunities Department Business Architecture (Business Service Models) Application Portfolio Management Asset Infrastructure Management New Projects Retirements Replacements Modernizations Maintenance Refreshment Cycles Security/Reliability Upgrades New Applications Infrastructure Additions/Upgrades IT Investment Portfolio Management Identify potential investments and evaluate candidates against defined criteria Prioritize projects based on analysis results (relative weighted scores) Balance staffing and fiscal resources Determine disposition – invest, adjust, or sunset Current IT Project Portfolio Other Plans and Strategies This chart is an illustration of what is accomplished in Phase I of NC’s Framework for the Life Cycle Management of IT Investments. The intent is to create new processes, procedures, and tools and employ a disciplined approach for “doing the right thing” by identifying, evaluating, justifying, and selecting/recommending IT investments (projects) that are: synchronized with governmental initiatives, agency strategies, and business goals; are achievable within budgetary constraints and personnel resource limitations; offer acceptable risk profiles; maximize financial returns, citizen benefits, and societal value; satisfy project interdependencies; meet legal or regulatory mandates; and comply with technical architecture standards. The traditional functions for IT were: Standardize and automate business processes. Reduce unit transaction costs. If those are the limits of our successes, IT will become irrelevant to the strategic goals of the enterprise, devolve to a utility function that, will be categorized and treated as a cost center, and will go to the cheapest provider of services, which probably will not be in the US. Rather IT must become a valued partner with the business to meet the more demanding challenges of increased globalization, uncertain economics, greater public expectations for more and butter services at less costs, ever expanding governmental initiatives. Status of all projects (schedule, budget, business objectives, etc.) Projects no longer relevant or with lower priorities Projects with higher priorities or increased urgency State CIO IT Plan Statewide IT Initiatives Department & Statewide Tech. Architectures Department IT Plan Funding Requests and Project Approvals

10 Framework for Managing IT Investments
Portfolio Management – Project Portfolio Management III. Investment Operation and Maintenance, and Renewal, Retirement, or Replacement (IT Service Management; Enhancement, Renovation, or Termination; IT Asset Management; and Applications Portfolio Management) I. Strategic Business and IT Planning and Investment Selection and Budgeting (Linking IT Investments to Agency Missions and Business/Program Goals and Objectives, and Investment Portfolio Management) Life Cycle of IT Investments Project Tracking and Reporting and Post Implementation Assessment Project Approval II. Project Implementation (Acquisition of Products and Services, System Development Life Cycle Methodology, Project Management Methodology, Agency and Statewide Governance, and Project Portfolio Management)

11 Policy Drivers and IT Management Expectations for Project Management
Legislative Mandates Drive IT Portfolio Management Use Provide stronger oversight of project management: Improve performance in costs, scope, schedule, and quality Increase reliability of achieving expected business results, projected benefits to citizens, and proposed value to the state Guide and administer governance for project approvals and monitoring/status reporting Prescribe information to be developed, maintained, and reported for programs and projects Report program and project status and identify exception situations Support the consistent, disciplined, effective, and efficient performance of project governance Provides a workflow process that encompasses project approvals, checkpoint reviews, and periodic status reporting at project, agency, and statewide levels Provide a “gated” review approach to ensure each project has performed all preceding work acceptably and is in position to complete the succeeding phase successfully, and to verify that it is still viable (i.e., continuing to offer worthwhile benefits and value within satisfactory cost and timetable parameters at desired quality levels and presenting an acceptable risk profile) Employ governance to maximize the potential of project success Enable the productive and effective management of projects Offer documents and administrative management capabilities that follow industry recognized best practices for system development life cycle and project management

