111 Appendix A: IT Planning and Assessment Guidelines

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HomePolicies111-PlanningforIT Portfolios 111Appendix A:IT PlanningandAssessmentGuidelines

Thisguidewillhelpyouprepareandmanageyouragency’stechnologyportfolio.Itdescribestheroleplanningplaysintheportfoliomanagementprocess;providesapracticalapproachtomakingtechnologyinvestmentdecisions;andintroducestoolstoassistyouintheprocess.Useoftheconceptsandtoolspresentedarenotmandated.Agenciesmayselectothermethodsandprocessestomaketechnologyinvestmentdecisions.

ElementsofITPortfolioManagement

ITportfoliomanagementprovidesanintegratedapproachtotheidentification,selection,control,evaluation,andlifecyclemanagementoftechnologyinvestments.

Theprocessmaybeviewedasconsistingofthreeinterrelatedcomponents:

PlanningandSelectingTechnologyInvestments—Makingdecisionsbasedonagencystrategiesandbusinessrequirementsregardingtheselection,continuation,orcancelationofinvestments.RiskassessmentapproachesdescribedinSectionVofthisdocumentwillhelptheagencyconsiderproposedinvestmentsbychoosingfromavarietyofdifferenttools.

ManagingEstablishedInvestments—Makingsurethatoncetechnologyinvestmentdecisionsaremade,performanceexpectationsareachieved,costsarekeptwithinbudgetedresources,andschedulesaremet.

EvaluatingthePerformanceofInvestments—Includingbaseline,ongoing,andnewinvestmentassessments.

Figure 1:ITPortfolioManagementProcess

CriticalSuccessFactors

Successfulportfolioplanningincludesthefollowingpractices:

Agencyexecutivesareactivelyinvolvedintheportfoliomanagementprocess

Portfoliodecisionsarelinkedtotheagency’sbusinessplanandbudgetandareconsistentwithstateandagencytechnologypoliciesandstandardsDecisionsarebasedonthebestavailablecost,benefitandriskinformation

Previousprojectsarereviewedtodetermineifthedesiredobjectivesweremet(cost,schedule,quality,etc.)

Emphasisisonmaximizingvaluetotheagencyandthestatewhilemanagingrisk.Portfoliomanagementhelpsdecision-makersdeterminetherealvalueoftechnologytotheagency.Theprocessbuildsonatraditionalcost-benefitanalysisapproachformakingfinancialinvestmentdecisions,butistailoredtotechnologyproductsandservices.Theconceptrefinesthedefinitionofcosts,suggestsawaytoquantifybothtangibleandintangiblebenefits,andrecommendsstrongbusinessjustificationasthebasisforalltechnologydecisions.

Inthesectionstofollow,theprocessofportfolioassessment,investmentplanningandselection,andprojectdevelopmentarediscussed.

SectionIIdescribestheportfolioplanningprocessandhowitdiffersfromplanningeffortsinthepast,therecommendedplanningstructure,andthestepsintheplanningprocess.

SectionIIIdescribesITportfolioassessment.

SectionIVsummarizestheprocessfordevelopingnewinvestments.

SectionVbrieflydescribesseveralassessmenttoolsthatcanbeusedtoconductthebaselineassessmentaswellasevaluatingthemeritsofnewinvestments.

ITInvestmentPlanning

ITinvestmentplanningisasystematicprocessforlinkingeachagency’sinvestmentinITtoitsbusinessstrategies,objectives,programs,andprocesses.Theplanningprocessincludes:

DetermininghowwelltechnologyiscurrentlymeetingthebusinessneedsoftheagencyIdentifyingservicegapsortechnologyopportunitiesthatcouldimproveagencyperformance

Defininginvestmentsthatwilldeliverdesiredbusinessoutcomesaswellascustomersatisfactionlevelswiththebestvalueovertheinvestmentlifecycle

Attheheartofportfoliomanagementliesastrongpartnershipbetweenthebusinessandtechnologydomainsoftheagency.ThebusinessdomainistheuserofIT,whilethetechnologydomainisthesupplieroftechnologyservices.Thetwodomainsmustforgeapartnershipforportfolioplanningandmanagementtobeeffective.Figure2illustratesthecontinuousinteractionbetweenthebusinessandtechnologydomainsintheportfolioplanningprocess.

FourDimensionsofTechnologyPlanning

AsshowninFigure2,theportfolio-planningmodelinvolvesfourtypesofplanningactivities.

Figure 2:Dimensions ofPortfolioPlanning

OrganizationPlanning—Beginswiththeagency’sbusinessstrategyanddefinestheorganizational structureandprocessesnecessarytoimplement technology.

TechnologyAlignment—Beginswith theagency’sbusinessorganizationandprocessesandgeneratesthe informationsystemsandapplicationsthatmeetbusinessneeds.

OpportunityPlanning—Beginswiththeagency’sexistingtechnologyinventoryanddefinescurrentandfutureresourcesthatmaybedeployedtochangethebusinessstrategyand/orimprovesupportforprograms.