12 Governance and Management for Project Implementation
The diagram on illustrates the major components for the project approval and reporting workflow. The following points may add to the understanding of the diagram.  ·      The horizontal ‘swim lanes’ (one each for the agency project and agency approvals and one for the state level approvals consisting of the SCIO, OSC, and OSBM) differentiate the organizational levels (governance) of the process. ·        The five vertical phases are the typical development life cycle phases for normal implementation projects. ·        The three state level review points (called gates) are positioned at exit Phase 1 and entry Phase 2, exit Phase 2 and entry Phase 3, exit Phase 3 and entry Phase 4. Each project is evaluated at these gates to determine that it in position to complete the succeeding phase successfully, and to verify that it is still viable (i.e., continuing to offer worthwhile benefits and value within satisfactory cost and timetable parameters at desired quality levels and presenting an acceptable risk profile). Projects cannot proceed to the following phase without obtaining all required approvals at project, agency, and state levels. As a general rule, re-baseline projects with major changes in scope, budget, or timetable must demonstrate that new objectives and results/outcomes have a high probability of successful achievement and that the investment still has benefit-cost or public value evaluations that justify continued funding after comparison with other projects in the portfolio analysis and budget and staffing limitations. ·        The documents (work papers) listed under each phase are created or updated in the phase. Those listed under State CIO (SCIO) are required to be reviewed at each state level gate. Others are optional for agency use, to be determined by each agency. These documents are found in industry accepted system development life cycle (SDLC) mythologies and Project Management Institute (PMI) approaches for managing projects. ·        The portfolio management software tool manages the workflow and collects and organizes the information in the documents as tabs. The software tool allows for the use of other forms and documents (such as Word and Excel); therefore, projects and agencies may employ a broad diversity of other types of project related work papers, if they desire.

13 Portfolio Dashboard

14 Framework for Managing IT Investments
I. Strategic Business and IT Planning and Investment Selection and Budgeting (Linking IT Investments to Agency Missions and Business/Program Goals and Objectives, and Investment Portfolio Management) III. Investment Operation and Maintenance, and Renewal, Retirement, or Replacement (IT Service Management; Enhancement, Renovation, or Termination; IT Asset Management; and Applications Portfolio Management) Life Cycle of IT Investments Purchasing Process II. Project Implementation (Acquisition of Products and Services, System Development Life Cycle Methodology, Project Management Methodology, Agency and Statewide Governance, and Project Portfolio Management)

15 Position of Purchasing in Project Portfolio Management Workflow
This panel illustrates several key points: See the ‘swim lanes’ – the process and work papers meet the project, department, and state-level management and oversight requirements. Below, which you can not read is a list of documents (work papers) under two categories: (a) those required for the State CIO approval process, and (b) others that the agencies may want to use, at their option. The shaded area gives the ground rules for processing review and approval thresholds. This panel clearly indicates the last point of the previous slide. It shows that project portfolio management is the integration in one process and one set of working papers of three components: (a) governance rules for internal department and state-level review and approval, (b) system development life cycle (SDLC) for steps in the construction of an application or asset, and (c) project management for managing the endeavor. We typically emulate IEEE for the SDLC process work papers and PMI’s PMBOK fro the project management work papers. For detailed project task and phase and work plan management, the project may use a tool appropriate to this detailed level of planning and control, and the data from leading tools can be imported into the portfolio management tool. The way we developed this workflow and its component work papers is worthily of note. We picked a sampling of the best project managers in the departments, and we told them to design this workflow based on the needs of the individual projects and the departments. The only suggestions we gave them were to forget the past process and paper-based documents (don’t automate a past inefficient and less than optimal effective process) and consider retaining the information on the monthly status report they used internally and submitted to us as it was ‘textbook’ and has proven over the years to be useful to everybody. We did not change a thing they recommended. In fact, they wanted more than we did. Exit and Re-Entry Point for RFP Process Draft RFP (Using Results From Work in Phase 1) Evaluate Proposals and Recommend Award Issue RFP and Receive Vendor Proposals

16 Framework for Managing IT Investments
Portfolio Management – Applications Portfolio Management Optimize maintenance costs and benefits over useful lives and retire or replace at best times III. Investment Operation and Maintenance, and Renewal, Retirement, or Replacement (IT Service Management; Enhancement, Renovation, or Termination; IT Asset Management; and Applications Portfolio Management) I. Strategic Business and IT Planning and Investment Selection and Budgeting (Linking IT Investments to Agency Missions and Business/Program Goals and Objectives, and Investment Portfolio Management) Life Cycle of IT Investments II. Project Implementation (Acquisition of Products and Services, System Development Life Cycle Methodology, Project Management Methodology, Agency and Statewide Governance, and Project Portfolio Management)

17 Drive IT Portfolio Management Use
Policy Drivers and IT Management Expectations for Applications Portfolio Management Legislative Mandates Drive IT Portfolio Management Use Increase capabilities for inventorying assets and analyzing them, including infrastructure hardware, software, communications equipment, and legacy (in place) applications Determine the right times and best approaches for renovating, retiring, or replacing assets Develop and submit annual disaster recovery plans Evaluation of the inventory of the current application stock for architectural fit, for suitability to the business needs, and for the prospective costs and risks of various application investment or retirement strategies Demonstrate that normal maintenance and necessary enhancements are planned and conducted in a manner that optimizes costs and benefits over the useful lives of assets Collect and analyze cost, benefit, and strategic value information to evaluate the TCOs of retention, enhancement, or replacement alternatives for maximizing long-term worth to the organization Review operational assets on an appropriate recurring basis to determine whether they are cost-effective to operate and maintain, align with strategic business and architectural directions, are recoverable and security acceptable, and are risk justified Evaluate assets by determining business and technical status; developing remediation, retirement, or replacement approach; and ascertaining priority and timeframe for action Estimate the state’s 5-year cost liability for applications maintenance, renovation, and replacement Develop cost estimates for asset modernization, and retirement (with and without replacement) and total statewide Provide information for developing business impact analyses (BIAs) and resulting continuity plans (BCPs) for key applications Identify vulnerabilities, criticalities, return-to-service needs, dependent business processes, public services, etc.

18 Issues Surrounding Systems Obsolescence
Over time, sustainability of applications becomes questionable due to age and technology advances, combined with changed business needs. They no longer: a) support business goals and objectives, b) are cost-effective to operate or maintain, and/or c) are risk-acceptable by presenting too great a likelihood of failure with cataclysmic consequences. Business Issues Impediment to the implementation of new and more cost-effective service delivery models – unable to respond to demands for new functionality, support business processes, or provide adequate and secure information access Becomes a constraint in meeting regulatory requirements Staffing issues - Unavailability of Skills Unavailability of staff skills or expertise to maintain Unavailability of third party vendors Dependency on individual contractors Technology issues Expired warranties, with no vendor support Can not handle increased usage or volumes of data Does not run anymore on available platforms Inefficient IT resource utilization Used beyond original intent, and cannot be enhanced Cannot meet security, privacy, or confidentiality requirements Are not easily recoverable for disaster recovery and business continuity System can fail, with untraceable error Inconsistent or inadequate information and data quality Sources of Risks Application modernization projects are created because: enterprises need to boost performance, make easier to access (through Internet), transition from technologies no longer being supported, or extend the reach of existing application by integrating them with new programs being built by Java or other modern platforms. Extending legacy applications, rather than calling in the virtual bulldozer, appeals to enterprises because these applications are proven after perhaps decades of battle hardening, and because they are full of important business and customer information. Seems to run forever, but ultimately has a finite business, economic, and/or technical life

19 Why the Management of Legacy Applications is Important
Ongoing and long-term management of: Risks Costs Funding opportunities Benefit/Cost optimization Fiscal liability Performance and capacity Disaster recovery and business continuity

20 Why the Management of Legacy Applications is Important – Risk Management
December 24, 2004 – Comair’s 18-year-old flight crew management system failed: All 1,100 flights cancelled Christmas day Comair did not return to full schedule until December 29 – total of 3,900 flights cancelled or delayed Nearly 200,000 passengers stranded - Cost $20 million Highly regarded image and reputation tarnished – key executives resigned or replaced No backup system - Plans for replacement had been in works for 7 years prior to failure – but no implementation for a variety of reasons, events, and circumstances (no valid excuses) System had a critical flaw that was not known – could handle only 32,000 crew changes per month – snow storm hit Ohio Valley December 22 through 24, requiring many transactions, so that the ‘magic number’ hit on Christmas Eve Source: CIO Magazine, May 1, 2005