TechnologyImpact—Beginswithtechnologyopportunitiesandgenerateschangestothebusinessplanintermsofnew strategies,products,services,customers,orcustomerinterfaces.

Portfoliomanagementdiffersfromtraditionalplanningmodelsthattypicallyfocusontheautomationofexistingbusinessprocesses(alignmentplanning).Portfoliomanagementdemonstrateshowtechnologycanenhancebasicbusinessstrategiesandmethods.Newproblems,enhancedknowledge,advancingtechnology,andmanagementperceptionsdriveplanchangesandpresentnewopportunitiestoimprovebusinessperformance.

PortfolioPlanningandITPlans

TheportfolioplanningprocessreplacesthedevelopmentofagencystrategicandtacticalplansforIT.Itstructuresexecutivedecision-makingintheselectionofITinvestmentsandfeedsdirectlyintothebiennialbudgetprocess.Onceaninvestmenthasbeenapprovedandresourcesallocated,implementationoftheinvestmentfallsunderthepolicies,standards,andguidelinesthathavebeenestablishedforprojectmanagement.

PortfolioplanningwillhelpensurethatITwilleffectivelysupporttheaccomplishmentoftheagency’sbusinessstrategies.AsshowninFigure2,itcanalsoplayanimportantroleinshapingthosestrategies.Theplanningprocesscanidentifyopportunitiesforprogramimprovementsthatmaysignificantlyaffectfuturebusinessgoals,plans,andstrategies.Forexample,inmanyagenciestheidentificationofopportunitiesfortheuseofelectronicfundstransferhasenabledfundamentalbusinessprocessimprovement.Similarly,geographicinformationsystemtechnologymayofferawholenewparadigmfortheorganizationanduseofinformationinagencieswhosemissionsrevolvearoundgeographicconsiderations.

HowPortfolioPlanningDiffersfrom“Strategic”and “Tactical”Planning

Portfolioplanningusestheportfolioasthefoundationforacontinuousplanningprocessresultinginatechnologyinvestmentplanthatidentifiesthetechnologystrategies,goals,andnewprojectsrequiredtomeetthebusinessneedsofeachagency.

Thetechnologyportfolioisaworkingdocumentthatismaintainedandcontinuallyupdatedbytheagency.TheInvestmentsectionoftheportfoliomustbeupdatedonanannualbasisduringthebudgetcycleforthebienniumorthesupplementalbudgetandisupdatedmorefrequentlywhenanagencyidentifiesnewproblemsoropportunitiesrequiringatechnologyinvestment.

Allinvestmentdecisionsarebasedoncost,benefit,andriskassessmentsordrivenbyfederalandlegislativemandatesorotherexternalmandates.Investmentperformanceismeasuredregularlytoensurethatallinvestmentscontributetotheoverallstrategicbusinessplanoftheagency.

OrganizingthePlanningEffort–AnIntegratedPlanning Process

StrategicplanningforITshouldbeintegratedintoeachagency’soverallbusinessstrategyplanningprocess.Aspreviouslynoted,aclosepartnershipbetweenprogrammanagementandtechnicalmanagementisessentialforeffectiveportfolioplanning.Eachagency’sseniortechnologymanager,itsChiefInformationOfficer,shouldbeamemberofitsstrategicplanningworkteam.

Thetasksthataretraditionallyassociatedwiththestrategicplanningprocessprovideusefulvehiclesforintegratingbusinessandtechnicalstrategies.Stakeholderanalysis,forexample,shouldincludetheneedsandexpectationsofbothusersandsuppliersofIT.Analysisofinternalstrengthsandweaknessesshouldaddressthestrengthsandweaknessesoftheagency’stechnicalinfrastructureanditsabilitytorespondtouserneeds.Similarly,theassessmentofexternalopportunitiesandthreatsisanexcellentchannelforbringingtechnologyissues,rangingfromYear2000complianceissuestoparticularlypromisingnewtechnologies,intotheplanningprocess.

IfyouragencyanticipatesusingITinconjunctionwithmajorbusinessprocessimprovementinitiatives,hasarelativelycomplextechnicalinfrastructure,orhassuccessfullyadoptedoneoftheformal,structuredmethodologiesfortechnologyplanning,thenitshouldestablishatechnicalworkinggrouptosupporttheoverallstrategicplanningteam.Thisworkinggroupshouldincludeagencyexecutives,technicalmanagers,andknowledgeablerepresentativesof usermanagement.Thegroupchartershouldclearlystatethatitsresponsibilityistosupporttheagency’soverallstrategicplanningprogram,notdevelop anindependenttechnicalstrategy.

Linking Technology Investmentstothe Agency’s Strategic Business Plan and Budget

Withthe1997-99Biennium,thestateadoptedaperformance-basedbudgetingsystemthatcloselylinkseachagency’sstrategicbusinessplanwithitsbudget.Agenciesarerequiredtodirectlytietheirmissions,goals,objectives,strategies,andperformancemeasurestotheirfinancialplans.

Technologyplaysanimportantroleinenablingeachagencytoaccomplishitsmissionandprogramgoalsbysupportingandenhancingbasicbusinessprocesses.Increasingly,technologyisinvolvedineveryaspectofagencyprogramoperations.Thereforeitisessentialthattechnologyplanningbeanintegralpartoftheagency’soverallperformance-basedbusinessandbudgetplan.Amajorgoalofportfolio-basedITmanagementistoensuretheintegrationofbusinessandtechnologyvisions.

Technology PlanningSummary

Althoughthedevelopmentoftechnologyplansshouldbeintegratedwithineachagency’soverallplanningprocess,thefollowingsequenceofactivitieswillhelpensurethattechnologicalopportunitiesareidentifiedandjustified.Theaccomplishmentofthesestepsshouldbetheresponsibilityoftheagency’sstrategicplanningteam,withsupportfromitstechnicalmanagementandstafforaspecializedworkgroupoftechnicalmanagementandexperiencedtechnologyusers.

Assessingperformance.Assesstheperformanceoftheexistingtechnologyinvestmentstoestablishabaseline.Atechnologyportfoliomeasureshowwellexistinginvestmentsareperformingintermsofthebusinessneedsoftheagency.

Identifyservicegapsortechnologyopportunities.Planningistheprocessofanalyzingbusinessrequirements,identifyingproblemareas,oridentifyingtechnologyopportunitiesthatwillimprovethebusinessperformanceoftheagency.

Identifyalternatives.Identifyandassessalternativesolutionsforfillingservicegapsand/ortakeadvantageoftechnologyopportunities. Implementinvestmentsandevaluateproject/portfolioperformance.Implementthebestsolutionandevaluateitsperformancetodeterminethesuccessoftheplanningeffort.Technicallynotaplanningstep,projectimplementationconcludestheplanningcycle.Theevaluationprovidesthedataforthenextplanningcycle.Performancedataresultingfromasystematicassessmentprocessofexistingandproposedinvestmentsisneededthroughouttheportfolioplanningandmanagementprocessinordertomakeinformedplanning,selection,andmanagementdecisions.

ITPortfolioAssessment

AgenciesarerequiredtoconductannualassessmentsoftheirITportfolios.Theseassessmentsexaminehowwellexistinginvestmentsaremeetingthebusinessneedsoftheagency,identifyproblemswiththemanagementofexistinginvestments,andsuggestopportunitiesforimprovingagencyperformancethroughnewtechnologyinvestments.

Costs,Benefits and Risks—Key FactorsinPortfolioAssessment

Considerationsofcosts,benefitsandrisksshouldbecontinuallyappliedthroughouttheplanning,selection,management,andevaluationphasesofportfoliomanagement.Neworcontinuingportfolioinvestmentdecisionsshouldbebasedonanalysesofthesefactors.

Costs(RecurringandNon-Recurring)

One-timecosts,suchashardwareandsoftware,designanddevelopmentcost

Ongoingcostssuchassalaries,softwareupgrades,training,supplies,andmaintenanceIndirectcostssuchasinitialproductivitylosses,networkmanagement,anddataadministration

Benefits

Tangiblebenefitsincludethosedirectlylinkedtotheachievementoftheagency’sbusinessstrategythatcanbeexplicitlyquantified(e.g.,costreductions,productivityincreases,processingtimereductions,servicequalityimprovements,etc.)

Intangiblebenefitsincludethosedirectlylinkedtotheachievementoftheagency’sbusinessstrategythataredifficulttoquantify(e.g.,greaterdataaccuracy,improveddatasecurity,improvedorganizationalknowledge,moreefficientdecisionmaking,etc.)

Risks

StrategicriskassessmentensuresthatproposedITinvestmentsarealignedwiththeagency'sstrategicdirectionassetforthintheagencybusinessplan

Financialriskisassociatedwiththecostsanddurationofthedevelopmenteffort

Capabilityorprojectmanagementriskisassociatedwiththeorganization’scapabilityofcarryingoutthechangesrequiredbytheproject,includingmanagementskillandexperience

Technologyriskisassociatedwiththetechnologythatwillbeusedtoimplementaproposedapplicationorsystem

Organizationalimpactoroperationalriskisassociatedwiththedegreeandcomplexityofthechangestothebusinessrulesandprocesses

Agenciesshouldassesstheirtechnologyinvestmentsintermsoftheperformanceofindividualinvestmentsaswellastheportfolioasawhole.Afinancialportfolioismeasuredbyitsoverallgainorloss.Althoughindividualinvestmentsmaybeprofitable,iftheoverallresultsfortheportfolioarebelowmarketbenchmarks,theportfoliowillnotreceiveapositiverating.Marketbenchmarksinthiscontextrelatetoatleastthereturnoninvestment(ROI)beingequal toorgreaterthanoriginalexpectations.Successfulprojectsarethosethatreachtheexpectedoutcome.Technologyportfoliosshouldbeviewedinasimilarfashion.