21 Possible advantages of replacement:
Lessons from Comair – Considerations for use in Business Cases for Replacing Legacy Applications Cost of failure (cost of not mitigating crash) – Potential for jeopardizing organization’s image, brand, and reputation, and loss of revenue and increase in operating costs. Possible advantages of replacement: Lower operating and maintenance costs. Better customer or constituent services. Increased integration and adaptability. Better to move strategically (proactively) to replace legacy system than to have to respond tactically (reactively) to application failure. Source: CIO Magazine, May 1, 2005

22 Why the Management of Legacy Applications is Important – Cost Management
Definitions Maintenance – Defect repair and other changes that don’t affect application function. Changes are ‘mandatory” in type, and projects are less than 2-weeks in duration. Enhancements – Projects that add, change, or delete functionality. “Rules of Thumb” Annual maintenance cost is 11 cents for every $1 dollar of application development cost. Annual enhancement cost is 17 cents for every $1 dollar of application development cost. Therefore, an order-of-magnitude estimate of total annual ongoing costs of applications is 30% of their development costs. The average age of applications is a little over 8 years (national, not NC number); therefore, the total cost of ownership is $3.40 for every $1 of development cost – over the life of an application, its maintenance and enhancement costs can exceed its development cost by over a factor of 2 (twice as much) Source: Gartner, Inc.

23 Percent of Total IT Spending Business Value of Investment
Why the Management of Legacy Applications is Important – Funding Management Percent of Total IT Spending Business Value of Investment Expenditure Type Infrastructure to run the business and maintenance of legacy applications 47% Low New Applications: Utility Enhancement Frontier Total 53% 21% Low 21% Medium 11% High 100% Two-thirds of spending (infrastructure and utility applications) gives one-third of business value – need to reverse this ratio (reduce percents on these and increase percents on enhancement and frontier applications) as much as possible. Equally important, the funding source for new applications can come from the better management of legacy ones. Source: Gartner, Inc.

24 Why the Management of Legacy Applications is Important – Benefit/Cost Optimization Management
Risk Acceptability Limit Operational (Business and Technical) Risks Period of deferred maintenance and declining benefits (e.g., foregone benefits from not meeting emerging business needs) Growth in benefits from enhancement with stable maintenance costs Period of stable benefits and costs Minimum acceptable benefits/costs Benefits/Costs Period of stable benefits and costs Growth in initial benefits with steady maintenance costs Mandatory Decision Point – retire, replace, or renovate? Major enhancement performed Time Implementation of Application Opportunity time to act before reaching mandatory decision point

25 Why the Management of Legacy Applications is Important – Fiscal Liability Management
Comparison Cost Types: Medicaid, Employee Health Care, Public Education, etc. – spending pattern is generally linear with long-term compounded annual growth rates of 3% to 10% per year. Program Cost CGR Medicaid $2.3 B 10% Future Cost Liabilities – Annual Costs and Growth Rates Education $9.1 B 3% ??? Legacy Applications – Future annual projections and long-term spending patterns are unknown State Business Infrastructure Program Funding (SBIP) - $20 M Time Today

26 Why the Management of Legacy Applications is Important – Performance and Capacity Management
Performance Considerations Capacity Considerations Usability – Ease of use (intuitive). Reliability – ability to keep operating over time. Availability – length of time between failures. Security – ability to resist unauthorized attempts for access. Adaptability – ability to be changed quickly and economically to meet evolving business requirements. Functionality – ability to do the work for which it was/is intended. Portability – ability to run under different computing environments. Recoverability – resiliency to human-initiated or natural disasters. Arrival rate – rate at which transactions arrive into the application. Service rate – rate at which transactions are processed by the system. Utilization – ratio of arrival rate to service rate. If greater than 1 (100%), the transactions arrive faster than they can be processed (called saturation). Response time – total time for one transaction to be processed. Latency – time required for an operation to complete. Response times are usually the total of many latencies. Scalability – the ability of an application to meet increased business transaction demand.