Portfolio-LevelAssessment

Piecemealassessmentcanresultintheallocationofscarceresourcestoindividualinvestmentsthatarecounter-productiveintermsoftheoverallneedsandexpectationsoftheagency.Questionsconcerninginteroperability,commonarchitecture,orpublicinformationaccesscannotberesolvedby assessingindividualinvestmentsasseparateentities.Viewedinisolation,aninvestmentmayappeartobejustified;however,whenconsideredwithinthecontextofotheragencytechnologyinvestments,itmayprovetoberedundantorinconsistentwiththeagency’soveralltechnologystrategy.

Thereforeitisessentialthateachinvestmentintheportfoliobeassessedtoensuretheinvestmentssupportthestrategicvisionoftheagencyandareindividuallyandcollectivelycost-effective.Portfolioassessmentdrawsupondataaboutindividualapplicationsandprojects,butitisnotsimplyanaggregationofsuchdata.Itisnecessarytoassesseachcurrentandproposedinvestmentintermsofitsvalueinthecontextoftheagencyandstate-leveltechnology strategies.

Suggestedbelowaresomequestionsthatwillhelpyouassessthevalueofthetechnologyportfolioinachievingyouragency’sstrategicvision.

Howwellhastheentiretechnologyportfoliocontributedtotheachievementoftheagency’smission,businessgoals,andobjectives?Istechnologyproducingcost-effectiveresults?

Howwellaretechnologyinvestmentsbeingmanaged?Hasthetechnologyportfoliobeenreviewedtoidentifyandreduceredundantandlowvalueapplications?Havelegacy/oldapplications,data,andinfrastructurebeenconsideredforintegrationintonewsystemsorreplacement?Havenewopportunitiesforconsolidationandsharingbeenpursued?

Istheagencymaximizingthebusinessvalueandcosteffectivenessoftechnology?Istheagencyleveragingitstechnologyresourcesacrossitsentireoperation?Canresourcesbesharedorconsolidated?

Towhatextentdocurrenttechnologyinvestmentsemployacommonarchitecture?Whatlinksneedtobedevelopedforinteroperabilityanddatasharing?

Whathasbeendonetoensureappropriatepublicaccesstoagencyinformationandtheabilitytodobusinesswiththeagencyusingtechnologyresources?

Onetooltoassistagenciesinmeasuringtheeffectivenessoftheirtechnologyportfoliosinachievingtheirbusinessstrategiesisthe“balancedscorecard”methodology.Thebalancedscorecardapproach,whichhasbeenadaptedtopublicagencysettingsbytheU.S.GeneralAccountingOffice,helpstotranslatebusinessstrategiesintotechnologyobjectives,measures,andperformancetargets.Foramorecompletediscussionofthebalancedscorecardinthepublicsector,pleaseseeAppendixB.

Assessing IndividualInvestments

Eachinvestment,application,orprojectintheportfolioshouldbeassessedtodeterminehowitislinkedtothebusinessplan.Benefits,costs,andrisksshouldbemeasured.Inadditiontotheinformationincludedintheportfolioitself,effectiveassessmentmayrequirethatyoureviewfeasibilitystudyreports,post-implementationstudies,andprogrammanagementreports.

SectionVofthisguidesuggestssometoolsforconductingassessmentsofindividualinvestments;however,youmayuseanycombinationofmethodologiesthattogetheraddress:

Cost/benefitratiosorotherfinancialmeasures,suchasROI,thatallowyoutomeasuretheinvestmentagainstdesiredratesofreturn

Theinvestment’slinkagetothebusinessplan—agencystrategies,goalsandobjectives,performancemeasures,andbusinessprocessimprovements

Evidencethattheprojectcomplieswithstatetechnologypoliciesandstandards

Expectedversusactual performancedatameasuredagainstacceptablevariationbetweenexpectedandactual results

Adescriptionoftherisksassociatedwiththeinvestmentandthesuccessoftheagencyincontrollingthoserisks—againmeasuredagainstalevelofacceptableperformance

Theassessmentprovidesagencydecision-makerswithessentialperformanceinformationabouteachindividualinvestmentandtheportfolioasawhole.Theprocessshouldvalidatemostinvestmentsintheportfolio,butitmayidentifysomeforimmediateorfutureelimination.Otherinvestmentsmayneedactivemonitoringorevenreassessmentusingamoredetailedorrigorousassessmenttool.Theresultsoftheassessmentsshouldbehyper-linkedandSection4oftheportfolioshouldbeappropriatelyupdated.

DevelopingNewInvestmentProposals

ITportfoliomanagementisacontinuousanddynamicprocess.Figure3illustrateshownewagencyinvestmentsareincorporatedintotheportfolio.Eachinvestmentshouldbeevaluatedandsupportedwithsufficientjustifyingevidenceonwhichtobaseaselectiondecision.

Anagency’sdecisiontoapproveanewinvestmentshouldbebasedon:

Therelativebenefits,costsandrisksoftheprojectincomparisontoallotherproposalsThestrengthoftheproject’slinkagetotheagency’sstrategicbusinessplanAdaptabilitytofuturebusinessneedsandpriorities

Completionoftheproject’sdevelopmentcycle(orstand-aloneincrement)withintwoyears

Thecontributiontheproposedtechnologywillmaketotheagency’stechnicalinfrastructure,includingbutnotlimitedtoanalysisofthefollowing:

Useofexistingassetsincludinghardware,software,tools,andprogramsAbilitytocapture,analyze,maintain,andsharedata

RobustnessoftheproposedsolutionandtheestimatedlifeexpectancyofanydevelopedsystemReliabilityandeaseofuseoftheuserinterface

Thereusabilityofanyprograms,purchasedsoftware,ortoolsInteroperabilityandscalabilityofanypurchasedordevelopedcomponentsTheuseofindustryacceptedstandardsforconnectivityandopensystemsEaseofmaintenance

Ingeneral,highrisk(asidentifiedintheITPortfolioStructureandContentStandards,AppendixA)andmulti-bienniainvestmentsaresubjecttoOCIOandTSBpriorapprovals.Onceaninvestmenthasbeenidentifiedbytheagency,itshouldbeincludedinthePlannedProjects/Investmentssectionoftheportfolioandrankedagainstotherpossibleinvestments.

Figure 3:Selecting New Investments

Theprocessofconductingtheannualportfolioassessmentwillidentifygapsintheagency’stechnicalinfrastructureandsuggestopportunitiesforimprovingagencyperformancethroughnewtechnologyinvestments.Onceaproblemoropportunityhasbeenidentified,youcanbegintheprocessofidentifyingandprioritizingpossiblenewinvestments—asystematicandrigorousprocessofcompilingdata,identifyingalternativesolutionsandanalyzingtheassociatedcosts,benefitsandrisksofeachalternative.

ResponsibilityforSelectingInvestments

PrimaryresponsibilityforselectingITinvestmentslieswiththeheadofeachagency.Theidentificationandassessmentoftechnologyinvestmentsinsupportofthisexecutiveresponsibilitymaybeoverseenbytheagency’sstrategicplanningcommitteeorbyaseparateITportfolioplanningteam.Ineithercase,detailedprogramandtechnologyinputshouldbedrawnfrombothuserandtechnologystaff.Theprocessofidentifyinganddocumenting

technologyinvestmentsisessentiallysimilartotheprojectplanningandjustificationstagesinthestate’sestablishedtechnologymanagementprocess.Asinthepast,developmentfollowsthenormalstepsinthetechnologyprojectcycle.Ateachsucceedingstepintheprocess,agencymanagementhasmoreinformationonwhichtomakedecisionstocontinueorcurtailfurtherinvestment.

Documenting Proposed Investments

SummaryinformationabouteachproposednewinvestmentmustbeincludedinthePlannedProjects/Investmentssectionoftheportfolioinvestmentplan.Theformatfortheportfolioisspecifiedinaseparatedocumententitled,“ITPortfolioStructureandContentStandards.”Thissummaryinformationshould bebasedonthebestinformationabouttheinvestmentthatiscurrentlyavailabletotheagency.

IfaproposedinvestmentrequiresOCIOorTSBapproval,theagencyshouldbepreparedtosupplementtheinformationprovidedintheportfoliowithwhateveradditionalevidenceitthinksappropriatetodemonstratethemeritsoftheinvestment.Similarly,iftheinvestmentrequiresabudgetaction,theagencyshouldbepreparedtoprovidewhateveradditionalinformationisspecifiedinthecurrentbudgetinstructions.

Agenciesshouldretaindocuments—suchasbusinessprocessimprovementstudies,requirementanalyses,orfeasibilitystudyreports—usedinpreparingtheinvestmentanalysisforpossiblerevieworauditbytheOCIO.

Analyzing and Justifying Proposed Investments

EachagencyisresponsibleforanalyzingandjustifyingitsproposedITinvestmentsandprovidingevidencethateachwillbringanappropriatereturnfromtheexpenditureofscarcepublicresourcesandfurtheragencyandstate-levelpriorities.Inmostcases,thisanalysisandjustificationshouldinclude:

ITInvestmentDefinition—Ahigh-levelanalysisthataddressesthebusinessneedsoftheagencyandtheproposedscope,schedule,andcostoftheinvestment

ComparativeAssessmentofITInvestmentAlternatives—Ranksalternativesintermsofagencypriorities,aswellasrelativecosts,benefitsandrisksFeasibilityStudy—Providesanin-depthanalysisofthedesiredresultsofinvestmentsandexaminesthetechnicalrequirementsoftheproject,therelativecosts,benefitsandrisksofeachtechnicalalternative,andlaysoutaprojectimplementationplan

Theinformationdevelopedthroughtheinvestmentdefinitionandcomparativeanalysisstepswillnormallybesufficientforexecutivedecision-makingand, ifrequired,OCIOorTSBreviewandapprovalofproposedITinvestments.Insomecases,agenciesmaybeaskedtoprovidesupplementaldocumentationtosupportcontrolagencyreviewandapproval.