27 Provide Information For Provide Information For
Why the Management of Legacy Applications is Important – Disaster Recovery and Business Continuity Implementation of Recovery Strategy Provide Information For Recovery Strategy Provide Information For Applications Portfolio Management Database Business Continuity Plan (BCP) Business Impact Analysis (BIA) Name and other identifying information Business processes supported and users served Importance to agency missions and criticality to operations (strategic fit) Technical/architecture, infrastructure used, and interfaces with other applications/uses Operational performance, risks, and other data Vulnerabilities to human-originated and natural disasters Interdependencies and priorities of business processes and return to service objectives and strategies Recovery requirements – personnel, IT, paper records, business facilities, etc. Protective measures and actions to mitigate potential disasters, especially those with high probability and high impact Prerequisites for recovery – technical, IT, business, alternate facilities, staffing, etc. What to recover (priorities and timetables) How to recover (processes and procedures for recovery/continuity)

28 Summary of Findings of Legacy Applications Study – December 2004
In the portfolio of approximately 900 applications: 40% are considered critical for department mission/strategy; 17% are enterprise (statewide) applications; and 75 of the applications processed by the state data center require 1-day return-to-service capability. The statewide portfolio is relatively young, with an average age of 7.5 years – since 1997, from 70 to 90 new or replacement applications have been added each year to bring down the average age. Health status is: 23% presenting functional, technical, or both problems; 50% with some problems, but manageable; and 27% healthy, with a prescription for continuing on-going operations and maintenance. Remediation timeframes are: 11% require action immediately (within next two years), 35% require action in the near term (2 to 4 years), and 54% require action in the long term (4 to 6 years). Although the immediate needs of the portfolio appear to be manageable, projections of its future status, if no remediation actions are taken, indicate an increasingly deteriorating condition as the applications age.

29 Key Concepts: Analysis Perspectives
Business, technology, and financial perspectives are combined to determine the posture of the application, indicate the appropriate remediation strategy, and to provide recommendations for managing the application portfolio over time Do we have the right capabilities in place? Are they aligned with business priorities? Where are potential synergies? Are there duplications? Business How do we maximize overall value? Can costs be optimized across the organization? To what extent can innovation and new applications be funded by cost savings? Do they cost too much to operate or maintain? Application Portfolio Analysis Perspectives Technology Financial Are applications sustainable? Do they fit in the desired architecture? What is the technical migration road-map? Are they risk-acceptable? Do they present security, privacy, or disaster recovery vulnerabilities?

30 Application Portfolio Management -Approach for Assessing Applications
Data Collection, Analysis, and Decision-Making Process Next Steps Question #1 Question #2 Question #3 Assess Overall Posture of Application Business Status? Technical Status? Determine if Remediation (Other Than Regular Ongoing Support and Maintenance) Required Continue Regular Support & Mainte-nance Create Inventory in UMT Portfolio Management Software Tool Incorporate Results in Business and IT Planning Processes Remediation Required? No Yes Evaluate Business Importance and Criticality of Problems - Prioritize & Specify Timeframe for Action

31 Application Portfolio Management - Determining the Posture of Applications
Generic criteria are defined to assess applications from a business and technology perspective Good Meets present service delivery needs Meets anticipated needs for new services, business process reengineering initiatives, and information access Protective of individual privacy and data confidentiality High Warning Zone – High Technical Risks Safe Zone Safe Zone Business Perspective Creates inefficient and less effective service delivery processes Constraint on implementation of new services, expanded citizen benefits, and/or more efficient business processes Individual privacy and data confidentiality at risk High Attention Zone – Both Business and Technical Risks Warning Zone – Not Making Best Use of In-Place Technology to Meet Business Needs Bad Low High Bad Good Technical Perspective Expensive to operate or maintain None or decreasing vendor support for major components Insufficient or decreasing availability of staff support Architecture not allow enhancements for new business requirements Inefficient IT resource utilization Inadequate data access and quality Vulnerable security Recoverability difficult or suspect Cost-effective to operate and maintain Adequate vendor support for major components Adequate availability of staff support Architecture allows enhancements for new business requirements Efficient IT resource utilization Adequate data access and quality Adequate security protection Resilient to human-induced or natural disasters Understanding strengths and weaknesses of the existing set of applications from both a business and technical perspective can offer a good starting point for portfolio management. This starts with building profiles for each application (costs, business purpose/value, technology footprint, support, and architecture fit) followed by a business assessment that examines operational efficiency, business risks, and strategic importance and a technology assessment that examines capabilities, ongoing risks, and architecture issues. The results can be graphically displayed using a 4 sector quadrant that show poor performing applications, those with primarily technical issues, those with functional issues, and those that are doing a god job supporting business needs. Red zone applications are candidates for replacement or renovation. Orange zone applications are technically sound, but have shortcomings in providing effective business support and are god candidates for functional enhancements with relatively minor investment. Yellow zone applications are meeting business needs, but have technology shortcomings that probably require technical enhancements to address risk and prolong their life. Green zone applications are healthy and require regular support and maintenance.