Investmentdefinition,comparativeassessment,andfeasibilitystudiesarediscussedintheremainderofthissection.

InvestmentDefinition

Theinvestmentdefinitionestablishestheinitialexpectationofscope,schedule,andcostforapossibleITinvestment.Theanalysisshouldfollowfromageneraldesignandrequirementsanalysisandinclude:

BackgroundStatementandadiscussionofthereasonsfortheinvestmentBusiness environment

BusinessneedsBusinessopportunitiesBusinessservicegoalsStatutoryrequirements

Objectives—theprimaryoutcomesoftheinvestment

Problemsthatwillbesolvedand/oropportunitiesforbusinessprocessimprovementServicedeliveryenhancements

Responsetostatutoryrequirements

ProjectImpacts—otheragenciesorentitiesaffectedbytheinvestmentInteragency

Intra-agencyPrograms/Subprograms

Agencycustomers(i.e.,clients,constituents,taxpayers,etc.)

OrganizationalEffects—describe(asapplicable)howimplementationoftheinvestmentmayaffecttheagencyImpactonworkprocesses

NeedfortrainingChangesinjobcontent

Changesintheorganizationalstructure

Descriptionoftheproposedsolutionschosenandofthealternativesolutionsconsideredbutnotchosen

Positiveaspectsofthechosensolution,thatis,factorsthatultimatelymadetheapproachthemostdesirable

ShortcomingsoftheconsideredalternativesthatmadethemultimatelylesssatisfactoryintheprojectanalysisunderconsiderationCostProjections

Anestimateofthetotalprojectcostforeachphaseoftheinvestmentfromdefinitionthroughimplementation.Youneedtobeabletodocumentthemethodologyusedtodeveloptheestimate

Cost-BenefitSummary

Aninitialcost-benefitanalysisoftheproposedinvestmentEstimatedTimeFrame

AnestimationofthetimerequiredtoimplementtheinvestmentConformitywithAgencyPlans

Ananalysisofhowtheproposedinvestmentsupportstheagency’sstrategicbusinessplanandtherelationshipbetweentheinvestmentandothercurrentandproposedtechnologyinvestmentsinthetechnologyportfolio.

ProjectManagementandOrganization

DeterminationoftheprojectmanagementapproachfortheinvestmentRolesandresponsibilities

DecisionmakingprocessManagement qualificationsQuality assurance/oversightRiskmanagementProcurementstrategyMeasuresofsuccess

Fiscalrequirements

Theestimatedbudgetfortheinvestment,includingfundingsourcesandspendingplan.

ComparativeAssessment

ThepurposesofthecomparativeassessmentofproposedITinvestmentsaretoestablishprioritiesamonginvestmentalternativesandtoensurethateachinvestmentisviewedinlightofitsimpactonothercurrentandproposedinvestments.ThevariousinvestmentdefinitionsandtheProjectandInfrastructuresectionsoftheagency’sportfolioprovidedatafortheassessment.Typicalquestionsthatshouldbeaddressedinconjunctionwiththeassessment include:

Whataretherelationshipsbetweeneachproposedinvestmentandotheractiveandproposedinvestments?Towhatextentdoeseachinvestmentenhanceorrestrictthevalueofotherinvestments?

Isthesuccessofanyinvestmentcontingentuponthesuccessfulimplementationofotherinvestmentsorcompletionofongoingprojects?WhatcriteriashouldbeusedinestablishingthepriorityofagencyITinvestmentsandwhatshouldbetherelativeweightofeachcriterion?Howwelldoeseachproposedinvestmentsatisfyeachcriterion?Whatisitstotalscore?

Howshouldproposedinvestmentsberankedforbudgetingandresourceallocation?

Agenciesmayestablishanycomparativeassessmentmethodologythattheyfeelisappropriatetosupportexecutivedecision-making.Themethodologyshouldbesystematicandfullydocumented,andtheresultsoftheassessmentmustbehyper-linkedto,orreferencedbytheagency’sportfolio.

FeasibilityStudy

Afeasibilitystudyisarigorousexaminationanddocumentationofthecosts,benefitsandrisksofanITprojectandprovidesatransitionfrominvestmentanalysistoprojectmanagement.Thestudybuildsonanalysesandinformationalreadycollectedduringthedefinitionstepoftheportfoliomanagementprocess.Thescopeofthestudyshouldbecommensuratewiththenature,complexity,risk,andexpectedcostoftheproject.Onlyverylimitedprojectsdo

notnormallynecessitateafeasibilitystudy.Theseincludeprojectsoflessthansixmonthsduration,thatrequireminimalchangesintheagency’sbusinessprocesses,orthatrespondtoproblemsoropportunitieswithastraightforwardsolutionbasedonoff-the-shelfproducts.

Thefeasibilitystudyshoulddocument:

Theproblemoropportunityintermsoftheeffectontheagency’smissionandprograms

Theorganizational,managerial,andtechnicalenvironmentwithinwhicharesponsetotheproblemoropportunitywillbeimplementedSpecificserviceleveland/orfinancialobjectivestojustifytheinvestment

Functional requirements

Theidentificationandevaluationofalternativecoursesofactionforeachestablishedobjective

Economicanalysis(i.e.,cost-benefitanalysis)foreachalternativewhichmeetstheestablishedobjectivesandfunctionalrequirementsRiskanalysisforeachalternative

Riskmitigationplanfortheselectedalternative

TheselectionofthealternativethatisthebestresponsetotheproblemoropportunityProjectworkplanforimplementationoftheproposedaction

ToolsforMakingTechnologyInvestmentDecisions

Whenusinganyassessmenttool,keepinmindthatassessmentsaredependentuponbothsoftandharddata.Theresponsibilityoftheagencyisto provideabodyofevidenceinsupportofeachproposedtechnologyinvestmentthatwillpersuasivelydemonstratethattheinvestmentisinfactasounduseofscarcepublicresources.Quantificationofdatatoscoreorrankprojectsshouldbedonewheneverfeasible;however,manyaspectsoftheassessmentprocess,suchasthedeterminationofbenefits,willrequireanexaminationofbothtangibleandintangiblebenefits.

Methodsthatcanbeusedforassessing,ranking,andselectingnewinvestmentsarelistedbelowandfurtherdetailedinAppendixB.

AnInformation Economics Model

Informationeconomicshelpsdecision-makersdeterminethetruevalueofITandisbasedupontheconceptsofvalueandtwo-domainanalysis.Valueisthecontributiontechnologymakestoenablethesuccessofthebusinessdomain.Thetwo-domainanalysisseparatesbusinessandtechnologytodeterminetheimpactofatechnologyinvestmentoneachdomain.(EachoftheimpactmeasureslistedbelowisdefinedinAppendixB.)

Businessdomainimpactmeasures:

ReturnonInvestment(ROI)Strategicmatch(SM)Competitive advantage (CA)

Managementinformationsupport(MI)Legislativeimplementation(LI)Organizationalrisk(OR)

Technologydomainimpactmeasures:

Strategictechnologyarchitecturealignment(SA)Definitionaluncertaintyrisk(DU)

Technicaluncertaintyrisk(TU)Informationsysteminfrastructurerisk(IR)

Toevaluateaproposedproject,theplanningteamand/orseniormanagersassignscoresforeachfactorbasedonitsvalueorrisktotheagencyandaweightreflectingthefactor’srelativeimportancetotheagency.Foramoredetailedexplanation,pleaseseeAppendixB.

Federal AssessmentModel

Thefederalassessmentmodelprovidesanassessmentmethodderivedfromtheinformationeconomicsmodel.Thismodelweighscosts,benefitsandrisksforproposedprojectsandscoresthembaseduponfivefactors:linkagetothebusinessplan,missioneffectiveness,organizationalimpact,riskandcost-benefitratio.Byscoringallproposednewinvestmentswiththistool,decision-makerscanreadilyseewhichprojectsappeartohavethegreatestvaluetotheagency.AppendixBprovidesadescriptionofthescoringtechniqueandahypotheticalexampleusingthemethod.

BalancedScorecard

Asnotedabove,thebalancedscorecardisaresults-orientedplanningandassessmentapproachthatintegratesbusiness,technology,andfinancialplanningprocesses.Thebalancedscorecardtranslatesbusinessstrategiesintotechnologyobjectives,measures,andperformancetargets.Unlikeothermethodsthatfocussolelyonfinancialperspectives,thebalancedscorecardusesthreeadditionalperspectives:thecustomer,internalbusiness processes,andorganizationallearningandgrowth.Together,theseperspectivesgiveacomprehensiveviewofhowtechnologyisperforminginrelation totheagency’svisionandbusinessstrategy.Proposednewinitiativesorprojectsalsoareassessedtodeterminewhichoneshavethegreatestpotentialforcontributingtotheachievementofagencyobjectives.

Toapplythebalancedscorecardapproach,aportfoliosteeringcommitteelinksspecificbusinessstrategiestodesiredtechnologyresults.Basedontheagencyvisionandstrategy,thesteeringcommitteesetsobjectivesbyidentifyingsuccessmeasures.Thenspecificmeasuresaredevelopedtogaugeachievementoftheobjectivesinrelationtothecustomer,learningandgrowth,internalbusinessprocessesandfinancialareas. BalancedscorecardmatricesareprovidedinAppendixB.Usingtheresultsobtainedfromusingthebalancedscorecard,decision-makerscanreadilyseethestrengthsandgapsintheirtechnologyportfolio.

OtherTools

Cost-Benefit Analysis

Cost-benefitanalysisisasystematicquantitativemethodofassessingthedesirabilityofprojectsorpolicies.AstandardsourceforgovernmentalagenciesisthefederalOfficeofManagementandBudgetCircularA-94whichprovidesanexcellentguidetocostbenefitanalysis.

Thefollowinglistoftypicalcostsandbenefitsassociatedwithtechnologyprojectsmaybeused.Thelistofbenefitsincludesboththetangibleandintangiblebenefitsofaproject.