32 Application Portfolio Management - Remediation Approaches
High/Good Low Priority Reengineering: Low maintenance and support costs Provides value as is Regular support and maintenance Good Reengineering Candidates: High business value means quicker ROI Renovation will improve support and maintenance costs Business Perspective Replace, if possible, with Commercial or Government Package: Low value probably doesn’t justify custom code No Reengineering: Re-host candidate Functional enhancement Low/Bad Low/Bad High/Good Technical Perspective

33 Business/Technology Risk or Urgency
Application Portfolio Management - Investment Selection and Prioritization Prioritization and timeframe for action is driven by overall importance as well as risks. “Critical/At Risk” are highest priority were level of risks drive (broader) remediation activities “Limited Risk/Critical” applications are second priority compared to critical/at risk “At Risk/Non Critical” applications are also second priority for remediation, especially if risks can be mitigated “Limited Risk/Non Critical” applications should be reviewed to minimize technology investments and look for opportunities to consolidate or substitute for better solutions High Limited Risk / Critical At Risk / Critical Second Priority First Priority Overall Importance Selectively Second Priority Low Limited Risk / Non Critical At Risk / Less Critical Low Business/Technology Risk or Urgency High In addition prioritization is driven by: Specific business initiatives, programs, and/or funding streams available Overall risk issues, interrelationships between applications, and the general need for modernization of legacy systems

34 Framework for Managing IT Investments
Applications requiring immediate and near term remediation or replacement Investment Identification, Evaluation, and Justification Process Transition from APM to IPM I. Strategic Business and IT Planning and Investment Selection and Budgeting (Linking IT Investments to Agency Missions and Business/Program Goals and Objectives, and Investment Portfolio Management) III. Investment Operation and Maintenance, and Renewal, Retirement, or Replacement (IT Service Management; Enhancement, Renovation, or Termination; IT Asset Management; and Applications Portfolio Management) Life Cycle of IT Investments Funded Projects for Application Remediation or Replacement II. Project Implementation (Acquisition of Products and Services, System Development Life Cycle Methodology, Project Management Methodology, Agency and Statewide Governance, and Project Portfolio Management)

35 Position of Investment Identification, Evaluation, and Justification in Project Portfolio Management Workflow This panel illustrates several key points: See the ‘swim lanes’ – the process and work papers meet the project, department, and state-level management and oversight requirements. Below, which you can not read is a list of documents (work papers) under two categories: (a) those required for the State CIO approval process, and (b) others that the agencies may want to use, at their option. The shaded area gives the ground rules for processing review and approval thresholds. This panel clearly indicates the last point of the previous slide. It shows that project portfolio management is the integration in one process and one set of working papers of three components: (a) governance rules for internal department and state-level review and approval, (b) system development life cycle (SDLC) for steps in the construction of an application or asset, and (c) project management for managing the endeavor. We typically emulate IEEE for the SDLC process work papers and PMI’s PMBOK fro the project management work papers. For detailed project task and phase and work plan management, the project may use a tool appropriate to this detailed level of planning and control, and the data from leading tools can be imported into the portfolio management tool. The way we developed this workflow and its component work papers is worthily of note. We picked a sampling of the best project managers in the departments, and we told them to design this workflow based on the needs of the individual projects and the departments. The only suggestions we gave them were to forget the past process and paper-based documents (don’t automate a past inefficient and less than optimal effective process) and consider retaining the information on the monthly status report they used internally and submitted to us as it was ‘textbook’ and has proven over the years to be useful to everybody. We did not change a thing they recommended. In fact, they wanted more than we did. Note Note Perform the work tasks and complete the tabs in Phase 1of Project Portfolio Management (PPM) - determine goals and objectives, scope, costs, benefits, staffing, investment priority, implementation approach, technology, risks, procurement requirements, and other information necessary to define, plan, and justify legacy applications remediation or replacement project. Entry Point From Applications Portfolio Management (APM) Exit Point from Investment Portfolio Management (IPM) To Expansion Budget Submission or Other Funding Request Process