Costs / BenefitsandOpportunities
Non-recurring
hardwaresoftware
networkhardwareandsoftwaresoftwareanddataconversionsitepreparation
installation
initiallossofproductivity
Recurring
hardwaremaintenancesoftwaremaintenancesystemsmaintenancedataadministrationsoftwaredevelopmentcommunicationsfacilities(rent)
powerandcoolingtraining / Higherproductivity,increasedcapacityReducedcostofrework,scrap,failure
ReducedcostoftechnologyoperationsandsupportcostsReducedcostofbusinessoperations
ReducederrorsImprovedimage
ReducedmaterialhandlingcostsReducedenergycosts
BetterresourceutilizationBetterpublicservice
Moretimelyinformation
ImprovedorganizationalplanningIncreasedorganizationalflexibility
Availabilityofnew,betterormoreinformation
AbilitytoinvestigateanincreasednumberofalternativesFaster decision-making
PromotionoforganizationallearningandunderstandingBetternetworkandsysteminteroperability
Betterinformationconnectivity
ImprovedITresponsetimetouserrequestsExpandabilityofstandards-basedsystemsGreateraccesstoagencyinformationLegislativeandregulatorycompliance

RiskAssessmentTools

Riskrelatestotheprobabilityofsuccessorfailureofanaction.PortfoliomanagementfocusesonfiveareasofriskstobeconsideredinmakingITinvestmentdecisions.Theseinclude:

StrategicRisk—Thedegreetowhichtheproposedinvestmentwillalignwiththeagency’sstrategicdirectionandintegrateintotheexistingbusiness.

FinancialRisk—Theprobabilitythattheagencywillbeabletosecurefundingfortheentireprojectlifecycleandthattheprojectwilldeliverontheproposedfinancialbenefits.

CapabilityorProjectManagementRisk—Theprobabilitythattheagencyhastheprojectmanagementcapabilityneededtosuccessfullyimplementtheinvestment,includingarealistictimeframe,sufficientresources,necessaryskilllevels,andasoundbusinessapproach.

TechnologyRisk—Thedegreetowhichtheinvestmentmustrelyonnew,untested,oroutdatedtechnologies,includinghardware,software,andnetworks.

OrganizationalImpactorOperationalRisk—Theamountofchangeneededwithintheagencytobenefitfromthenewinvestment,aswellastheeffortrequiredtocontinueprogramoperationsoncetheinvestmentisimplemented.

Assessingriskforaproposednewinvestmentmustbebaseduponthebestinformationavailableatthetimeoftheassessmentandthejudgmentoftheprojectplanners.Duringtheearlystagesofinvestmentanalysis,sufficientinformationforathoroughriskassessmentmaynotbeavailable.Therefore,riskassessmentshouldberepeatedatmajormilestonesintheinvestmentplanningandprojectdevelopmentsequencetoassurethatrisksarewithinreasonablelimitsandanappropriateriskmitigationplanhasbeendeveloped.

Manyriskassessmentmethodsemploysurveyinstrumentsthataskaffectedprogram,financial,andtechnologymanagers,andsystemuserstoindependentlyrespondtoquestionsdesignedtomeasureriskinthefiveareas.Byinvolvingacrosssectionofaffectedpartiesabroadperspectiveofpotentialriskisobtained.

MeasuringtheSuccessofthePortfolioManagementApproach

Benchmarksthatmeasurethesuccessfulimplementationofportfoliomanagementandestablishthepositiveimpactsexpectedfromportfoliomanagementapproachesincludethefollowing:

Allrequiredelementsareincludedintheportfoliodocument.

Usechecklisttomeasurelevelofcompliance

TechnologyinvestmentsaredemonstrablylinkedwiththeBusinessStrategicPlanDevelopquestionnairetospecifyhowprojectssupportobjectivesandstrategies

Theagencyassesses,manages,andmitigatesriskusingprovenriskidentificationandmitigationtools

Evaluatebypercentageofagencyprojectsutilizingcontinuousriskmanagementtools,tracktrendofissuesresolvedthatpresentedneedforcorrectiveaction

Theagencyusesappropriateprojectmanagementtechniques

Developquestionnairetoevaluateusage,specifyhowCapabilityMaturityModellevel2KeyProcessAreasaresatisfied

Theagencyexecutive(s)supporttheportfoliobecausetheyhavebecomemoreinvolvedinITpolicyandinvestmentdecisions

MeasurescanbechangesinamountoftimeexecutivesspendwithITmanagers,changesindollarscommittedtoimproveprocessesTheagencyinvestmentpolicyisdemonstrablyimprovedasaresultofportfolioanalysis

Developquestionnaire,identifywhatsavingshavebeenachievedasaresultoftheanalysis

Theamountofdefectdensities,scheduleslips,andcostoverrunshavebeensignificantlyreduced,aswellasthenumber,size,andfrequencyofITprojectfailures,sincetheportfoliorequirementshavebeenimplemented

Measurechangeinallareasovertime

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