36 Two Near-Term Concurrent Paths for Application Portfolio Management
Legacy Applications Study Performed Last Year Review Agency Responses for 90 Immediate-Attention Applications from Legacy Study and Take Appropriate Action Spreadsheet Listing of 90 Applications by Agency Begin Design and Development Activities for Implementing Application Portfolio Management using Software Tool Implementation Effort for Applications Portfolio Management

37 Overview of Work on Applications Portfolio Management – Fall 2005
Task/Deliverable Timeframe 1. Develop draft worksheets (called tabs in software tool) Mid Sep – End Sep 2. Configure tabs First Oct – Mid Oct 3. Review tabs (including sample data) with agency-level advisory committee Mid Oct – End Oct 4. Finalize tab configurations and load applicable inventory data to UMT tool First Nov – Mid Nov 5. Develop rollout plan, including training for optimizer and planner modules for expansion budget preparation –ongoing and recurring approach for application and investment portfolio management. Mid Nov – End Nov

38 Timeline for Implementation and Use of Application and Investment Portfolio Management Capabilities
Legend SCIO Deliver Interim Legacy Assessment Report to General Assembly for 90 Projects Needing Immediate Attention APM – Applications portfolio management IPM – Investment portfolio management SCIO – State CIO Agency Submissions to SCIO: 1) Legacy Assessments, 2) Agency IT Plans, and 3) Expansion Budget Requests Agencies Assess Study Findings for 90 Immediate Attention Applications and Report Status, Remediation Approach, and Needs for Assistance Submissions to General Assembly: Governor’s Budget Package SCIO – 1) Statewide Legacy Assessment, and 2) Statewide IT Plan SCIO Review Agency Expansion Budget Requests, Prepare Statewide Legacy Assessment, and Write SCIO IT Plan Agencies Perform Legacy Assessments, Develop IT Plans, and Prepare Expansion Budget Requests APM Configuration and Agency Rollout Plan Development APM and IPM Rollout to Agencies Four Months Five Months Implement APM and IPM Use APM and IPM Jun 2005 Sep 2005 Jan 2006 Mar 2006 Apr 2006 Jun 2006 Aug/Sep 2006 Next Year Jan 2007 Jun 2007 Jan 2008 Today 2005 –2007 Biennial Budget 2007 –2009 Biennial Budget

39 IT Portfolio Management Maturity Framework
Strategic Imperative: Government already has most of the service delivery capabilities and systems it needs to satisfy customer need. What is needed now is the political will to enable the linkage of systems to empower agile service delivery. Complete processes with supporting metrics Projects and programs provide reliable, accurate information and are supported by excellence in project management and execution Balancing of project, application, and infrastructure portfolios using key asset information 5. Optimizing Sense and respond Cost and benefit realization metrics governing projects Solid metrics to track use and effects of governance processes and mechanisms Applications, and infrastructure are defined, captured, and used to manage the portfolios as assets rather than tracked expenses. 4. Managing Mechanisms and metrics Synchronized governance structure exists involving project, program, and portfolio managers with executive steering committee direction Policies and defined processes for decisions exist; periodic review of application and infrastructure portfolios utilizing asset management Project, application, and infrastructure interdependencies are recognized and factored into decisions 3. Governing More refined portfolio decisions Aggregating and interrelating projects using standard data elements Business value, technical condition, process supported and affected units are identified Infrastructure and applications assets compared to architecture technical standards All sub-portfolios are documented and key interrelationships highlighted 2. Communicating Enterprise and unit IT views Basic data collection (identification, purpose, owner) for IT projects, applications and infrastructure As-is planning, funding, and selection processes are defined 1. Admitting There must be a better way… Source: IT Portfolio Management: Step-By-Step, Bryan Maizlish and Robert Handler, 2005 and modified by NC Strategic Initiatives


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